Segmenting Consumer Market

 There is no single way to segment a market. A marketer has to try different segmentation variables, singly and in combination, hoping to find an insightful way to view the market structure. In this article, we shall examine the major geographic, demographic, psychographic and behaviouristic variables used in segmenting consumer markets. In using these characteristics as bases for segmenting consumer markets, you should bear several points in mind:

(i)     Buying behaviour is hardly traceable to only one characteristic. Hence, useful segmentation is developed by including several characteristics. At the same time, you should be careful in adding too many variables, since this may result in the identified segments being smaller than necessary. The first characteristic to choose should be the one that provides the clearest and most distinctive division of the market. Others should then fol ow in the order of how well they discriminate among the segments.

(ii)      You need to be aware of the interrelationships among these characteristics, especial y among the demographic variables. For instance, age and income are often related. Income in turn, depends on the level of education and occupation. Hence, for a particular product or service, the segments resulting from divisions according to income, education, and occupation may be very similar. Whenever this occurs, it is better to use only that attribute for which the data are easiest to obtain.

GEOGRAPHIC SEGMENTATION

Geographic segmentation cal s for dividing the market into different geographical units such as countries, regions, states, local government areas, cities, towns or neighbourhoods. Note that this is one of the widely used bases for segmentation. It is premised on the assumption that consumers’ want and product usage often are related to one or more of these subcategories. In addition, geographic characteristics are also measurable and accessible.

Marketers consider a wide variety of elements when they use geographic seg­mentation. Population patterns, transportation, climate, growth patterns, and so forth. These elements are important because they influence and sometimes dictate the marketing mix for a given geographical segment.

DEMOGRAPHIC SEGMENTATION

This is the most common basis for segmenting consumer markets. Marketers use demographic segmentation when they market on the basis of information about the size, composition, and distribution of a population, including age, sex, race, religion, national origin, family size, marital status, occupation, social class, income and education. Information about demographic variables is generally available to marketers through government publications and other studies, thus making demographic segmentation a practical way of looking at the market. It is interesting to know that many products can be naturally and realistically targeted to segments defined by demographic variables.

However, you should note that people are moving targets whose demographics are constantly changing. It is therefore important to monitor these changes. There is usually the need to forecast the changes so that you can be ready with marketing mixes that fit the demographic trends of the present and the future. The family life cycle is the sequence of events in adult lives starting with the unmarried stage and then moving through such stages as marriage, children, divorce, and remarriage.

Frequently, the main factor accounting for differences in consumption patterns between two people of the same age and gender is that they are in different life­cycle stages.

There are nine distinct life cycle stages:

(i)      Bachelor stage: young, single people.

(ii)      Young married: couples with no children

(iii)      Full nest I: young married couples with children.

(iv)      Single parents: young or middle-aged people with dependent children

(v)         Divorced and alone: divorced without dependent children

(vi)      Middle-aged married: middle-aged married couples without children.

(vii)      Full nest II: middle-aged married couples with dependent children.

(viii)   Empty nest: Older married couples with no children living with them

(ix)     Older single: single people still working or retired.

You should realize that the family life-cycle stage is a major determinant of buyer behaviour, and thus can be a very useful basis for segmenting consumer markets. For instance, marketers can target specific needs that customarily arise in each stage of the family cycle, from wedding invitations to drapers to legal advice.

Income is another component of demographic segmentation. Ordinarily, people alone do not make a market- they must have money to spend. This is the reason marketers should analyse the spending patterns of people at different income levels. Actually, income segmentation has been a long-standing practice in such product and service categories as automobiles, clothing, cosmetics, and travel.

The market for certain consumer products is influenced by such factors as education, occupation, religion, and ethnic origin. For example, with an increasing number of people aiming higher levels of education, there may be changes in product preferences, as well as buyers with higher incomes and more discriminating tastes. 

Instead of income, occupation may turn out to be more meaningful for segmenting some markets. For instance, commercial bus drivers and auto mechanics may, on the average, earn as much as young marketing executives or secondary school teachers. However, the buying patterns of the first two are likely to be different from the second two because of attitudes and interests.

This figure demonstrates the traditional family cycle and the many possible stages in the family life cycle.

The modern family life cycle.

In Nigeria today, some states have started operating the Sharia legal system, which forbids the production, sale and consumption of alcoholic drinks. That legal system also imposes some other restrictions on the citizenry, which ultimately affect the conduct of business activities in such area where the Sharia code is operated.

