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Methods/Bases of Market Segmentation

A market can be segmented on the bases of the following factors:

 

1. Geographic Segmentation

The following are some examples of geographic variables often used in segmentation.

  • Region: by continent, country, state, or even neighbourhood.
  • Size of metropolitan area: segmented according to size of population.
  • Population density: often classified as urban, suburban, or rural.
  • Climate: according to weather patterns common to certain geographic regions.

2. Demographic Segmentation

Demographic variables such as age, occupation, education, sex and income are commonly used for segmenting markets.

  • Age : Marketers design, package and promote products differently to meet the wants of different age groups. Good examples include the marketing of toothpaste (contrast the branding of toothpaste for children and adults) and toys (with many age-based segments). 
  • Gender: Gender segmentation is widely used in consumer marketing. The best examples include clothing, hairdressing, magazines and toiletries and cosmetics. 
  • Income: Many companies target affluent consumers with luxury goods and convenience services. Good examples include Coutts bank; Moet & Chandon champagne and Elegant Resorts - an up-market travel company.
  • Social class: Consumers "perceived" social class influences their preferences for cars, clothes, home furnishings, leisure activities and other products & services.
  • Lifestyle: Marketers are increasingly interested in the effect of consumer "lifestyles" on demand. Unfortunately, there are many different lifestyle categorization systems, many of them designed by advertising and marketing agencies as a way of winning new marketing clients and campaigns.

 

3. Psychographic Segmentation

Under this method consumers are classified into market segments on the basis of their psychological make-up, i.e., personality, attitude and lifestyle. According to attitude towards life, people may be classified as traditionalists, achievers, etc.

Rogers has identified five groups of consumer personalities according to the way they adopt new products:

  • Innovators:  These are cosmopolitan people who are eager to try new ideas. They are highly venturesome and willing to assume the risk of an occasional bad experience with a new product.
  • Early Adopters: These are influential people with whom the average person checks out an innovation.
  • Early Majority: This group tends to deliberate before adopting a new product. Its members are important in legitimising an innovation but they are seldom leaders.
  • Late Majority:This group is cautious and adopts new ideas after an innovation has received public confidence.
  • Laggards: These are past-oriented people. They are suspicious of change and innovations. By the time they adopt a product, it may already have been replaced by a new one. Understanding of psychographic of consumers enables marketers to better select potential markets and match the product image with the type of consumer using it. For example, women making heavy use of bank credit cards are said to lead an active lifestyle and are concerned with their appearance. They tend to be liberated and are willing to try new things.

Psychographic classification may, however, be an oversimplification of consumer personalities and purchase behaviour. So many factors influence consumers that an early adopter of one product might well be a laggard for some other product and vice versa.

4. Behavioristic Segmentation

In this method consumers are classified into market segments not the basis of their knowledge, attitude and use of actual products or product attributes. Any of the following variables might be used for this purpose:

  • Opinions, interests and hobbies: this covers a huge area and includes consumers’ political opinions, views on the environment, sporting and recreational activities and arts and cultural issues. 
  • Degree of loyalty: customers who buy one brand either all or most of the time are valuable to firms. 
  • Occasions: this segments on the basis of when a product is purchased or consumed. 
  • Benefits sought: this requires marketers to identify and understand the main benefits consumers look for in a product.  Usage – some markets can be segmented into light, medium and heavy user groups.

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