IGNOU : M.COM : MCO 6 : UNIT 5 : Q - 4. Critically evaluate four important bases for segmenting consumer markets.

Ans. Bases for Segmenting Consumer Markets

As stated earlier there is no single way of segmenting a market. A marketer has to try different segmentation variables, alone and in combination, to find the best way to view the market structure. Eight major categories of consumer characteristics provide the most popular bases for consumer market segmentation. They include: geographic factors, demographic factors, psychological factors, sociocultural variables, use-related characteristics, use-situation factors, benefit sought, and hybrid segmentation forms such as demographic/psychographic profiles, geodemographic factors, and values and lifestyles. Hybrid segmentation forms a combination of several segmentation bases to create rich and comprehensive profiles of particular consumer segments. All eight segmentation bases are divided further into specific variables.

Geographic Segmentation : This calls for dividing the market on the basis of location. A company may divide the market into different geographical areas such as nations, regions, states, cities, urban/rural areas, or neighbourhoods and then decides to operate in one or few geographical areas, or to operate in all areas but pay attention to geographical differences in consumer needs and wants. The basic reason of using geographic base for segmentation is that people who live in the same area share some similar needs and wants that these needs and wants differ from those people living in other areas. For example, certain food and beverages sell better in one region than in others. Take the example of coffee which is consumed in India, but it is more consumed in South India than any other region. A company who is marketing coffee may keep the taste and flavour preferences in the different regions and accordingly it may come out with different variants of coffee in terns of taste and flavours which may be liked by people belonging to different regions. In the context of India, another variation may be found in terms of purchasing pattern among urban and rural consumers. Companies, if they observe divergent pattern of purchasing in a specific product category among the people of these areas then they may develop products and marketing mixes to suit the consumers' tastes and preferences belonging to urban or rural areas. 

Demographic Segmentation : Demographic segmentation consists of dividing the market into groups on the basis of demographic characteristics of consumers such as age, sex, family size, income, occupation, education, religion, nationality, etc. Demography refers to the vital and the measurable statistics of population. Demographic variables are the most popular bases for distinguishing customer groups. One of the reasons for preferring demographic bases is that consumer wants, preferences and usage rates are, often highly associated with demographic characteristics. Another reason is that demographic variables are easier to measure than most other types of variables, even when the target market is described in non-demographic terms (say, a personality type), it should be linked back to demographic characteristics in order to know the size of the target market and reach it effectively.

• Age and life cycle stage : Because product needs and interest often vary with consumer age, marketers have found age to be particularly useful demographic variable for distinguishing segments. Many marketers have carved themselves a niche in the marketplace by concentrating on a specific age segment. For instance, children of six months age differ from children of three months age in their food requirements and consumption potential.
• Sex (Gender) : Segmentation of markets based on sex or gender has long been useful in the case of products such as clothing, cosmetics, and magazines. Gender has long been a distinguishing segmentation variable. Women have traditionally been the main users of such products as hair coloring, shampoo, and cosmetics and men have been the main users of tools and shaving goods. However, sex roles, in the recent years, have blurred considerably, and gender is no longer an accurate way of distinguishing consumers in some product categories. For example, women are buying all types of household products and men have become significant users of skin care, shampoo and cologne and hair care products. 
• Marital Status : another way of segmenting a market is on the basis of marital status. Traditionally the family has been the focus of most marketing efforts, and many products and services; the household continues to be the relevant consuming unit. Marketers are interested in the number and kinds of households that own and/or buy certain products they are also interested in determining the demographic and media profiles of household decision makers (the person involved in the actual selection of the product) to develop appropriate marketing strategies. 
• Income, Education, and Occupation : In the recent years the popularity of income as segmenting variable of a market has been decreased. Although income has long been an important variable for distinguishing market segments, a major problem with segmenting the market on the basis of income alone is that income simply indicates the ability (or inability) to pay for a product. For this reason, marketers often combine income with some other demographic variable(s) to define their target market, more accurately. For example, very often marketers combine income with age to identify the important affluent elderly and affluent younger segments.

Psychographic Segmentation : Demographic data are used to segment markets because these data are related to behaviour and are relatively easy to gather. However, demographics are not in themselves the causes of behaviour. Consumers do not buy products purely on the demographic variables but these variables may correlate with certain psychological characteristics of consumers. Therefore, marketers have gone beyond demographic attributes in an effort to better understand why consumers behave as they do. They now engage in psychological segmentation, which involve examining attribute such as personality, and lifestyles. When demographic and psychological attributes are combined, richer description of segments is produced. Let us learn some of the psychographic bases of segmentation. 

• Lifestyle Segmentation : Lifestyle relates to activities, interests, and opinions. A person's lifestyle reflects how he spends his time and what his beliefs are on various social, economic, and political issues. People are found to exhibit many types of lifestyles and their lifestyles undoubtedly affect what goods they purchase and what brands they prefer. Marketers are aware of this and attempt to segment their markets based on lifestyle characteristics. One theory relating to lifestyles is that lifestyles are shaped partly by whether consumers are time constrained or money-constrained. Consumers who experience time-constrain i.e., paucity of time at their disposal, are prone to multitasking, that is, doing two or more things at the same time. Companies aiming to serve them will try to create convenient services for this group.
• Personality Segmentation : Marketers also use personality variables Lo segment markets. An individual's personality characteristics are described in terms of traits that influence behaviour. In trying to segment a market on personality traits marketers endow their products with what is known as brand personality that corresponds to target group personality. Then they project this brand personality through their promotional campaigns. For example, Bajaj Scooter has been projected most often as "Trusted friend" and Red and White Cigarettes as 'Daring" Lipton Tiger Tea as "valiant". 
• Value Segmentation : Some marketers try to segment a particular market by values. According to psychologists, values are a reflection of our needs adjusted for the realities of the world in which we live. In other words values are the belief systems that underlie consumer attitudes and behaviours. Research at the Survey Research Center at the University of Michigan has identified nine basic values that relate to purchase behaviour. These are known as List of Values (LOV). These values are: a. Self-respect b. Self-fulfillment c. Sense of accomplishment d. Fun and enjoyment in life e. Security f. Being well respected g. Sense of belonging h. Having warm relationship i. Excitement.

