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Explain the four major segmentation variables for consumer markets

The four bases for segmenting consumer market are as follows: Demographic segmentation divides the markets into groups based on variables such as age, gender, family size, income, occupation, education, religion, race and nationality.

Top 4 Bases for Segmenting Consumer Market

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 the demographic variables.

Moreover, demographic factors are easier to measure than most other type of variables. It is one of the most common demographic variables used to segment markets.

Leave the Comfort Zone

Markets that are commonly segmented by age includes clothing, toys, music, automobiles, soaps, shampoos and foods. Gender segmentation is used in clothing, cosmetics and magazines.

Markets are also segmented on the basis of income. Income includes housing, furniture, automobile, clothing, alcoholic, beverages, food, sporting goods, luxury goods, financial services and travel.

Choice of Consumer Segmentation Bases

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 family life cycle. Housing, home appliances, furniture, food and automobile are few of the numerous product markets segmented by the family cycle stages. Social class can be divided into upper class, middle class and lower class.

Market segmentation: basic strategies to identify segments and select a target market

Many companies deal in clothing, home furnishing, leisure activities, design products and services for specific social classes. Geographic segmentation refers to dividing a market into different geographical units such as nations, states, regions, cities, or neighbourhoods.

  • Geographic variables such as climate, terrain, natural resources, and population density also influence consumer product needs;
  • In behavioural segmentation, buyers are divided into groups on the basis of their knowledge of, attitude towards, use of, or response to a product;
  • Many companies deal in clothing, home furnishing, leisure activities, design products and services for specific social classes;
  • It does not serve any purpose to make everyone aware of the product if only a small group of people in the entire population is likely to use the product.

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 wants to differ from one region to another.

Psychographic segmentation pertains to lifestyle and personality traits. In the case of certain products, buying behaviour predominantly depends on lifestyle and personality characteristics.

Here markets are segmented according to competitiveness, introvert, extrovert, ambitious, aggressiveness, etc. It is the manner in which 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 on the basis of activities, interests, beliefs and opinions.

In behavioural segmentation, buyers are divided into groups on the basis of their knowledge of, attitude towards, use of, or response to a product. Behavioural segmentation includes segmentation on the basis of occasions, user status, usage rate loyalty status, buyer-readiness stage and attitude. Buyers can be distinguished according to the occasions when they purchase a product, use a product, or develop a need to use a product.

  • Markets are also segmented on the basis of income;
  • Marketing campaigns exist in large part to move the target audience through the buyer readiness stages;
  • Apart from playing a major role in developing new marketing efforts to attract new customers, market segmentation can also help a business to discover ways to reinforce existing customer loyalty;
  • By using any of these segmentation bases, either individually or in combination, an organization can construct market segments for evaluation to help them select appropriate target markets;
  • For example, a K-Means Cluster Analysis attempts to identify relatively similar groups of interviewees based on selected characteristics using an algorithm capable of handling large amounts of people;
  • Market segmentation helps marketers by using the resources available to them in a more efficient manner.

It helps the firm expand the product usage. Sometimes the markets are segmented on the basis of user status, that is, on the basis of non-user, ex-user, potential user, first-time user and regular user of the product. Markets can be distinguished on the basis of usage rate, that is, on the basis of 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. The six psychological stages through which a person passes when deciding to purchase a product.

  • By using any of these segmentation bases, either individually or in combination, an organization can construct market segments for evaluation to help them select appropriate target markets;
  • Description of each main consumer segmentation base Geographic Segmenting by country, region, city or other geographic basis;
  • Region, climate, population density, and population growth rate Geographic Location, customer concentration, regional industrial growth rate, and international macroeconomic factors Demographic Age, gender, ethnicity, nationality, education, occupation, religion, income, and family status Customer type Size of the organization, its industry and position in the value chain Psychographic Values, attitudes, opinions, interests, activities, and lifestyles Buyer behavior Loyalty to suppliers, usage patterns, and order size Behavioral Usage rate and patterns, price sensitivity, brand loyalty, and pursuit of benefits The identified segments are profiled and the attractiveness of each one must be evaluated before choosing a target market;
  • In behavioural segmentation, buyers are divided into groups on the basis of their knowledge of, attitude towards, use of, or response to a product;
  • Market segmentation helps marketers by using the resources available to them in a more efficient manner.

Marketing campaigns exist in large part to move the target audience through the buyer readiness stages.