2. Which Of The Following Sales Data Would Be Considered Segmented By Product?
v.2 How Markets Are Segmented
Learning Objectives
- Understand and outline the ways in which markets are segmented.
- Explain why marketers employ some division bases versus others.
Sellers can choose to pursue consumer markets, business organisation-to-business (B2B) markets, or both. Consequently, one obvious way to begin the segmentation process is to segment markets into these two types of groups.
Different factors influence consumers to buy certain things. Many of the same factors can too be used to segment customers. A firm will often use multiple segmentation bases, or criteria to classify buyers, to get a fuller picture of its customers and create real value for them. Each variable adds a layer of information. Think of it as being similar to the style in which your professor builds upward data on a PowerPoint slide to the betoken at which you are able to understand the material being presented.
There are all kinds of characteristics you tin use to slice and dice a market. "Big-and-tall" stores cater to the segment of population that'south larger sized. What well-nigh people with wide or narrow feet, or people with medical conditions, or sure hobbies? Next, we look primarily at the ways in which consumer markets can be segmented. Subsequently in the chapter, we'll expect at the ways in which B2B markets can be segmented.
Types of Segmentation Bases
Tabular array five.1 "Common Ways of Segmenting Buyers" shows some of the unlike types of buyer characteristics used to segment markets. Observe that the characteristics fall into one of four segmentation categories: behavioral, demographic, geographic, or psychographic. We'll discuss each of these categories in a moment. For now, yous can get a rough idea of what the categories consist of by looking at them in terms of how marketing professionals might respond the following questions:
- Behavioral sectionalization. What benefits practise customers want, and how do they use our product?
- Demographic partitioning. How do the ages, races, and ethnic backgrounds of our customers touch on what they buy?
- Geographic sectionalization. Where are our customers located, and how can we attain them? What products practice they buy based on their locations?
- Psychographic partitioning. What do our customers think about and value? How practice they live their lives?
Table 5.1 Common Ways of Segmenting Buyers
| By Behavior | Past Demographics | By Geography | By Psychographics |
|---|---|---|---|
|
|
|
|
Segmenting by Behavior
Behavioral sectionalization divides people and arrangement into groups according to how they behave with or human action toward products. Benefits segmentation—segmenting buyers by the benefits they want from products—is very common. Take toothpaste, for example. Which do good is most important to yous when you buy a toothpaste: The toothpaste's price, ability to whiten your teeth, fight tooth decay, freshen your breath, or something else? Peradventure it's a combination of two or more than benefits. If marketing professionals know what those benefits are, they tin can then tailor different toothpaste offerings to you (and other people like yous). For example, Colgate two-in-1 Toothpaste & Mouthwash, Whitening Icy Smash is aimed at people who want the benefits of both fresher breath and whiter teeth.
Video Prune
A Vintage Colgate Commercial from the 1950s
(click to see video)
Watch the YouTube video to see a vintage Colgate toothpaste advertizement that describes the product's various benefits to consumers. (Onscreen kissing was evidently too racy for the times.)
Another style in which businesses segment buyers is by their usage rates—that is, how oft, if ever, they use sure products. Harrah's, an amusement and gaming visitor, gathers information about the people who take chances at its casinos. High rollers, or people who spend a lot of money, are considered "VIPs." VIPs get special treatment, including a personal "host" who looks after their needs during their casino visits. Companies are interested in frequent users because they want to reach other people like them. They are also keenly interested in nonusers and how they tin exist persuaded to use products.
The fashion in which people utilise products is also be a basis for sectionalization. Avon Skin And then Soft was originally a beauty product, only afterwards Avon discovered that some people were using it as a musquito repellant, the company began marketing it for that purpose. Eventually, Avon created a dissever product called Skin Then Soft Problems Baby-sit, which competes with repellents similar Off! Similarly, Glad, the company that makes plastic wrap and numberless, constitute out customers were using its Press'north Seal wrap in ways the visitor could never have imagined. The personnel in Glad's marketing department later launched a Web site called 1000uses.com that contains both the company's and consumers' use tips. Some of the ways in which people utilise the production are pretty unusual, as evidenced by the following annotate posted on the site: "I take a hedgehog who likes to run on his wheel a lot. Subsequently quite a while of cleaning a gross bicycle every forenoon, I got the tip to utilise 'Press'n Seal wrap' on his bike, making clean up much easier! My hedgie can run all he wants, and I don't have to retrieve about the cleanup. At present nosotros're both GLAD!"
