The four bases for segmenting the consumer market are as follows:
Demographic Segmentation
Geographic Segmentation
Psychographic Segmentation
Behavioural Segmentation.
(1) Demographic Segmentation
Demographic segmentation divides the markets into groups based on variables such as age, gender, family size, income, occupation, education, religion, race and nationality. Demographic factors are the most popular bases for segmenting the consumer group. One reason is that consumer needs, wants, and usage rates often vary closely with demographic variables. Moreover, demographic factors are more accessible to measure than most other types of variables.
(a) Age
It is one of the most common demographic variables used to segment markets. Some companies offer different products or use different marketing approaches for different age groups. For example, McDonald’s targets children, teens, adults and seniors with different ads and media. Markets that are commonly segmented by age include clothing, toys, music, automobiles, soaps, shampoos and foods.
(b) Gender
Gender segmentation is used in clothing, cosmetics and magazines.
(c) Income
Markets are also segmented based on income. Income is used to divide the markets because it influences people’s product purchases. It affects a consumer’s buying power and style of living. Income includes housing, furniture, automobile, clothing, alcoholic, beverages, food, sporting goods, luxury goods, financial services and travel.
(d) Family cycle
Product needs vary according to age, number of persons in the household, marital status, and number and age of children. These variables can be combined into a single variable called the family life cycle. Housing, home appliances, furniture, food and automobile are a few of the numerous product markets segmented by the family cycle stages. Social class can be divided into the upper class, middle class and lower class. Many companies deal in clothing, home furnishing, leisure activities, and design products and services for specific social classes.
(2) Geographic Segmentation
Geographic segmentation refers to dividing a market into different geographical units such as nations, states, regions, cities, or neighbourhoods. For example, national newspapers are published and distributed to different cities in other languages to cater to the needs of the consumers.
Geographic variables such as climate, terrain, natural resources, and population density also influence consumer product needs. Companies may divide markets into regions because the differences in geographic variables can cause consumer needs and want to differ from one region to another.
(3) Psychographic Segmentation
Psychographic segmentation pertains to lifestyle and personality traits. In the case of certain products, buying behaviour predominantly depends on lifestyle and personality characteristics.
(a) Personality characteristics
It refers to a person’s individual character traits, attitudes and habits. Here markets are segmented according to competitiveness, introvert, extrovert, ambition, aggressiveness, etc. This type of segmentation is used when a product is similar to many competing products, and consumer needs for products are not affected by other segmentation variables.
(b) Lifestyle
It is how people live and spend their time and money. Lifestyle analysis provides marketers with a broad view of consumers because it segments the markets into groups based on activities, interests, beliefs and opinions. Companies making cosmetics, alcoholic beverages and furniture segment market according to lifestyle.
(4) Behavioural Segmentation
In behavioural segmentation, buyers are divided into groups based on their knowledge of, attitude towards, use of, or response to a product. Behavioural segmentation includes segmentation based on occasions, user status, usage rate loyalty status, buyer-readiness stage and attitude.
(a) Occasion
Buyers can be distinguished according to the occasions when they purchase a product, use a product, or develop a need to use a product. It helps the firm expand product usage. For example, Cadbury’s advertising to promote the product during the wedding season is an example of occasion segmentation.
(b) User status
Sometimes the markets are segmented based on user status, that is, based on non-user, ex-user, potential user, first-time user and regular user of the product. Large companies usually target potential users, whereas smaller firms focus on current users.
(c) Usage Rate
Markets can be distinguished based on usage rate, that is, based on light, medium and heavy users. Heavy users are often a small percentage of the market but account for a high percentage of the total consumption. Marketers usually prefer to attract a heavy user rather than several light users, and vary their promotional efforts accordingly.
(d) Loyalty Status
Buyers can be divided based on their loyalty status—hardcore loyal (consumer who buy one brand all the time), split loyal (consumers who are loyal to two or three brands), shifting loyal (consumers who shift from one brand to another), and switchers (consumers who show no loyalty to any brand).
(e) Buyer readiness stage
The six psychological stages through which a person passes when deciding to purchase a product. The six stages are awareness of the product, knowledge of what it does, interest in the product, preference over competing products, the conviction of its suitability, and purchase. Marketing campaigns exist in large part to move the target audience through the buyer readiness stages.
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