Market Segmentation: Practical Applications

Geographic Segmentation

• The reason why we study geographic segmentation is because WHERE people live has a big effect on their consumption patterns.
• Additionally, WHERE people live in a city is also a reflection of their income level and we can make certain assumptions about their ABILITY TO SPEND.
• This helps people plan store locations and the location of other services.

• Demographic Segmentation

• Demographic Segmentation is the most common approach to Market Segmentation
• Variables are:
• age
• gender (male/female)
• income
• occupation
• education
• household (family - style) size

• Demographic Segmentation is the most common approach to Market Segmentation
• Variables are:
• gender (male/female)
• gender is an obvious way to divide the market into segments since so many products are gender-specific
• clothing
• medical products
• sports products/services
• entertainment

• Demographic Segmentation is the most common approach to Market Segmentation
• Variables are:
• age
• age is another obvious way to divide the market into segments since so many products are based upon “time of life”
• diapers for babies
• toys for children
• entertainment for “over 18”

• Demographic Segmentation is the most common approach to Market Segmentation
• Variables are:
• household (family - style) size
• Segmenting by the “stages in the family life cycle”
• There are different buying characteristics of people in each stage of the family

• household (family - style) size
• BUYING PATTERNS
• 0-5 young children
• 6-19 school children
• 20-34 young adults
• 35-49 younger middle-aged
• 50-64 older middle-aged
• 65+ seniors
• 80+ SUPER seniors

• income
• Segmenting markets on the basis of income and expenditure patterns. Income is possibly the most common basis for segmentation
• Upper High Class High Class Uper Middle Class Middle Class Lower Middle Class
• Toyota
• • Lexus for high end
• • Camry for the middle of the roaders
• • Corolla for low end
• HUL soaps - Dove for high end, Hamam

• Psychographic Segmentation

• “The use of psychological attributes, lifestyles and attitudes in determining the behavioral profiles of different customers”

• Psychographic Segmentation

• Psychographic profiles on a target market segment are obtained by doing a lot of questionnaires and surveys to ask people if they agree/disagree with certain statements made about particular activities, interests or opinions
• AIO - activities, interests, and opinions

• Behavioural Segmentation

• On the basis of occasions, product usage, benefits sought, brand loyalty
• Occasions
• • Y2K Cruises
• • Hallmark Cards
• • a greeting card for every occasion - Valentine’s Day Card, Deepavali card

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