Figure 5.4
Encouraging consumers to utilize your products for multiple purposes is a smart marketing strategy.
Terminal Human being Getaway – Hedgehog – CC BY-NC-ND 2.0.
Although we dubiety Glad volition ever go to great lengths to segment the Press 'n Seal market by hedgehog owners, the firm has certainly gathered a lot of proficient consumer insight nigh the product and publicity from its 1000uses.com Web site. (Incidentally, i rainy solar day, the author of this affiliate made "rain boots" out of Press 'n Seal for her dog. But when she later on tried to tear them off of the dog'south paws, he bit her. She is now thinking of trading him in for a hedgehog.)
Segmenting by Demographics
Segmenting buyers by personal characteristics such equally age, income, ethnicity and nationality, instruction, occupation, religion, social grade, and family size is chosen demographic segmentation. Demographics are normally utilized to segment markets because demographic information is publicly available in databases around the world. You tin obtain a great deal of demographic information on the U.S. Demography Bureau'due south Web site (http://www.census.gov). Other government Web sites you can tap include FedStats (http://www.fedstats.gov) and The World Factbook (http://world wide web.cia.gov/cia/publications/factbook), which contains statistics about countries effectually the earth. In addition to current statistics, the sites contain forecasts of demographic trends, such as whether some segments of the population are expected to abound or decline.
Historic period
At this point in your life, y'all are probably more than likely to buy a auto than a funeral plot. Marketing professionals know this. That's why they try to segment consumers by their ages. You're probably familiar with some of the age groups nigh commonly segmented (see Table 5.2 "U.Due south. Generations and Characteristics") in the The states. Into which category practise yous fall?
Table 5.2 U.Southward. Generations and Characteristics
1946–1964
- Second-largest generation in the The states
- Grew up in prosperous times before the widespread apply of credit
- Account for 50 percent of U.South. consumer spending
- Willing to use new technologies as they see fit
1965–1979
- Comfortable but cautious about borrowing
- Ownership habits characterized by their life stages
- Cover technology and multitasking
| Generation | Also Known Equally | Nascence Years | Characteristics |
|---|---|---|---|
| Seniors | "The Silent Generation," "Matures," "Veterans," and "Traditionalists" | 1945 and prior |
|
| Baby Boomers | |||
| Generation X | |||
| Generation Y | "Millennials," "Echo Boomers," includes "Tweens" (preteens) | 1980–2000 |
|
| Note: Non all demographers agree on the cutoff dates between the generations. | |||
Today'southward college-historic period students (Generation Y) compose the largest generation. The infant boomer generation is the second largest, and over the course of the concluding thirty years or and so, has been a very attractive market for sellers. Retro brands—former brands or products that companies "bring back" for a period of time—were aimed at baby boomers during the contempo economic downturn. Pepsi Throwback and Mountain Dew Throwback, which are made with pikestaff sugar—like they were "back in the good old days"—instead of corn syrup, are examples (Schlacter, 2009). Marketing professionals believe they appealed to baby boomers because they reminded them of meliorate times—times when they didn't have to worry about being laid off, about losing their homes, or about their retirement funds and pensions drying up.
Baby boomers are aging and the size of the grouping will somewhen decline. By contrast, the members of Generation Y have a lifetime of buying still ahead of them, which translates to a lot of potential customer lifetime value (CLV), the amount a customer will spend on a detail brand over his/her lifetime, for marketers if they can capture this grouping of buyers. However, a recent survey plant that the latest recession had forced teens to change their spending habits and college plans and that roughly half of older Generation Yers reported they had no savings1.
So which grouping or groups should your house target? Although it'due south difficult to be all things to all people, many companies try to augment their customer bases by highly-seasoned to multiple generations so they don't lose market share when demographics change. Several companies have introduced lower-price brands targeting Generation Xers, who take less spending power than boomers. For example, kitchenware and home-effects company Williams-Sonoma opened the Elm Street concatenation, a less-pricey version of the Pottery Barn franchise. The Starwood hotel concatenation's Westward hotels, which feature contemporary designs and hip confined, are aimed at Generation Xers (Miller, 2009).
