Consumer Behavior

Chapter 2 : Segmenting Consumers

  Defining Market Segmentation

+Bases for Segmentation

  Criteria for Effective Targeting of Market Segments

+Market Segmentation Strategies

Chapter Summary

Market segmentation is the process of dividing the market on the basis of certain major factors - geography, demography, psychology, psychographics, socio-culture factor, use-related factor, use-situation factor, and benefits, or on multiple factors like psychographic-demographic segmentation, geodemographic segmentation, and SRI Consulting’s VALS.

Geographic segmentation involves segmenting consumers on the basis of region, climate, size of city, and density of population. Demographic segmentation involves segmenting consumers on the basis of demographic variables like age, sex, marital status, education, occupation, and income. Psychological segmentation involves segmenting the market on the basis of psychological variables like motivation, personality, attitude, perception, and learning. Psychographic segmentation divides consumers on the basis of difference in lifestyle, attitude, interest, and opinions.

Socio-cultural segmentation divides consumers on the basis of culture, sub-culture, cross-culture, religion, social class, and family life cycle. Use-related segmentation divides consumers on the basis of usage rate, awareness status, and brand loyalty. Use-situation segmentation involves segmenting consumers on the basis of time, objective, location, and person. Benefit segmentation segments consumers on the basis of the benefit they seek like prestige, confidence, health, nutrition etc.

Multi-segmentation involves combining segmentation various variables to effective segmentation. Some popular multi-segmentation tools are psychographic-demographic segmentation, geodemographic segmentation, and SRI Consulting’s Values and Lifestyle System (VALS). Segmentation yields positive results only if the right segment is chosen. While choosing a target segment care should be taken that the segment is measurable (quantifiable in terms of market size), substantial (commercially viable), accessible (easy to reach and address to), and differentiable (different in some way from the other segments).

After selecting the relevant segment(s), the marketer has to formulate a marketing mix. The marketers may choose to cater to a single segment or multiple segments, with single or multiple products – single product-single segment strategy (concentration strategy); single product-multiple segments (product specialization strategy); single segment-multiple products (market specialization strategy); and multiple products-multiple segments (selective segmentation strategy).

Big marketers, at times, may also employ a full market coverage strategy, which may further be differentiated (different marketing mix for different products) or undifferentiated (single marketing mix for all products). Sometimes marketers adopt too many micro segments, which later become redundant. In such a case, all segments are clubbed together with a single marketing mix (counter segmentation).

Next Chapter>>