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Varieties of Market Segmentation

Paper Type: Free Essay Subject: Management
Wordcount: 1818 words Published: 2nd Oct 2017

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Market segmentation is the process of categorizing the market into several groups on the basis of various factors such as demographic, geographic, psychological, and behavioral factors. This is to ensure that the marketers can understand their target audience better so as to make the marketing more effective and get more satisfied customers. Thus, the marketers can gain a great advantage over the competitors. There are different ways by which market segments can be categorized. It can be done by categorizing the preferences of the consumer. Based on this, market can be categorized as homogeneous preferences, diffused preferences and clustered preferences. In homogeneous preferences the customers roughly have the same preferences whereas it varies in case of diffused preferences. When a group of consumers have shared preferences it leads to the formation of natural market segment which refers to clustered preference.

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While marketing a product three areas of marketing must be taken into consideration, i.e, mass marketing, product differentiated marketing and target marketing. Mass marketing takes into account mass producing, mass distributes and mass promotes on product to all buyers. It is important to realize the great variety in individual customers and therefore the marketers use this type of segmentation to customize their marketing programmes for each customer. In product differentiated marketing more than one product with different features, style, size, and quality is introduced. In target marketing, on the basis of the market segments the products are developed and customized.

Market segments can be differentiated in various ways. Some of them are demographics, geographics, psychographics and behavioural segmentation.

Demographic segmentation

Demographic factors are age, gender, income, occupation, education, religion, generation, nationality, family size, family cycle, social class etc. Based on these demographic values, the customers are divided into various segments. This type of segmentation is suitable because the variables are easy to measure and as they provide description of the target customers therefore media buyers and others can target a desired target market.

Some of the important variables while segmenting markets are:

  • Age and Life cycle segmentation

As the desire and need of customer change with their age therefore age and life cycle is a good factor in order to determine marketing approach. One of the examples is of a 70 year old person using landlines instead of mobile phones due to lack of technological knowledge. Therefore marketers need to take this into consideration and guard against stereotypes.

This can also be associated with buying pattern and behavioural characterstic. For example, as married people have various economical obligation therefore they tend to spend less on luxury items whereas on the contrary, single people tend to purchase new fashionable items as they don’t have such economic obligations.

  • Gender Segmentation

As the needs and wants of men and women are different therefore gender segmentation is being applied from a long time in terms of clothing, hairstyle, magazines, cosmetics. But the marketers must not define a product as being masculine or feminine as metro sexuality has become a common gender-factor.

  • Income Segmentation

This type of segmentation can be seen in automobiles, financial services, travel, clothing, and cosmetics. Usually the high income customers are the target but it should be considered by the companies that just the income cannot be suitable criteria to determine the customer as they might have different preferences and priorities while selecting a product. Even the lower income groups are targeted as the competitive pressure reduces and the consumer loyalty is gained.

  • Generation Segmentation

Various significant events, many a times characterize a particular period. These influential factors can be music, politics, movies etc. Therefore the marketers must make use of the images and icons of a particular generation in order to market their product.

  • Social class Segmentation

Most of the companies design their product for a specific social class. It divides the customers on the basis of their preferences towards cars, clothing, leisure activities, home furnishing, retailers, reading habits etc.

Demographic segmentation thus assumes that people with different backgrounds and other differences are likely to share same values and behaviour.

Geographic Segmentation

In this method of segmentation, customers can be categorized on the basis of countries, nation, state, region, city, and neighborhood. But a company must consider the fact that the data might vary due to population shift.

Various sales and purchases are based on the geographical variables as the purchasing behaviour of the customers are influenced on where they live or work.

Sometimes there are also differences in the location where the product is marketted due to cultural factors, tradition, politics. These differences can be significant in one segment whereas in other segments there might just be minor differences.

Globalization plays a major role in linking socio economic and demographic characteristics. This type of segmentation is referred to as geodemographics. It therefore combines the target customers with where they live. Instead of comparing the consumers by their occupation, the consumers are compared on the basis of where they live, hence the companies are more capable of predicting consumer behaviour.

Psychographic Segmentation

There are two types of customers, personality profiles and lifestyle profiles. The psychological variables provide the marketer opportunity to get additional information about traditional, geographical, demographic bases like sex, age, income. Psychological profiles are often used as a supplement to geographics and demographics. Therefore on the basis of their attitude, values, lifestyles, interests and opinions people are divided in psychographic segmentaton.

Behavioural Segmentation

There are various behavioural variables such as occasions, benefits, status, usage rates, loyalty, attitude, buyer readiness (which will be discussed in detail) which determine behavioural segmentation .These variables are considered the best starting points in constructing market segments which are mainly based on the customers attitude towards the use and response to a product.

  • Occasions

Customers are divided into segments according to the time on which they get the idea to buy a product. The time can be a day , a week, a month or an year. An example for this situation is the variation in market strategy for Christmas and Valentines day.

  • Benefits

As different kind of people look for different benefits in the same product, this segmentation divides the customers based on this. People tend to look for the benefits provided by different brands and accordingly they make their choice. Here casual factors play a major role rather than descriptive factor like demographics.

  • User status

This type segmentation is done on the basis of the category of users , i.e potential users, non users, ex-users, first time users, regular users etc. The marketing approach varies according to the type of users.

  • Usage rate

Based on the usage of the product, the customers are divided into various segments like non users, heavy, medium, light product users. The basic strategy followed by the company is to target one heavy user instead of several light product users because the heavy users account for a high percentage of total buying although they constitute a small percentage of the market. But the other users must not be neglected as even they may provide better future prospects. Usage rate further divides the customer according to time which means that the product to be sold may vary according to time.

  • Buyer readiness stage

It depends on the factors such as people’s awareness and interest in the product. A person might be aware of the product and he also may not be. The difference lies in whether they are just informed about the product or interested in buying the product or they desire to buy the product or just intend to buy the product. In all the cases, a customer must be lead along so that he finally gets convinced to buy the product. For example, a person belonging to a different place might not be aware of the products particularly sold at one place hence the marketing strategy should be different at that place and the product should be promoted more.

  • Loyalty status

Based on the loyalty of the customers, they can be categorized as hard core loyals, split loyals, shifting loyals and switchers. Hard core loyals tend to stick to a particular brand for a long period of time without even considering other brands. Split loyals have preference towards two to three brands and they keep switching in these. Shifting loyals stay with a particular brand for some time and then change it. Switchers do not have any specific choice and they keep changing the brands from time to time.

  • Attitude

People can have an enthusiastic, indifferent, positive, negative, or hostile approach towards a product. Based on these factors people can be divided into various segments and hence the company can get a good idea of the market and the strtegy to be followed.

To improve the targetting strategies and get a clear picture of the market, it is important for the marketers to combine different behavioural variables.

A marketer must reach all buyers in all segments by defining its target audience. By taking into account various concepts such as demographic segmentation, geographic segmentation, the psychographic segmentation and the behavioural segmentation, a company must decide which is the most appropriate concept while designing the market strategy. For example , demographic and behavioural segmentation are the most appropriate one’s while designing market strategies of a telephone as the ages of the customers is an important factor. Apart from age, attitude is also an important factor.

Once the target customers have been defined, the next step is to evaluate the market segments and decide in which segments the marketing strategy should be directed. Market targeting is the second stage of the segmentation process.


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