The video game market is very proud of the fact that along with Generation X and Generation Y, many older Americans yet play video games. (Yous probably know some baby boomers who own a Nintendo Wii.) Products and services in the spa market used to exist aimed squarely at adults, simply not anymore. Parents are now paying for their tweens to get facials, pedicures, and other pampering in numbers no i in years past could have imagined.
Video Clip
Evian H2o: Roll, Babe, Curl!
(click to see video)
Watch the YouTube video to see a fun generational type of advertisement. No, the ad isn't designed to appeal to babies. It's aimed at us adults!
Every bit early equally the 1970s, U.S. automakers found themselves in trouble because of changing demographic trends. Many of the companies' buyers were older Americans inclined to "buy American." These people hadn't forgotten that Japan bombed Pearl Harbor during World War II and weren't about to buy Japanese vehicles, but younger Americans were. Plus, Japanese cars had developed a ameliorate reputation. Despite the challenges U.Due south. automakers face today, they take taken great pains to cater to the "younger" generation—today'due south baby boomers who don't remember of themselves as beingness old. If you are a automobile buff, yous maybe take noticed that the once-stodgy Cadillac now has a sportier expect and stiffer break. Besides, the Chrysler 300 looks more like a musculus car than the old Chrysler Fifth Avenue your groovy-grandpa might take driven.
Automakers have begun reaching out to Generations X and Y, too. General Motors (GM) has sought to revamp the century-old company by hiring a new younger group of managers—managers who empathise how Generation X and Y consumers are wired and what they want. "If y'all're going to entreatment to my daughter, you're going to have to be in the digital earth," explained 1 GM vice president (Cox, 2009).
Companies have to develop new products designed to appeal to Generations X and Y and too find new ways to reach them. People in these generations non only tend to ignore traditional advertising just also are downright annoyed by information technology. To market place to Scion drivers, who are more often than not younger, Toyota created Scion Speak, a social networking site where they can communicate, socialize, and view cool new models of the car. Online events such as the fashion shows broadcast over the Web are also getting the attending of younger consumers, as are text, e-mail, and Twitter letters they can sign up to receive so as to go coupons, greenbacks, and costless merchandise. Advergames are too being used to entreatment to the ii demographic groups. Advergames are electronic games sellers create to promote a production or service. Would y'all like to play one at present? Click on the following link to see a fun one created by Burger King to advertise its Tender Well-baked Chicken.
Income
Tweens might appear to be a very attractive market when you consider they will be buying products for years to come. Only would you change your mind if you knew that baby boomers account for fifty percentage of all consumer spending in the United States? Americans over sixty-v at present control nearly 3-quarters of the internet worth of U.S. households; this grouping spends $200 billion a year on major "discretionary" (optional) purchases such every bit luxury cars, booze, vacations, and financial products (Reisenwitz, 2007).
Income is used as a partition variable because it indicates a group's buying power and may partially reflect their education levels, occupation, and social classes. Higher pedagogy levels usually result in higher paying jobs and greater social status. The makers of upscale products such equally Rolexes and Lamborghinis aim their products at high-income groups. However, a growing number of firms today are aiming their products at lower-income consumers. The fastest-growing product in the financial services sector is prepaid debit cards, nigh of which are existence bought and used by people who don't have depository financial institution accounts. Firms are finding that this grouping is a large, untapped pool of customers who tend to be more brand loyal than nearly. If y'all capture enough of them, yous tin earn a profit (von Hoffman, 2006). Based on the targeted market, businesses tin can determine the location and blazon of stores where they want to sell their products.
Figure v.5
Automobile companies may segment markets based on income, age, social class, and gender.
Sometimes income isn't ever indicative of who will purchase your product. Companies are enlightened that many consumers want to be in higher income groups and behave like they are already part of them. Mercedes Benz's cheaper line of "C" grade vehicles is designed to appeal to these consumers.
