Process of Segmenting the Consumer Market
- 1. THE PROCESS OF SEGMENTING THE CONSUMER MARKET Rebecca Hermetz MRK-2100-100 17 February 2019 Market Segmentati on demograp hic geograph ic behaviori stic psychograp hic
- 2. INTRODUCTION 2 important steps in the market segmentation process: 1. Identifying groups of people or organizations with shared needs and characteristics 2. Combining the groups into larger market segments by their interest in product’s utility Utility: product’s ability to satisfy functional needs and symbolic wants Results in market segments large enough to target and reachable through a mix of marketing activities Target market: market segment that all marketing activities will be directed towards Advertisers try to reach these markets through media outlets that overlap with the target market Target audience: specific group of individuals the advertising message is directed to The group available to advertisers through the chosen media outlet
- 3. TYPES OF SEGMENTATION Behavioristic segmentation: method of segmenting consumers based on purchasing behavior Geographic segmentation: method of segmenting markets by geographic regions based on shared characteristics of people within a region Demographic segmentation: based on a population’s statistical characteristics Psychographic segmentation: method of defining consumer markets based on psychological variables
- 4. BEHAVIORISTIC SEGMENTATION Determined by variables such as: User status: reflects varying degrees of brand loyalty Sole users: most brand loyal; requires least amount of advertising Semisole users: typically use Brand A but may buy Brand B if it’s discounted Discount users: typically use Brand B but may buy Brand A if it’s discounted Aware nontriers: use competitive products in the category but dislikes Brand A Trial/rejectors: tried Brand A but didn’t like it; only a reformulation will bring them back Repertoire users: brand switchers and respond to persuasive advertising based on wants/desires; a primary target for brand advertising Usage rate: extent to which consumers use a product (light, medium, heavy) Easier to increase usage by heavy user vs. light user
- 5. BEHAVIORISTIC SEGMENTATION (CONT) Variables cont.: Purchase occasion: segmenting on the basis of when consumers buy and use a good/service Might be affected by frequency of need, a fad, or seasons Benefit segmentation: segmenting consumers based on benefits being sought Benefit: particular product attributes offered to customers (i.e. high quality, low price, status, etc.)
- 6. GEOGRAPHIC SEGMENTATION People in one region of the country or the world have specific needs, wants, and purchasing habits that are different from those in other regions Analysis of geographic data includes sales by: Regions Country size City size Specific locations Types of stores Marketers want to advertise in areas where sales potential is best
- 7. DEMOGRAPHIC SEGMENTATION Statistical characteristics can include: Gender and sexual identity Age Ethnicity Education Occupation Income Sexual orientation
- 8. GEODEMOGRAPHIC SEGMENTATION Combination of demographic and geographic segmentations Based on: People who live in the same neighborhood often demographically similar Neighborhoods can be categorized in terms of characteristics of populations Neighborhoods can be placed in the same category even though they are geographically separate
- 9. PSYCHOGRAPHIC SEGMENTATION Psychographics groups people by their values, attitudes, personality, lifestyle, etc. Appealing to emotions and cultural values can be persuasive to consumers Enables marketers to see people as individuals with emotions and inclinations Consumers can be classified according to what they feel and believe, how they live, and what products, services, media they use Values and Lifestyles typology (VALS) is best-known classification system Assigns consumers to one of eight groups based on: Primary motivation: can be motivated by ideals, achievement, or self-expression
- 10. AGGREGATING MARKET SEGMENTS Second step of market segmentation process Involves 2 substeps: 1. Selecting groups with mutual interest in product’s utility 2. Reorganizing and aggregating (combining) into larger market segments based on potential for sales and profit 1. Company needs to know primary demand trend: projection of future consumer demand for a category based on past demand and other influences
- 11. LIMITATIONS AND CHALLENGES Psychographics sometimes add little value for some products Oversimplifies consumer personalities and purchase behavior Classification systems are sometimes criticized for being too complicated Estimating profits the company might realize if it aims at the whole market vs. caters to specific segments
- 12. SOURCE Weigold, Michael F., and William F. Arens. Advertising. 3rd ed., McGraw-Hill Education, 2018.