Sociocultural Segmentation : Sociological (i.e., group) and anthropological (i.e., cultural) variables-that is sociocultural variables-provide further bases for market segmentation. We will briefly discuss three bases under this head. These are: family life cycle, social class, and culture. Let us learn them.

• Family Life Cycle Segmentation : This is based on the premise that many families pass through similar phases in their formation, growth, and final dissolution. At each phase, the family unit needs different products and services. Family life cycle is a composite variable based explicitly on marital and family status, but implicitly including relative age, income, and employment status. Each of the stages in the traditional family life cycle (i.e., bachelorship, newly married couple, couple with small children, couples with grown up children, and retired people with no children) represents an important target segment to a variety of marketers. For example, Life Insurance Corporation of India (LIC) has different life insurance policies for young married couples, couples with grown up children and for retired persons. 
• Social Class Segmentation : Social class is a potential market segmentation variable. It is traditionally measured by a weighted index of several demographic variables, such as education, occupation, income (we have already discussed social class influence in Unit 4). The concept of social class implies that people belonging to different social classes vary in terms of values, product preferences, and buying habits. Therefore, marketers have used their knowledge of social class differences to appeal to specific segments. 

Culture Segmentation : Some marketers have found it useful to segment their markets on the basis of cultural heritage, because members of the same culture tend to share the same values, beliefs, and customs. Marketers who use cultural segmentation stress specific, widely held cultural values which they hope consumers will identify. Cultural segmentation is particularly successful in international marketing, but in such instances, it is important for the marketer to understand fully the beliefs, values, and customs of the countries in which the product marketed. Within the larger culture, there exist subcultures. These subcultures sometime exhibit distinct purchase preferences. If this is the case then marketers may segment a particular market on the basis of subcultures. Also culturally distinct segments can be prospects for the same product but often are targeted more efficiently with different promotional appeals.

Use -Related Segmentation : An extremely popular and effective form of segmentation is based on the user -related variables. We will briefly discuss three bases of segmentation under this category. These are: user rate, awareness status, and loyalty status. 

• User Rate Segmentation : Here the marketer differentiates among heavy users, medium users, light users, and non users of a specific product, service, or brand. Normally a company is most interested in the heavy users of its product because heavy users are often a small percentage of the market but account for a high percentage of total consumption. For example, research has consistently indicated that between 25 and 35 percent of beer drinkers account for more than 70 percent of all beer consumed. In many frequently purchased product categories less than 50 percent of all users account for 80 to 90 percent of total purchases.
• Awareness Status Segmentation : This is also known as buyer-readiness stage segmentation. A market consists of people in different stages of readiness to buy a product. Marketers have to determine what percent of potential consumers are aware of the product, interested in the product, or need to be informed about the product. The relative numbers make big difference in designing the marketing program. 
• Loyalty Status Segmentation : Sometimes brand loyalty is used as the basis of segmentation. Buyers can be divided into four groups according to brand loyalty status: (I) hard-core loyals (who always buy one brand), (2) soft-core loyals or split loyals (who are loyal to two or three brands), (3) shifting loyals (who shift from one brand to another), and (4) switchers (who show no loyalty to any brand).

Benefit Segmentation : Marketing people constantly attempt to isolate the one articular benefit char they should communicate to consumers. Segmenting the market on the basis of benefit sought by various consumers has been a popular segmenting base for many products and services. For example, motorcycle manufacturers tried to segment chis market on the basis of benefits sought by various consumers. Hero Honda emphasized fuel consumption, Kawasaki Bajaj and Yamaha emphasized on power and style. Benefit segmentation can be used to position various brands within the same product category. The classic case of successful benefit segmentation is the market for toothpaste: Colgate for total dental care, Close-up with a special appeal that stresses bright teeth, Forhans appeals to the protection of gums. 

 Hybrid Segmentation : Marketers commonly segment markets by combining several segmentation variables rather than relying on a single segmentation base. We will discuss two hybrid segmentation approaches i.e., psychographic/demographic profiles, and geodemographics. These two approaches provide marketers with more accurately defined consumer segments than can be derived using a single segmentation base.

• Psychographic-demographic Profiles : Psychographic and demographic profiles are highly complementary approaches that work best when used together, By combining the knowledge gained from both demographic and psychographic studies, marketers are provided with powerful information about their target markets. The demographic information provide the marketer about the prospective customers' age, education, income, etc. and the psychographic information provides the basis of the prospective consumers personality, and lifestyle pattern.
• Geodemographic Segmentation : This type of hybrid segmentation scheme is based on the notion that people who live close to one another are likely to have similar financial means, tastes, preferences, lifestyles, and consumption habits. , Many marketing research firms collect information on geodemographic clusters and then provide this information to advertisers for developing effective advertising campaigns.