Gender
Gender is some other way to segment consumers. Men and women take different needs and also shop differently. Consequently, the two groups are oftentimes, simply not always, segmented and targeted differently. Marketing professionals don't stop there, though. For example, considering women brand many of the purchases for their households, marketplace researchers sometimes try to further carve up them into subsegments. (Men are as well often subsegmented.) For women, those segments might include stay-at-home housewives, plan-to-work housewives, only-a-chore working women, and career-oriented working women. Enquiry has plant that women who are solely homemakers tend to spend more than money, mayhap considering they have more than time.
Figure 5.half dozen
Considering the rising number of U.S. women who live without spouses, entrepreneurs take launched handyman services in many markets.
In addition to segmenting by gender, market researchers might couple gender with marital status and other demographic characteristics. For, example, did you know that more women in America than ever before (51 per centum) now live without spouses? Tin you think of any marketing opportunities this might nowadays? (Barry, 1985)
Family Life Cycle
Family life cycle refers to the stages families go through over time and how it affects people'southward buying behavior. For case, if you have no children, your need for pediatric services (medical care for children) is likely to be slim to none, simply if yous have children, your demand might be very loftier because children frequently get sick. Yous may be part of the target market not only for pediatric services just besides for a host of other products, such as diapers, daycare, children'south wearable, entertainment services, and educational products. A secondary segment of interested consumers might be grandparents who are likely to spend less on day-to-day childcare items but more than on special-occasion gifts for children. Many markets are segmented based on the special events in people's lives. Think about brides (and desirehoped-for brides) and all the products targeted at them, including Web sites and television shows such equally Say Yeah to the Dress, My Fair Hymeneals, Platinum Weddings, and Bridezillas.
Figure 5.7
Many markets are segmented based on people's family life cycle needs.
Resorts as well segment vacationers depending on where they are in their family life cycles. When you think of family unit vacations, yous probably call up of Disney resorts. Some vacation properties, such as Sandals, exclude children from some of their resorts. Possibly they practice then because some studies prove that the market segment with greatest financial potential is married couples without children (Hill, et. al., 1990).
Proceed in listen that although you might be able to isolate a segment in the marketplace, including one based on family life bike, you lot can't brand assumptions nigh what the people in information technology will desire. Simply like people'southward demographics change, so practice their tastes. For example, over the past few decades U.S. families have been getting smaller. Households with a single occupant are more commonplace than ever, but until recently, that hasn't stopped people from demanding bigger cars (and more of them) as well as larger houses, or what some people jokingly refer to as "McMansions."
The trends toward larger cars and larger houses appear to be reversing. High energy costs, the credit crunch, and business concern for the environment are leading people to need smaller houses. To attract people such equally these, D. R. Horton, the nation's leading homebuilder, and other construction firms are at present building smaller homes.
Ethnicity
People'southward ethnic backgrounds have a big bear upon on what they buy. If you lot've visited a grocery store that caters to a dissimilar ethnic group than your ain, you were probably surprised to see the types of products sold there. It's no hush-hush that the The states is becoming—and volition continue to become—more diverse. Hispanic Americans are the largest and the fastest-growing minority in the United States. Companies are going to smashing lengths to court this in one case disregarded group. In California, the health intendance provider Kaiser Permanente runs tv set ads letting members of this segment know that they can request Spanish-speaking physicians and that Castilian-speaking nurses, telephone operators, and translators are available at all of its clinics (Berkowitz, 2006).
African Americans are the second-largest ethnic group in America. Collectively, they have the near buying power of any ethnic group in America. Many people of Asian descent are known to exist early adapters of new engineering and accept above-average incomes. As a result, companies that sell electronic products, such as AT&T, spend more money segmenting and targeting the Asian customsii. Table v.three "Major U.South. Indigenous Segments and Their Spending" contains information most the number of people in these groups and their ownership ability.
Tabular array 5.3 Major U.S. Ethnic Segments and Their Spending
| Grouping | Percentage of U.S. Population | Almanac Spending Power (Billions of Dollars) |
|---|---|---|
| Hispanics | 13.7 | 736 |
| African Americans | 13.0 | 761 |
| Asians | 5.0 | 397 |
Source: New American Dimensions, LLC.
