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Segmentation Dimensions

Geographic segmentation

Geographic segmentation is an important process - particularly for national, multi-national and global businesses or brands. Many companies use regional sales and marketing programs and adjust their products, advertising and/or promotional activities to meet the varied needs inherent in the different regional segments.
Geographic segmentation is used to section markets into various geographical units:

1. Worldwide Geographic regions: i.e. The Americas; Asia Pacific; Europe & the Middle East; Africa

2. Countrywide Geographic regions: (i.e. In the US (Northeast, Southeast, Midwest, Southwest, West)

3. Specific Countries

4. Within a Country/State: City or Town size: e.g. population within ranges or above a certain level

5. Population density: e.g. urban, suburban, rural

Demographic segmentation

Demographic segmentation divides the market into groups based on variables such as age, education, family size, gender, income, nationality, occupation, race, and/or religion. Segmentation by demographic variables is generally the most often used basis for segmenting customer groups. This is for several reasons:

1. There is much more data available to companies using demographics for segmenting their markets, including considerable government information

2. Many individual consumer needs are affected by such demographic dimensions as Age, Income, Gender, etc.

3. This is the type of segmentation most often used in political and governmental analyses

The demographic segmentation variables used most often are summarized below:

Age

Consumer needs and wants often change with age although they may still wish to consumer the same types of product. So manufactures/marketers design, package and promote products differently to meet the wants of different age groups. One example is the variation in appeal made to children vs. adults by fast-food restaurants. The use of Happy Meals by McDonalds is one example of a marketing program aimed at their child market, as is the use of Ronald McDonald as a spokesperson. More recently, McDonalds focused on the adult portion of their market as they introduced their McCafe – line of coffee based products.
Considerable attention is paid to the variations of the age related cohorts, which are often discussed and covered by the press. The cohorts are relatively broad groups of people born in different periods, and who share historic experiences that gives them a different perspective from those who are older and/or younger. These include: the Depression cohort (born from 1912 to 1921); the Pre 'World War II cohort' (born from 1922 to 1927); the World War II cohort (born from 1928 to 1945); the Baby Boomer cohort #1 (born from 1946 to 1954); Generation Jones or Boomer cohort #2 (born from 1955 to 1964); Generation X aka Baby Busters, the 13th Generation, and the nomad generation, cohort (born from 1965 to 1980); Generation Y or Millennial Generation cohort (born from 1981 to 2001).
Life-stage (somewhat age related)
Many products and services are directed at the specific needs of individuals in a specific stage of life, from young children, tweens, teens young adults, marriage and partnering, parents, and aging/retirement, A consumer life-stage is a very important variable for many products and services such as fast food, life insurance, leisure activities, travel and tourism.

Gender

Segmentation by gender is widely used in consumer marketing. A few examples include toiletries, cosmetics, and clothing, however the variations in needs, thinking and decision making by men and women have made this an essential element in many other categories as well.

Income

Income is another popular basis for segmentation. Many companies target affluent consumers with luxury goods and convenience services; others focus on marketing products that appeal directly to consumers with relatively low incomes. High-end apparel manufacturers/designers, Watch brands, and High end liquor brands are clearly differentiated on this basis; as are low end products and highly successful stores such as Wal-Mart.
Psychographic segmentation
When a relatively complete assessment of a person or group's ‘psychographic make-up”, based on attributes relating to an individual’s personality, values, attitudes, interests, and/or lifestyles is constructed, this is called a psychographic profile. Psychographic profiles are often used in conducting a market segmentation, The value of using psychographics, generally in conjunction with another segmentation approach, is that it provides a mental picture of the individual you are marketing to that helps refine your marketing communications to reach them on an emotional level.
Specific attitude, life-style, values, or personality segmentation dimensions
Social class/values
Many Marketers believe that a consumers "perceived" social class influences their preferences for cars, clothes, home furnishings, leisure activities and other products & services. There is a clear link here with income-based segmentation.

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!

Personality

Occasionally used for market segmentation, personality dimensions, i.e. introversion, extroversion, etc. have been used to help understand how and why individuals select one brand over another.

Behavioral segmentation

Behavioral segmentation is based more on how a customer uses and/or interacts with a product/brand than on who they are as individuals. Among the most often behavioral segmentation methods are:

Usage Occasions

When a product is consumed or purchased, for example, cereals have traditionally been marketed as a breakfast-related product, however recent attempts have been made to expand their use beyond this limited use (i.e. Special K has positioned their product as a weight loss system if eaten for more than one meal a day). Expanding fast food restaurants into the breakfast space is another example of the use of occasion based segmentation that has produced significant improvements for a brand.  With Major soft drink brands having almost universal occasional usage, occasion based appeals are seen as an opportunity to expand their share of usage on the various occasions to gain share overall.

Usage

It is often highly effective to segment a market into light, medium and heavy user groups. One often discussed rule of thumb is that the top 20% of users, use/purchase/consume 80% of the product in most categories. Clearly looking at the attitudes and behavior of these essential customers will permit much more successful marketing programs.

Loyalty

Loyal customers - those who buy and use one brand exclusively or a majority of the time - are a brands most valuable customers. Many companies try to segment their markets to differentiate their customers to permit programs that will focus on and enhance the quality of their relationship with their most loyal customers.

Product Benefits

Benefit segmentation focuses on the specific benefits customers look for in a product. In the food category, there are individuals that want taste above all else (but many vary in how they perceive this benefit – some in terms of sweetness; some in terms of “mouth-feel”, etc. , others are concerned with “organic”, low calories, low fat, or other health related benefits; the actual number of specific benefits are varied and related to the specific product and consumer. However, this is a type of segmentation that has provided many manufacturers/marketers with the ability to identify and effectively market their products against their competition.

Problem Segmentation

Problem segmentation focuses on a specific problems that customers have relative to the product category and for which they seek solutions. The method identifies the problems that people have, classifies them in terms of frequency and bothersomeness (problems that are infrequently experienced and or not very bothersome are generally ignored) and then identifies groups of consumers that share an interest in their resolution.
 

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