Consumer Behavior Segmentation in detail

Consumer Behavior Segmentation

1. Market Segmentation
UnitI

3. MarketAggregationStrategy

Little or no subdivision is applied.
A firm will produce a single product and offer it to all
consumers under a single marketing program
Eg: Agricultural Sector
Alias: mass Marketing, Undifferentiated marketing,
Product marketing
Benefits:




Economical strategy working at lowest cost of production
Single standardized product therefore least inventory
hassles
Mass promotion through a single marketing program
(Usually promotes being better than the competition)


4. Marketers require:

Three Phases for In-depth Marketing
Services
ofProductand



Market Segmentation
Strategic Targeting
Product/ServicePositioning

5. MarketSegmentation

The process of partitioning the heterogeneous market
into segments
Where each segment is homogeneous within itself and
different from other segments
One or more segment is selected as a target market
And will be reached with a distinct marketing mix
Eg: Star network (Umbrella Name) provides multiple
channels


Star TV, Star World, Star News etc.
Keeping in mind the need and wants of the specific
consumer

6. Marketsegmentationisawayofaggregatingprospectivebuyers
intogroupsorsegments,basedondemographics,geography,
behavior,orpsychographicfactors,inordertobetterunderstand
andmarkettothem
UnderstandingMarketSegmentation
Companiescangenerallyusethreecriteriatoidentifydifferent
marketsegments:
•Homogeneity,orcommonneedswithinasegment
•Distinction,orbeinguniquefromothergroups
•Reaction,orasimilarresponsetothemarket
Anathleticfootwearcompany,forexample,mighthavemarket
segmentsforbasketballplayersandlong-distancerunners.As
distinctgroups,basketballplayersandlong-distancerunners
respondtoverydifferentadvertisements.Understandingthese
differentmarketsegmentsenablestheathleticfootwearcompany
tomarketitsbrandingappropriately.

7. 
Pros:
Supply in accordance to consumer demand
Consumer loyalty increases
Cons:


Costburdenontheorganizationincreases
Chances of
coverage
‘Cannibalization’duetooverlappingofmarket

8. Criteriaforeffective
Segmentation

Identifiable
Accessible
Substantial
Responsive
andMeasurable

9. 
GJSM
graduate,postgraduate
SEGMENTATIONBASE SELECTEDSEGMENTATIONVARIABLES
GeographicSegmentation
Region
NorthSouthEastWest
CitySize
Majormetropolitanareas,smallcities,towns
Densityofarea
Urban,suburban,rural
Climate
Temperate,hot,humid,rainy
Demographic Segmentation
Age Under12,12-17,18-34,35-49,50-64,65-74,75-99,100+
Gender Male,female
Maritalstatus Single,married,divorced,livingtogether,widowed
Income
Elite,LowIncome, HighIncome, MiddleIncome
Education Somehighschool,highschoolgraduate,somecollege,college
Occupation
Professional, blue collar, white collar, military, agriculture.

10. 
GJSM
SEGMENTATIONBASE SELECTEDSEGMENTATIONVARIABLES
PsychologicalSegmentation
Needs-motivation Shelter,safety,security,affection, senseofself-worth
Personality
Extroverts,noveltyseeker,aggressives,innovators
Perception
Low-risk,moderate-risk,high-risk
Learning-involvement Low-involvement,high-involvement
Attitudes Positiveattitude,negativeattitude
PsychographicSegmentation
(Lifestyle) Segmentation attitudes,
interests, opinions
Economy-minded, couch potatoes, outdoors enthusiasts, status
seekers
Socio-culturalSegmentation
Cultures American,Italian, Chinese,Mexican, French, Pakistani
Religion Catholic,Protestant,Jewish,Moslem, other
Subcultures(Race/ethnic) African American,Caucasian,Asian,Hispanic
Socialclass Lower,middle,upper
Familylifecycle Bachelors, youngmarried, fullnesters,emptynesters
CB(MB901)

11. How to Determine Your Market Segment?
There'snosingleuniversallyacceptedwaytoperformmarketsegmentation.
Todeterminemarketsegments,it'scommonforcompaniestoask
themselvesthefollowingquestionsalongtheirmarketsegmentationjourney.
PhaseI:SettingExpectations/Objectives
•Whatisthepurposeorgoalofperformingmarketsegmentation?
•Whatdoesthecompanyhopetofindoutbyperformingmarketing
segmentation?
•Doesthecompanyhaveanyexpectationsonwhatmarketsegmentsmay
exist?
Phase2:IdentifyCustomerSegments
•Whatsegmentsarethecompany'scompetitorssellingto?
•Whatpubliclyavailableinformation(i.e.CensusBureaudata)isrelevant
andavailabletoourmarket?
•Whatdatadowewanttocollect,andhowcanwecollectit?
•Howshouldwesegmentcustomers?