As y'all can estimate, even within various ethnic groups at that place are many differences in terms of the goods and services buyers cull. Consequently, painting each group with a broad brush would leave you with an incomplete picture of your buyers. For case, although the common ancestral language amidst the Hispanic segment is Castilian, Hispanics trace their lineages to different countries. Nearly seventy percent of Hispanics in the United States trace their lineage to United mexican states; others trace theirs to Primal America, Due south America, and the Caribbean.
All Asians share is race. Chinese, Japanese, and Korean immigrants practise not share the same languageii. Moreover, both the Asian and Hispanic marketplace segments include new immigrants, people who immigrated to the United States years ago, and native-born Americans. So what language will you use to communicate your offerings to these people, and where?
Subsegmenting the markets could potentially aid y'all. New American Dimension, a multicultural research firm, has further divided the Hispanic market into the following subsegments:
- Just moved in'rs. Recent arrivals, Spanish dependent, struggling but optimistic.
- FOBrs (fashionistas on a upkeep). Spanish dominant, traditional, merely striving for trendy.
- Accidental explorers. Castilian preferred, non in a rush to embrace U.Due south. culture.
- The englightened. Bilingual, technology savvy, driven, educated, modern.
- Doubting Tomáses. Bilingual, contained, skeptical, inactive, shopping uninvolved.
- Latin flavored. English preferred, reconnecting with Hispanic traditions.
- SYLrs (single, immature latinos). English language dominant, gratuitous thinkers, multicultural.
Yous could go and so far as to break down segments to the private level, which is the goal behind one-to-one marketing. However, doing so would be dreadfully expensive, notes Juan Guillermo Tornoe, a marketing expert who specializes in Hispanic marketing issues. Afterward all, are you really going to develop dissimilar products and different marketing campaigns and communications for each grouping? Probably not, merely "you lot need to perform your due diligence and understand where the majority of the people you are trying to reach land on this matrix, modifying your message according to this insight," Tornoe explains (Tornoe, 2008).
Segmenting by Geography
Suppose your not bad new product or service idea involves opening a local store. Earlier you open up the store, y'all volition probably want to do some research to determine which geographical areas take the best potential. For example, if your business organization is a high-terminate restaurant, should it be located near the local higher or land club? If you sell ski equipment, you probably will want to locate your shop somewhere in the vicinity of a mountain range where there is skiing. You lot might meet a snowboard shop in the same area but probably not a surfboard store. By dissimilarity, a surfboard shop is probable to exist located along the declension, merely yous probably would non discover a snowboard shop on the beach.
Geographic partitioning divides the market into areas based on location and explains why the checkout clerks at stores sometimes inquire for your zip code. It's too why businesses impress codes on coupons that represent to zero codes. When the coupons are redeemed, the store can discover out where its customers are located—or not located. Geocoding is a process that takes information such every bit this and plots it on a map. Geocoding tin can help businesses see where prospective customers might be amassed and target them with diverse ad campaigns, including straight mail. One of the most popular geocoding software programs is PRIZM NE, which is produced by a company chosen Claritas. PRIZM NE uses zippo codes and demographic information to allocate the American population into segments. The idea behind PRIZM is that "y'all are where you live." Combining both demographic and geographic information is referred to as geodemographics or neighborhood geography. The idea is that housing areas in different null codes typically attract certain types of buyers with sure income levels. To see how geodemographics works, visit the following page on Claritas' Web site: http://www.claritas.com/MyBestSegments/Default.jsp?ID=xx.
Type in your nil lawmaking, and you will encounter customer profiles of the types of buyers who alive in your area. Table 5.4 "An Example of Geodemographic Division for 76137 (Fort Worth, TX)" shows the profiles of buyers who can exist found the aught code 76137—the "Brite Lites, Li'l City" bunch, and "Home Sweet Habitation" set. Click on the profiles on the Claritas site to see which 1 most resembles yous.
Table v.4 An Example of Geodemographic Segmentation for 76137 (Fort Worth, TX)
| Number | Profile Proper noun |
|---|---|
| 12 | Brite Lites, Li'l City |
| nineteen | Home Sweetness Home |
| 24 | Upwards-and-Comers |
| thirteen | Upwards Bound |
| 34 | White Picket Fences |
The tourism agency for the state of Michigan was able to identify and target different client profiles using PRIZM. Michigan's biggest travel segment are Chicagoans in certain zip codes consisting of upper-middle-class households with children—or the "kids in cul-de-sacs" group, as Claritas puts it. The agency was also able to identify segments significantly different from the Chicago segment, including blue-collar adults in the Cleveland area who vacation without their children. The arrangement then created significantly unlike marketing campaigns to entreatment to each group.
