Market segmentation
A company can not serve all coustomers in a brand market. Customers are numourus and diverse in their buying requirements “Marketer does not only create segments but its task is to identify the segments and decide which one to target”.
For Example: Passenger cars in INDIA
1. Budget Cars: price below 2.2 lakhs --Nano, Maruthi 800
2. Compact cars: price 2.2-4 lakhs – Maruthi ZEN, Santro, Indica
3. Family cars: price 4-5 lakhs – Maruthi Esteem
4. Premium cars: price 5-6 lakhs --Ford ICON, Honda CITY
5. Super luxaury cars: BENZ, AUDI, BMW
The major segmentation variables – geographic, demographic, psychographic, and behavioral segmentation.
GEOGRAPHIC SEGMENTATION
Geographic segmentation calls for dividing the market into different geographical units such as nation, states, regions, countries, cities, or neighborhoods . The company can operate in one or a few geographic areas, or operate in all but pay attention to local variations . For example Hilton Hotels customizes rooms and lobbies according to the location of its hotels.
DEMOGRAPHIC SEGMENTATION
In demographic segmentation , the market is divided into groups on the basis of variables such as age , family life cycle , gender , income , occupation , education , religion , race , generation , nationality , and social class. Demographic variables are the most popular bases for distinguishing customer groups. One reason is that consumer wants, preferences, and usage rates are often associated with demographic variables. Another is that demographic variables are easier to measure.
Age and Life-Cycle Stage
Consumer wants and abilities change with age. Age and life cycle can be tricky variables. For example, the Ford Motor Company designed its Mustang automobile to appeal to young people who wanted an inexpensive sports car . But Ford found that many mustangs were purchased by older buyers. It then realized that its target market was not the chronologically young but the psychologically young.
Life Stage
Person in the same part of the life cycle may differ in their life stage. Life stage defines a person’s major concern, such as going through a divorce, going into a second marriage, taking care of older parents, deciding to cohabit with another person, deciding to buy a new home, and so on.
Gender
Men and women tend to have different attitudinal and behavioral orientations, based partly on genetic makeup and partly on socialization practices.
Gender differentiation has long been applied in clothing, hairstyling, cosmetics and magazines. The automobiles industry is beginning to recognize gender segmentation, since there are now more women car owners, some manufacturers are designing features to appeal to women, although they stop short of advertising the cars as women’s cars.
Income
Income segmentation is long- standing practice in such products and services categories as automobiles, boats, clothing, cosmetics, and travel. However, income does not always predict the best customers for a given product.
Generation
Many researchers are now turning to generation segmentation. Each generation is profoundly influenced by the times in which it grows up- the music, movies, politics, and defining events of that period. Demographers call these groups “cohorts”.
Social Class
Social class has a strong influence on preference in cars, clothing, home, furnishings, leisure activities, reading habits, and retailers. Many companies design products and services for specific social classes.
PSYCHOGRAPHIC SEGMENTATION
In psychographic segmentation, buyers are divided into different groups on the basis of lifestyle or personality or values. People within the same demographic group can exhibit very different psychographic profiles.
Lifestyle
People exhibit many more lifestyles than are suggested by the seven social classes. People differ in attitudes, interest, activities, and these affect the goods and services they consume. Companies making cosmetics and furniture are always seeking opportunities in lifestyles segmentation, but lifestyle segmentation does not always work.
Personality
Markers have used personality variables to segment markets. They endow their products with a “brand personality” that corresponds to a target consumer personality. The company utilizes product features, services, and image making to transmit the product’s personality.
Values
Some markers segment by core values. Core values go much deeper than behavior or attitude, and determine, at a basic level, people’s choices and desires over the long term.
BEHAVIORAL SEGMENTATION
In behavioral segmentation, buyers are divided into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. Many marketers believe that behavioral variables-occasions, benefits, user status, usage rate, loyalty status, buyer-readiness stage, and attitude—are the best starting points for constructing market segments.
Occasions
Buyers can be distinguished according to the occasions when they develop a need, purchase a product, or use a product. Occasions segmentation can help firms expand product usage. For example in Pakistan tea is usually consumed at breakfast. A company can consider occasions of critical life events or transitions-marriage, childbirth, illness, relocation, career change—as giving rise to new needs.
Benefits
Buyers can be classified according to the benefits they seek, people vary considerably in the benefits they seek from the same product.
1. Road Warriors: premium products and quality service. (16%)
2. Generation F: fast fuel, fast service, and fast food. (27%)
3. True Blues: branded products and reliable service. (16%)
4. Home bodies: convenience. (21%)
5. Price Shoppers: Low price. (20%)
User Status
Markets can be segmented into nonuser, ex-users, potential users, first time users, and regular users of a product. Market-share leaders tend to focus on attracting potential users because they have the most to gain. Smaller firms focus on trying to attract current users away from the market leader.
Usage Rate
Markets can be segmented into light, medium, and heavy product users. Heavy users are often a small percentage of the market but account for high percentage of total consumption.
Loyalty Status
Consumers have varying degrees of loyalty to specific brands, stores, and companies. Buyers can be divided into four groups according to brand loyalty status:
1. Hard-core loyals: Consumers who are buy one brand all the time.
2. Split loyals: Consumers who are loyal to two or three brands.
3. Shifting loyals: Consumers who shift from one brand to another.
4. Switchers: Consumers who show no loyalty to any brand.
Buyer-readiness stage
A market consists of people in different stages of readiness to buy a product. Some are unaware of the product, some are aware, some are informed, some are interested, some desire the product, and some intend to buy. The relative numbers make a big difference in designing the marketing program.
Attitude
Five attitude groups can be found in a market: enthusiastic, positive, indifferent, negative, and hostile. Door-to-door workers in political campaign use the voter’s attitude to determine how much time to spend with that voter. They thank to enthusiastic voters and remind them to vote; they reinforce those who are positively disposed; they try to win the votes of indifferent voters; they spend no time trying to change the attitudes of negative and hostile voters.
Segmentation Variables | Data |
Geographic | |
World region | Asia |
Country | Pakistan |
Cities | All major cities of Pakistan |
Density | Urban |
Climate | Hot and Dry |
Demographic | |
Age | All ages |
Gender | Male, Female |
Family size | 1-2, 3-4, 5+ |
Family life cycle | Young, Single; Young, Married, no children; Young, Married with children; Older, Married with children; Older, Married with no children under 18; Older, Single; Other |
Income | Rs.30,000+ |
Occupation | From middle class to upper class |
Education | Schools, Colleges, Universities |
Religion | Major religion of Islam, Christianity and Hinduism and small percentage of others |
Race | Asian |
Nationality | Pakistani |
Psychographic | |
Social class | Working class, Middle class, Upper class. |
Lifestyle | Actualizes, Fulfilled, Believers, Achievers, Strivers, Experience’s makers and Strugglers |
Behavioral | |
Occasions | Parties, Birthdays, Sports and Regular Occasions |
Benefits | Quality, Taste, Economy, Health |
User status | First time user |
Attitude towards product | Positive |
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