METHODS OF MARKET SEGMENTATION

On the basis of the bases used for the market segmentation, various characteristics of the customers and geographical characteristics etc., common methods of market segmentations could be done. Common methods used are:

Geographical Segmentation

When the market is divided into different geographical unit as region, continent, country, state, district, cities, urban and rural areas, it is called as geographical segmentation. Even on the geographic needs and preference products could be made. Even through Tata Tea is sold on a national level, it is flavoured accordingly in different regions. The strength of the tea differs in each regions of the country. Bajaj has sub-divided the entire country into two distinct markets. Owing to the better road conditions in the north, the super FE Sector is promoted better with small wheels; whereas in the case of south, Bajaj promotes Chetak FE with large wheels because of the bad road conditions.

Demographic Segmentation

Demographics is the most commonly used basis for market segmentation. Demographic variables are relatively easy to understand and measure, and they have proven to be excellent segmentation criteria for many markets. Information in several demographic categories is particularly useful to marketers.

Demographic segmentation refers to dividing the market into groups on the basis of age, sex, family size cycle, income, education, occupation, religion, race, cast and nationality. In better distinctions among the customer groups this segmentation helps. The above demographic variables are directly related with the consumer needs, wants and preferences.

Age: Market segments based on age are also important to many organizations. Some aspects of age as a segmentation variable are quite obvious. For example, children constitute the primary market for toys and people 65 years and older are major users of medical services. Age and life cycle are important factors. For instance in two wheeler market, as Bajaj has ‘Sunny’ for the college girls; ‘Bajaj Chetak’ for youngsters; ‘Bajaj Chetak’ for the office going people and Bajaj M80 for rural people.

In appealing to teenagers, for example, the marketing executive must continually monitor their ever-changing beliefs, political and social attitudes, as wells as the entertainers and clothing that are most popular with young people at a particular time. Such factors are important in developing effective advertising copy and illustrations for a product directed to the youth market.

Sex segmentation is applied to clothing, cosmetics, magazines and hair dressing. The magazines like Women’s Era, Femina, (in Malayalam), Mangaiyar Malar (in Tamil) are mainly segmented for women. Recently even a cigarette exclusively for women was brought out. Beauty Parlours are not synonyms for the ladies.

Income segmentation: It has long been considered a good variable for segmenting markets. Wealthy people, for example, are more likely to buy expensive clothes, jewelleries, cars, and to live in large houses. In addition, income has been shown to be an excellent segmentation correlate for an even wider range of commodity purchased products, including household toiletries, paper and plastic items, furniture, etc.

Social Class segmentation: This is a significant market segment. For example, members of different social classes vary dramatically in their use of bank credit cards. People in lowe4r social classes tend to use bank credit cards as installment loans, while those in higher social classes use them for convenience purposes. These differences in behaviour can be significant when segmenting a market and developing a marketing program to serve each segment.

Psychographic Segmentation

On the basis of the life style, personality characteristics, buyers are divided and this segmentation is known as psychographics segmentation. Certain group of people reacts in a particular manner for an appeal projected in the advertisements and exhibit common behavioural patterns. Marketers have also used the personality variables as independent, impulsive, masculine, aggressive, confident, naïve, shy etc. for marketing their products. Old spice promotes their after shave lotion for the people who are self confident and are very conscious of their dress code. These advertisements focus mainly on the personality variables associated with the product.

Behavioural Segmentation

Buyer behavioural segmentation is slightly different from psychographic segmentation. Here buyers are divided into groups on the basis of their knowledge, attitude, use or response to a product.

Benefit segmentation: The assumption underlying the benefit segmentation is that markets can be defined on the basis of the benefits that people seek from the product. Although research indicates that most people would like to receive as many benefits as possible from a product, it has also been shown that the relative importance that people attach to particular benefits varies substantially. These differences can then be sued to segment markets.

Once the key benefits for a particular product/ market situation are determined, the analyst must compare each benefit segment with the rest of the market to determine whether that segment has unique and identifiable demographic characteristics, consumption patterns, or media habits. For example, the market for toothpaste can be segmented in terms of four distinct product benefits; flavour and product appearance, brightness of teeth, decay prevention and price.

The major advantage of benefit segmentation is that it is designed to fit the precise needs of the market. Rather than trying to create markets, the firm indentifies the benefit or set of benefits that prospective customers want from their purchases and then designs products and promotional strategies to meet those needs. A second and related advantage is that benefit segmentation helps the firm avoid cannibalizing its existing products when it introduces new ones.

Buyers can be divided based on their needs, to purchase product for an occasion. The number of times a product is used could be also considered as a segmentation possibility. A tooth paste manufacturer urges the people to brush the teeth twice a day for avoiding tooth decay and freshness. Either a company can position in single benefit or double benefit which the product offers. The status of the buyers using the product and the number of times they use the product can also reveal that behavioural patterns of consumers vary on a large scale.

Life-Style Segmentation

Life-style segmentation is a relatively new technique that involves looking at the customer as a “whole” person rather than as a set of isolated parts. It attempts to classify people into segments on the basis of a broad set of criteria”.

The most widely used life-style dimensions in market segmentation are an individual’s activities, interests, opinions, and demographic characteristics. Individuals are analyzed in terms of (i) how they spend their time, (ii) what areas of interest they see as most important, (iii) their opinions on themselves and of the environment around them, and (iv) basic demographics such as income, social class and education.

Unfortunately, there is no one best way to segment markets. This facts has caused a great deal of frustration for some marketing executives who insist that a segmentation variable that has proven effective in one market/product context should be equally effective in other situations. The truth is that a variable such as social class may describe the types of people who shop in particular stores, but prove useless in defining the market for a particular product. Therefore, in using a segmentation criteria in order to identify those that will be most effective in defining their markets