Urban center size and population density (the number of people per foursquare mile) are likewise used for segmentation purposes. Accept you always noticed that in rural towns, McDonald's restaurants are hard to find, but Dairy Queens (DQ) are normally easy to locate? McDonald's generally won't put a shop in a town of fewer than five chiliad people. However, this is prime number turf for the "DQ"— considering it doesn't take to compete with bigger franchises like McDonald'southward.
Effigy 5.8
Virgin Mobile is helping stores capitalize on proximity marketing by sending text messages to Virgin Mobile users when they opt to receive them. Billboards exterior stores tell Virgin Mobile users to "switch your Bluetooth on to get gratis stuff here!" (Who wouldn't want complimentary stuff?)
Proximity marketing is an interesting new technology firms are using to segment and target buyers geographically within a few hundred feet of their businesses using wireless technology. In some areas, you can switch your mobile phone to a "discoverable manner" while you lot're shopping and, if you want, get ads and deals from stores as you laissez passer by them, which is often less expensive than hiring people to hand you a flier as y'all walk by3.
Audio Clip
Interview with Apurva Ghelani
http://app.wistia.com/embed/medias/d0b89776be
To learn about how proximity marketing works at a real company, mind to Apurva Ghelani in this audio clip. Ghelani is a senior sales engineer for Air2Web, a company that helps businesses promote their brands and conduct transactions with people via their mobile phones.
In addition to figuring out where to locate stores and advertise to customers in that area, geographic sectionalization helps firms tailor their products. Chances are you lot won't be able to discover the same heavy winter coat you run into at a Walmart in Montana at a Walmart in Florida considering of the climate differences between the two places. Market researchers also wait at migration patterns to evaluate opportunities. TexMex restaurants are more usually found in the southwestern United States. Nonetheless, northern states are now seeing more than of them every bit more people of Hispanic descent motility due north.
Segmenting past Psychographics
If your offering fulfills the needs of a specific demographic group, then the demographic tin can be an important ground for identifying groups of consumers interested in your product. What if your product crosses several market place segments? For example, the group of potential consumers for cereal could exist "nigh" everyone although groups of people may have dissimilar needs with regard to their cereal. Some consumers might be interested in the fiber, some consumers (especially children) may be interested in the prize that comes in the box, other consumers may be interested in the added vitamins, and nonetheless other consumers may be interested in the type of grains. Associating these specific needs with consumers in a detail demographic group could be hard. Marketing professionals want to know why consumers behave the way they practise, what is of high priority to them, or how they rank the importance of specific buying criteria. Think most some of your friends who seem a lot like y'all. Take you ever gone to their homes and been shocked past their lifestyles and how vastly different they are from yours? Why are their families so much different from yours?
Psychographic partitioning can help fill in some of the blanks. Psychographic data is frequently gathered via all-encompassing surveys that ask people near their activities, interests, stance, attitudes, values, and lifestyles. One of the almost well-known psychographic surveys is VALS (which originally stood for "Values, Attitudes, and Lifestyles") and was developed by a company called SRI International in the belatedly 1980s. SRI asked thousands of Americans the extent to which they agreed or disagreed with questions like to the following: "My idea of fun at a national park would be to stay at an expensive lodge and wearing apparel up for dinner" and "I could stand to pare a dead animate being" (Donnelly, 2002). Based on their responses to dissimilar questions, consumers were divided upward into the following categories, each characterized by certain ownership behaviors.
- Innovators. Innovators are successful, sophisticated, take-charge people with high self-esteem. Considering they have such abundant resource, they exhibit all three primary motivations in varying degrees. They are change leaders and are the most receptive to new ideas and technologies. Innovators are very active consumers, and their purchases reflect cultivated tastes for upscale, niche products and services. Image is of import to Innovators, not as testify of status or power merely every bit an expression of their taste, independence, and personality. Innovators are among the established and emerging leaders in business and authorities, yet they proceed to seek challenges. Their lives are characterized by diverseness. Their possessions and recreation reflect a cultivated taste for the finer things in life.