PSYCHOLOGICAL SEGMENTATION

Marketers use psychological segmentation when they segment their markets according to personality and lifestyles thereby seeking to group people with similar lifestyles or interests. Usually, when demographics and psychographic factors are combined, richer descriptions of segments are produced.

An individual’s personality characteristics are usually described on the basis of traits that influence behaviour. Therefore, we ordinarily assume they should be a good basis for segmenting markets. For instance, compulsory people buy differently from cautious consumers, similarly, quiet introverts neither buy the same things nor in the same way as gregarious outgoing people (extroverts).

Fortunately, personality, characteristics have some problems that limit their usefulness in practical market segmentation.

In the first place, the presence and strength of these characteristics in the population are virtually impossible to measure. For example, how would you classify people on the basis of aggressiveness? The second problem is associated with the accessibility condition of segmentation./ there is no ad­vertising medium that provides unique access to a particular personality type. 

For example, access to newspapers, the radio, televisions, etc. reaches introverts as well as extroverts, aggressive people as well as timid people. Hence, one of the major goals of segmentation, i.e., avoidance of wasted marketing effort, is not likely to be achieved using personality characteristics. In spite of these limitations, many firms have been found to tailor their advertising messages to appeal to certain personality traits.

Life-styles relates to activities, interests, and opinions. General y, the lifestyle of a person reflects how he spends his time and what his beliefs are on various social, economic and political issues. A person’s, life-style, affect what product he buys and what brand he prefers. It is for this reasons their marketers attempt to segment their markets on the basis of life-style characteristics. Life-style segmentation also similar limitation faced by segmentation based on personality traits.

BEHAVIOURAL SEGMENTATION

In behavioural segmentation, buyers are divided into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. The belief here is that behavioural variables, such as occasions, benefits, user status, age rate, loyalty status, buyer readiness stage, and attitude, are the best starting points for constructing market segments. We shall briefly examine each of these variables.

(i)               Occasions: Buyers can be differentiated on the basis of the occasions they develop a need, purchase a product, or use a product. For example, air travel may be necessitated by occasion related to business, vacation, or family. In this way therefore, an airline can specialize in servicing people for whom one of these occasions dominates.

Occasion segmentation can be used to expand product usage. For example, if it is discovered that orange juice is usual y consumed at breakfast, an orange juice company can try to promote drinking orange juice on other occasions such as midday, lunch, and dinner.

(ii)             Benefits: Benefit segmentation divides the market according to the benefits consumers seek from a product or product category. Some researchers belief that benefit segmentation variables are more accurate than demographic or usage segmentation. Variable in determining consumer behaviour. Their argument is that the benefits that people seek are the real basis for their response to a product.

(ii)User status: Market can be segmented into non-users, ex-users, potential users, first-time users, and regular users of a product. By making use of these classifications, organization can conduct their activities more effectively and efficiently. 

For instance, blood banks should not rely only on regular donors to supply blood, instead, they must recruit new first-time donor and contact ex-donors. Each of these groups will definite requires a different marketing strategy

(iv)        Usage Rate: Markets can be segmented into light, medium, and heavy product users. Very often, heavy users are a small percentage of total consumption.

(v)          Loyal Status: consumers have varying degrees of loyalty to specific brands, stores, and other entities. Buyers can be divided into four groups according to loyalty status 

• Hard-core loyalist, i.e., consumers who buy one brand all the time 
• Split loyalist, i.e. consumers who are loyal to two or three brands 
• Shifting loyalist, i.e. consumers who shift from one brand to another.
• Switchers, i.e. consumers who show no loyalty to any brand. 

By analyzing the degrees of brand loyalty, a company can learn a lot about the market. For instance, by studying its hard-core loyalist, the company can identify its product’s strength. In addition, by studying its split loyalist, the company can pinpoint which brands are most competitive with its own. Furthermore, by looking at customers who are shifting away from its brands, the company can learn about its marketing weaknesses and attempt to correct them.

(vi)      Buyer. Readiness Stage:

A market generally consists of people in different stages of readiness to buy a product or service. Some of these people are unaware of the product, some are aware, some are informed, some are interested. Some desire the product, while some intend to buy.

The relative numbers for the various categories often make a big difference in designing the marketing programme.

(vii)         Attitude: An attitude is a manner of feeling or behaving. Five attitude group can be found in a market: – enthusiastic, positive, indifferent, negative, and hostile.