Market segmentation means dividing a market into distinct groups of buyers with different needs, characteristics or behaviour, who might require separate products or marketing mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segments.
There is no single way to segment the market. A marketer has to try different segmentation variables, alone and in combination, to find the best way to view the market structure. The major variables used in segmenting consumer markets are:
It divides the market into different geographical units, such as nations, states, regions, countries, cities or neighbourhoods. A company may decide to operate in one or few geographical units or to operate in all the regions but pay attention to its different needs and wants.
E.g. Self- expression is important to car buyers in all the geographical regions. The western groups look for quality and practicality, the south want value for money. Climatic differences leads to different lifestyles and eating habits. In countries with warm climate, social life takes place outdoors so the furniture is purchased according to it.
It divides the market into groups based on variables such as age, gender, sexual orientation, family size, family life cycle, income, occupation, religion, ethnic community and nationality. Demographic factors are the most popular bases for segmenting consumer groups. Reason being that customer needs, wants and usage rates often vary closely with demographic variables. These variables are easier to measure than most other variables.
Consumers needs and wants change with age. Some companies use age and life cycle segmentation, offering different products and approaches for different age and life- cycle groups. E.g. Mc. Donald’s targets children, teens, adults and senior citizens with different ads and media. The multi- ethnic communities within Europe define market segments for all manner of goods: clothes, music etc. it also nurtures businesses that appear beyond their own ethnic backgrounds. Life- cycle stage is important in recreating markets. E.g. in the holiday market, Club 18- 30 aims at young singles seeking the four Ss: sun, sand, sea and sex. Gender segmentation is usual in clothing, hairdressing, cosmetics and magazines. E.g. both men and women use most deodorant brands. P&G developed Secret as the brand especially for women while Gillette’s makes its deodorant male oriented. Income segmentation is used for products such as cars, boats, clothing, cosmetics and travel. Many companies target consumers with luxury goods and convenience services.
It divides a market into different groups based on social class, lifestyle or personality characteristics. People in demographic group can have different psychographic make- ups.
Social classes help in knowing how they affect preferences in cars, clothes, homes furnishings, leisure activities, reading habits and retailers. Many companies designs products or services for specific social classes, building in features that appeals to them. E.g. Butlin’s holiday camps cater only for working class families. People’s interest in goods is affected by their lifestyles. Marketers are increasingly segmenting their markets by consumer lifestyles. For e.g. General foods used lifestyle analysis in its successful repositioning of Sanka decaffeinated coffee. 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 used personality segmentation to power its way into the U.S market.
It divides a market into groups based on consumer knowledge, attitude, use or response to a product. Many marketers believe that behaviour variables are the best starting point for building market segments.
Occasion segmentation divides a market in the groups according to the occasions when they get the idea to buy, make their purchase or use the purchased items. It can help firms build up product usage. E.g. most people drink orange juice at breakfast, but orange growers promoted drinking orange juice as a cool and refreshing drink at other times of the day as well. Kodak uses it in designing and marketing its single used cameras in multi packs for wedding guests. Benefit segmentation divides the market into groups according to the different benefits that consumers seek from the product. E.g. toothpaste market, there was four benefit segments: economic, medical, cosmetic and taste. User status segments a market into non- users, ex- users, potential users, first time users and regular users of a product. Potential and regular users may require different kinds of marketing appeal.