Market segmentation is a process of dividing a market into distinct groups of buyers with different needs, characteristics or behavior, who might require separate produces or marketing mixes. Before knowing the types of segmentation its important for us to know about the levels of segmentation
Geographic Segmentation
Dividing a market into different geographical units such as nations, states, regions, counties, cities or neighborhoods. International lifestyles are emerging, but there are counterforces that continue to shape markets.
IKEA expanded globally using its large blue-and-yellow stores and dedicated out-of-town sites. IKEA was part of a marked 1980s trend towards out-of-town shopping. Its stores attracted customers from great distances, so that countries were served by a handful of
stores. IKEA changed its strategy when acquiring the Habitat furniture chain from
Storehouse in the early 1990s. The small stores gave it access to passing trade and
new customer segments who are less willing to travel. The Habitat chain also
serves small towns. In making this significant shift, IKEA is also following the
European trend towards town-center malls. Having seen American urban decay,
European politicians are resisting out-of-town developments.
Demographic Segmentation
Dividing the market into groups based on demographic variables such as age, sex, family size, family life cycle, income, occupation, education, religion, race and nationality.
Importance
consumer needs, wants and usage rates often vary closely with demographic variables. Demographic variables are easier to measure than most other types of variable.
life-cycle segmentation
Offering products or marketing approaches that recognize the consumer’s changing needs at different stages of their life.
LEGO’s range shows the limits of age-based segmentation. For babies there are Duplo rattles (0 to 3 months), then there are round-edged activity toys made of two or three pieces (3 to 18 months). All these have the familiar LEGO lugs so that they will fit on to LEGO products. Next come Duplo construction kits or toys (2 to 5 years). Duplo bricks look like LFGO bricks, but are twice the size so that young children can manipulate but not swallow them. Duplo kits start simple, but there are more complex ones – like train sets or 700 sets – that are suitable for children with increasing sophistication. By the age of 3, children have developed the manipulative skills that allow them to progress to LEGO Basic. This is targeted at 3 to 12-year-olds. The progression is made easy by the small LEGO bricks fitting to Duplo ones.
Gender
Dividing a market into different groups based on sex. Both men and women use most deodorant brands. Gender segmentation is usual in clothing, hairdressing, cosmetics
and magazines. Procter & Gamble, however, developed Secret as the brand specially formulated for a woman’s chemistry, and then packaged and advertised the product to reinforce the female image, To contrast, Gillette’s association with shaving makes its
deodorant male oriented.
Income
Dividing a market into different income groups. Income segmentation is often used for products and services such as cars, boats, clothing, cosmetics and travel.
Psychographic Segmentation
Dividing a market into different groups based on social class, lifestyle or personality characteristics.
Social Class
Relatively permanent and ordered divisions in a society whose members share similar values, interests and behaviors. Many companies design products or services for specific social classes, building in features that appeal to them.
Life Style
People’s interest in goods is affected by their lifestyles. Reciprocally, the goods they buy express their lifestyles. Marketers are increasingly segmenting their markets by consumer lifestyles. For example, General Foods used lifestyle analysis in its successful repositioning of Sanka decaffeinated coffee. For years Sanka’s -staid, older image limited the product’s market. To turn this situation around, General Foods launched an advertising campaign that positioned Sanka as an ideal drink for today’s healthy, active lifestyles. The campaign targeted achievers of all ages, using a classic achiever appeal that Sanka ‘Lets you be your best’. Advertising showed people in adventurous lifestyles, such as kayaking through rapids.
three main segments
- The Constrained: People whose expenditure is limited by income. It includes the resigned poor who have accepted their poverty and the more ambitious struggling poor.
- The Middle Majority: This segment contains mainstreams – the largest group of all – aspirers and successors.
- The Innovators: A segment consisting of transitional and reformers.
Personality
Marketers have also used personality variables to segment markets, giving their products personalities that correspond to consumer personalities. Successful market segmentation strategies based on personality work for products such as cosmetics, cigarettes, insurance and alcohol. Honda’s marketing campaign for its motor scooters provides another good example of personality segmentation. One ad, for example, shows a delighted child bouncing up and down on his bed while the announcer says, ‘You’ve been trying to get there all your life.’ The ad reminds viewers of the euphoric feelings they got when they broke away from authority and did things their parents told them not to do. And it suggests that they can feel that way again by riding a Honda scooter. So even though Honda seems to be targeting young consumers, the ads appeal to trendsetters and independent personalities in all age groups.
Behavioral Segmentation
Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses or responses to a product.
Occasions
Buyers can be grouped according to occasions when they get the idea to buy, make their purchase or use the purchased item. For example, most people drink orange juice at breakfast, but orange growers have promoted drinking orange juice as a cool and refreshing drink at other times of the day. Mothers day and Father’s Day are promoted to increase the sale of confectionery, flowers, cards and other gifts.
Benefit Sought
A powerful form of segmentation is to group buyers according to the different benefits that they seek from the product Benefit. Colgate-Palmolive used benefit segmentation to reposition its Irish Spring soap. Research showed three deodorant soap benefit segments: men who prefer lightly scented deodorant soap; women who want a mildly scented, gentle soap; and a mixed, mostly male segment that wanted a strongly scented, refreshing soap. The original Irish Spring did well with the last segment, but Colgate wanted to target the larger middle segment. Thus it reformulated the soap and changed its advertising to give the product more of a family appeal.
User Status
Some markets segment into non-users, ex-users, potential users, first-time users and regular users of a product. Potential users and regular users may require different kinds of marketing appeal. Kellogg’s took a different approach with its Bran Flakes breakfast cereal. Rather than keeping to the original health conscious users, it aimed at non-users by promoting the superior flavor of the product.
User Rate
Some markets also segment into light, medium and heavy-user groups. Heavy users are often a small percentage of the market, but account for a high percentage of total buying. American Express’s Membership Miles scheme integrates Air France’s Frequency Plus, Austrian Swissair’s Qualtflyer, Virgin’s Freeway and Continental Airline’s One Pass together with a string of hotel chains and car rental firms. Continental’s scheme is already bundled with others, so with it comes Air Canada, BWIA International Airways, Malaysian Airlines and
Cathay Pacific.
Loyalty Status
Many firms are now trying to segment their markets by loyalty, and are using loyalty schemes to do it. They assume that some consumers are completely loyal – they buy one brand all the time. Others are somewhat loyal -they are loyal to two or three brands of a given product, or favor one brand while sometimes buying others. In Australia members of Unilever’s Omomatic Club – for people with front-loading washing machines – get newsletters, brochures, samples and gift catalogues. ‘Front loaders’ are rare in Australia, so die club keeps Unilever in touch with a micro market that its Omomatic detergent is made for.
Business Readiness Stage
The stages that consumers normally pass through on their way Co purchase, including awareness, knowledge, liking, preference, conviction and purchase.
Attitude towards Product
People in a market can be enthusiastic, positive, indifferent, negative or hostile about a product. Door-to-door workers in a political campaign use a given voter’s attitude to determine how much time to spend with that voter. They thank enthusiastic voters and remind them to vote; they spend little or no time trying to change the attitudes of negative and hostile voters. They reinforce those who are positive and try to win the votes of those
who are indifferent.