Market Segmentation

Bases for Segmenting Consumer Markets

Geographic

Demographic Region, City or Metro Size, Density, Climate

Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ...

Psychographic Lifestyle or Personality Behavioral Occasions, Benefits, Uses, or Attitudes

Market Segmentation - Principles

Segmentation Variables Geographic Demographic Psychographic Behavioral Other (anything!) No single best way to segment a market. Often best to combine variables and identify smaller, better-defined target groups.

Step 1. Market Segmentation Bases for Segmenting Business Market

Personal Characteristics

Demographics

Situational STEP 1. Factors

Bases for Segmenting Business Operating Characteristics Markets MARKET SEGMENTATION

BASES FOR SEGMENTING BUSINESS MARKETS Purchasing

Approaches

Effective Segmentation
Size, purchasing power, profiles of segments can be measured. Segments must be large or profitable enough to serve. Segments can be effectively reached and served.

Measurable Substantial Accessible

EFFECTIVE SEGMENTATION
Actionable
Must be able to attract and serve the segments.

Descriptive Bases

Age
Gender Income Occupation Education

Family Size or Family Life Cycle

Religion or Nationality

Demographic Segmentation
Use Differences in: Age, gender, family size, family life cycle, income, occupation, education, race, and religion

Most frequently used segmentation variable Ease of measurement and high availability. Usually the worst variable to use.

Geographic Bases

Region
Density

Climate
Population

GEOGRAPHIC BASES

Geographic Segmentation
Divide markets into different geographic units. Examples: World Region or Country: North America, Western Europe, European Union, Pacific Rim, Mexico, etc. Country Region: Pacific, Mountain, East Coast, etc. City or Metro Size: New York, San Francisco Population Density: rural, suburban, urban Climate: northern, southern, tropical, semitropical

Behavioral Bases
User Status & Brand Loyalty Personality/Lifestyle Social Class

Occasion
Readiness to Buy

Benefits Sought
Usage Rate

Behavioral Segmentation
Occasion
Special promotions & labels for holidays. Special products for special occasions.

Loyalty Status
Nonusers, ex-users, potential users, firsttime users, regular users.

Benefits Sought
Different segments desire different benefits from the same products.

Usage Rate
Light, medium, heavy.

Psychographic Segmentation

Psychographic segmentation divides a market into different groups based on social class, lifestyle, or personality characteristics.
People in the same demographic classification often have very different lifestyles and personalities.

Heavy and Light Users of Common Consumer Products

PRODUCT (% USERS)
Soups and detergents (94%) Toilet tissue (95%) Shampoo (94%) Paper towels (90%) Cake mix (74%)

HEAVY HALF 75% 71% 79%

LIGHT HALF 25% 29% 21% 25% 17% 17% 13%

Cola (67%)
Beer (41%) Dog food (30%)

75% 83% 83%

87% 81% 95%

Bourbon (20%)

19% 5%

Loyalty Status Segmentation

Hard-core Split loyals

Shifting loyals
Switchers

User & Loyalty Status Segmentation

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