This document discusses market segmentation and different types of segmentation including demographic, behavioral, psychographic, and geographic. Market segmentation involves dividing the market into groups based on common characteristics so that marketing strategies can be tailored to each segment. The key types of segmentation are defined and their advantages and disadvantages are outlined. Demographic segmentation uses variables like age, gender, income while behavioral looks at purchasing behaviors. Psychographic considers personality traits and lifestyle. Geographic divides the market by location. Understanding segmentation allows targeting customized marketing messages at responsive audience segments.
2. TARGET
CUSTOMER
SEGMENT
MARKET SEGMENTATION IS THE PROCESS OF DIVIDING A MARKET
OF POTENTIAL CUSTOMERS INTO GROUPS, OR SEGMENTS, BASED
ON DIFFERENT CHARACTERISTICS. THE SEGMENTS CREATED ARE
COMPOSED OF CONSUMERS WHO WILL RESPOND SIMILARLY TO
MARKETING STRATEGIES AND WHO SHARE TRAITS SUCH AS
SIMILAR INTERESTS, NEEDS, OR LOCATIONS.
This Photo by Unknown Author is licensed under CC BY
4. DEMOGRAPHIC
SEGMENT:
DEMOGRAPHIC
COMES FROM THE
WORD
DEMOGRAPHY
WHICH MEANS
“STUDY OF
POPULATION”
• Demographics are commonly utilized to segment markets
because demographic information is publicly available in
databases around the world. You can obtain a great deal of
demographic information on the U.S. Census Bureau’s Web site
(http://www.census.gov). Other government Web sites you can
tap include FedStats (http://www.fedstats.gov) and The World
Factbook (http://www.cia.gov/cia/publications/factbook), which
contains statistics about countries around the world. In addition
to current statistics, the sites contain forecasts of demographic
trends, such as whether some segments of the population are
expected to grow or decline.
5. DEMOGRAPHIC SEGMENTATION
Advantages
• Demographic variables are typically easier
to collect and measure versus those of
other segmentation techniques.
• Targeting is typically more straightforward
when using demographics as a metric--
e.g., you can target a consumer group
such as college-educated millennials, or
men between the ages of 35 and 45.
• Consumer profiles are easy to understand
across the board, which lends itself to an
easier strategy development process in
terms of internal collaboration between
departments (e.g., sales, customer
service, management, etc.).
Disadvantages
• Similar demographics do not always imply similar
needs, values or motivations within a particular
demographic group.
• The effectiveness of your marketing message may
be hampered by a "one-size-fits-all" approach to
the consumers within a given demographic
segment.
• Skewed or problematic demographic data within a
given region can produce unreliable assumptions,
potentially reducing the accuracy of your marketing
message and methods.
6. BEHAVIORAL SEGMENTATION:
FORM OF MARKET SEGMENTATION
THAT GROUPS CONSUMERS BASED
ON SPECIFIC BEHAVIORAL PATTERNS
THEY DISPLAY WHEN MAKING
PURCHASE DECISIONS.
7. BEHAVIORAL SEGMENTATION
Advantages
•The opportunity exists for brands to
build targeted consumer segments
based on their responsiveness to
certain product categories, promotion
types or path-to-purchase preferences.
•Monitoring and understanding the
behavior of consumers online has
become much more precise and
granular due to advances in data
collection and tracking technologies
(e.g., cookies, beacons, pixels, etc.).
•Brands can now craft their marketing
messages based on consumer habits
and practices that have already been
proven
Disadvantages
• While consumer behavior can be
tracked, it is not always easy to
pinpoint the motivations behind
those behaviors, as they can vary
greatly from person to person.
• Behavioral segmentation is often
based on complex data constructs
that are not always easy to
understand.
.
8. PSYCHOGRAPHIC SEGMENTATION:
IS DIVIDING YOUR MARKET BASED UPON CONSUMER PERSONALITY
TRAITS, VALUES, ATTITUDES, INTERESTS, AND LIFESTYLES.
SEGMENTATION WILL ALLOW YOU TO BETTER DEVELOP AND MARKET
YOUR PRODUCTS BECAUSE THERE WILL BE A MORE PRECISE MATCH
BETWEEN THE PRODUCT AND EACH SEGMENT'S NEEDS AND WANTS.
This Photo by Unknown Author is licensed under CC BY-SA
9. PSYCHOGRAPHIC SEGMENTATION
Advantages
• This form of segmentation provides insight into
the motivations behind consumer behavior,
providing marketers with a more accurate
picture of what makes their potential customer
"tick."
• Brands can more easily identify the underlying
motives and needs of their target audience,
enabling them to customize more compelling
marketing messages.
• Psychographic segmentation provides a better
overall understanding of the consumer, better
overall understanding of the cons enabling
brands to execute effective emotive marketing
to highly responsive segments.
Disadvantages
• Psychographic data have traditionally been
more difficult to obtain than other "a priori"
data collection methods (e.g., demographics,
consumer behavior, etc.).
• It can be difficult to obtain data for consumers
in a given population, as participation in a
psychographic survey is usually necessary.
However, psychographic segments can be
statistically projected across a population with
predictive modeling, though the accuracy of
segment assignment will be significantly less
than with a prospective survey.
• Clear rules regarding the interpretation of data
must be put in place to ensure consistency of
approach among the individuals/departments
that engage in customer segmentation analysis.
10. GEOGRAPHIC SEGMENTATION:
IS WHEN A BUSINESS DIVIDES ITS MARKET ON THE BASIS OF GEOGRAPHY. YOU CAN
GEOGRAPHICALLY SEGMENT A MARKET BY AREA, SUCH AS CITIES, COUNTIES,
REGIONS, COUNTRIES, AND INTERNATIONAL REGIONS. YOU CAN ALSO BREAK A
MARKET DOWN INTO RURAL, SUBURBAN AND URBAN AREAS.
This Photo by Unknown Author is licensed under CC BY-SA-NC
11. GEOGRAPHIC SEGMENTATION
Advantages
• Geographic segmentation allows large companies to
target the varying wants and needs of customers in
different regions.
• Geographic segmentation is an effective methodology
used by organizations with large national or international
markets to better understand the location-based
attributes that comprise a specific target market.
• Consumers that live in different geographic regions
typically display varying needs, wants, and cultural
characteristics that can be specifically targeted for more
efficient and better marketing.
Disadvantages
• Assumes that consumers in a geographic area are similar,
which is generally unlikely across a broad area
• Usually needs to be used in conjunction with another
segmentation base