12. Phase3:EvaluatePotentialSegments
•Whatrisksaretherethatourdataisnotrepresentativeofthetruemarket
segments?
•Whyshouldwechoosetocatertoonetypeofcustomeroveranother?
•Whatisthelong-termrepercussionofchoosingonemarketsegmentover
another?
•Whatisthecompany'sidealcustomerprofile,andwhichsegmentsbest
overlapwiththis"perfectcustomer"?
Phase4:DevelopSegmentStrategy
•Howcanthecompanytestitsassumptionsonasampletestmarket?
•Whatdefinesasuccessfulmarketingsegmentstrategy?
•Howcanthecompanymeasurewhetherthestrategyisworking?
Phase5:LaunchandMonitor
•Whoarethekeystakeholdersthatcanprovidefeedbackafterthemarket
segmentationstrategyhasbeenunveiled?
•Whatbarrierstoexecutionexist,andhowcantheybeovercome?
•Howshouldthelaunchofthemarketingcampaignbecommunicated
internally?

13. Benefits of Market Segmentation:
Marketingsegmentationtakeseffortandresourcestoimplement.However,
successfulmarketingsegmentationcampaignscanincreasethelong-term
profitabilityandhealthofacompany.Severalbenefitsofmarketsegmentation
include:
•Increasedresourceefficiency:Marketingsegmentationallowsmanagementto
focusoncertaindemographicsorcustomers.Insteadoftryingtopromote
productstotheentiremarket,marketingsegmentationallowsafocused,precise
approachthatoftencostslesscomparedtoabroadreachapproach.
•Strongerbrandimage:Marketsegmentationforcesmanagementtoconsider
howitwantstobeperceivedbyaspecificgroupofpeople.Oncethemarket
segmentisidentified,managementmustthenconsiderwhatmessagetocraft.
Becausethismessageisdirectedatatargetaudience,thecompany'sbranding
andmessagingaremorelikelytobeveryintentional.Thismayalsohavean
indirecteffectofcausingbettercustomerexperienceswiththecompany.

14. •Greater potential for brand loyalty: Marketing segmentation increases the
opportunity for consumers to build long-term relationships with a company. More
direct, personal marketing approaches may resonate with customers and foster a
sense of inclusion, community, and a sense of belonging. In addition, market
segmentation increases the probability that the company lands the right client,
who fits its product line and demographic.
•Stronger market differentiation: Market segmentation gives companies the
opportunity to pinpoint the exact message they want to convey to the market and
competitors. This can also help createproduct differentiationby communicating
specifically how a company is different from its competitors. Instead of a broad
approach to marketing, management crafts a specific image that is more likely to
be memorable and specific.
•Better targeted digital advertising: Marketing segmentation enables a
company to perform better targeted advertising strategies. This includes
marketing plans that direct effort toward specific ages, locations, or habits via
social media.

15. Limitations of Market Segmentation
Marketsegmentationalsocomeswithsomepotentialdownsides.
Herearesomedisadvantagestoconsiderwhenimplementingmarket
segmentationstrategies.
•Higherupfrontmarketingexpenses:Marketingsegmentationhas
thelong-termgoalofbeingefficient.However,tocapturethis
efficiency,companiesmustoftenspendresourcesupfronttogainthe
insight,data,andresearchintotheircustomerbaseandthebroad
markets.
•Increasedproductlinecomplexity:Marketingsegmentationtakes
alargemarketandattemptstobreakitintomorespecific,
manageablepieces.Thishasthedownsideriskofcreatinganoverly
complex,fractionalizedproductlinethatfocusestoodeeplyon
cateringtospecificmarketsegments.Insteadofacompanyhavinga
cohesiveproductline,acompany'smarketingmixmaybecometoo
confusingandinconsistentlycommunicateitsoverallbrand.

16. Greaterriskofmisassumptions:Marketsegmentationisrootedin
theassumptionthatsimilardemographicswillsharecommonneeds.
Thismaynotalwaysbethecase.Bygroupingapopulationtogether
withthebeliefthattheysharecommontraits,acompanymayrisk
misidentifyingtheneeds,values,ormotivationsofindividualswithin
agivenpopulation.
Higherrelianceonreliabledata:Marketsegmentationisonlyas
strongastheunderlyingdatathatsupporttheclaimsthataremade.
Thismeansbeingmindfulofwhatsourcesareusedtopullindata.
Thisalsomeansbeingconsciousofchangingtrendsandwhen
marketsegmentsmayhaveshiftedfrompriorstudies.

17. •KeyTakeaways:
•Marketsegmentationseekstoidentifytargetedgroupsof
consumerstotailorproductsandbrandinginawaythat
isattractivetothegroup.
•Marketscanbesegmentedinseveralwayssuchas
geographically,demographically,orbehaviorally.
•Marketsegmentationhelpscompaniesminimizeriskby
figuringoutwhichproductsarethemostlikelytoearnashare
ofatargetmarketandthebestwaystomarketanddeliver
thoseproductstothemarket.
•Withriskminimizedandclarityaboutthemarketingand
deliveryofaproductheightened,acompanycanthenfocus
itsresourcesoneffortslikelytobethemostprofitable.
•Marketsegmentationcanalsoincreaseacompany's
demographicreachandmayhelpthecompanydiscover
productsorservicesithadn'tpreviouslyconsidered.