- Thinkers. Thinkers are motivated by ethics. They are mature, satisfied, comfortable, and reflective people who value order, noesis, and responsibility. They tend to exist well educated and actively seek out information in the decision-making process. They are well informed about globe and national events and are alert to opportunities to broaden their knowledge. Thinkers have a moderate respect for the condition quo institutions of authority and social decorum but are open to consider new ideas. Although their incomes allow them many choices, Thinkers are conservative, practical consumers; they wait for durability, functionality, and value in the products they buy.
- Achievers. Motivated by the desire for achievement, Achievers have goal-oriented lifestyles and a deep commitment to career and family. Their social lives reflect this focus and are structured around family, their place of worship, and work. Achievers alive conventional lives, are politically bourgeois, and respect authority and the status quo. They value consensus, predictability, and stability over risk, intimacy, and cocky-discovery. With many wants and needs, Achievers are active in the consumer marketplace. Epitome is of import to Achievers; they favor established, prestige products and services that demonstrate success to their peers. Because of their busy lives, they are oft interested in a diversity of timesaving devices.
- Experiencers. Experiencers are motivated by self-expression. Every bit young, enthusiastic, and impulsive consumers, Experiencers quickly become enthusiastic virtually new possibilities but are equally quick to cool. They seek diverseness and excitement, savoring the new, the offbeat, and the risky. Their energy finds an outlet in do, sports, outdoor recreation, and social activities. Experiencers are avid consumers and spend a comparatively high proportion of their income on fashion, entertainment, and socializing. Their purchases reverberate the accent they identify on looking good and having "cool" stuff.
- Believers. Like Thinkers, Believers are motivated by ideals. They are bourgeois, conventional people with concrete behavior based on traditional, established codes: family, organized religion, community, and the nation. Many Believers express moral codes that are deeply rooted and literally interpreted. They follow established routines, organized in large part around home, family, community, and social or religious organizations to which they belong. As consumers, Believers are predictable; they choose familiar products and established brands. They favor American products and are more often than not loyal customers.
- Strivers. Strivers are trendy and fun loving. Considering they are motivated past accomplishment, Strivers are concerned about the opinions and approving of others. Coin defines success for Strivers, who don't have plenty of it to meet their desires. They favor fashionable products that emulate the purchases of people with greater cloth wealth. Many see themselves as having a chore rather than a career, and a lack of skills and focus oft prevents them from moving alee. Strivers are active consumers because shopping is both a social activeness and an opportunity to demonstrate to peers their ability to purchase. As consumers, they are as impulsive as their financial circumstance volition permit.
- Makers. Similar Experiencers, Makers are motivated by self-expression. They express themselves and feel the world past working on it—building a house, raising children, fixing a car, or canning vegetables—and have enough skill and energy to conduct out their projects successfully. Makers are practical people who have constructive skills and value self-sufficiency. They live within a traditional context of family, applied work, and physical recreation and have piddling interest in what lies outside that context. Makers are suspicious of new ideas and big institutions such as big business. They are respectful of government authorisation and organized labor but resentful of government intrusion on private rights. They are unimpressed by material possessions other than those with a practical or functional purpose. Because they adopt value to luxury, they purchase basic products.
- Survivors. Survivors live narrowly focused lives. With few resources with which to cope, they frequently believe that the world is changing as well speedily. They are comfortable with the familiar and are primarily concerned with rubber and security. Because they must focus on meeting needs rather than fulfilling desires, Survivors exercise non show a strong chief motivation. Survivors are cautious consumers. They correspond a very modest market for most products and services. They are loyal to favorite brands, peculiarly if they can purchase them at a disbelieve4.
To observe out which category you're in, take a VALS survey at http://world wide web.sric-bi.com/vals/surveynew.shtml. VALS surveys have been adapted and used to study ownership behavior in other countries, too. Note that both VALS and PRIZM grouping buyers are based on their values and lifestyles, but PRIZM likewise overlays the information with geographic data. As a result, yous tin guess what the ownership habits of people in certain zip codes are, which tin exist helpful if yous are trying to figure out where to locate stores and retail outlets.
The segmenting techniques we've discussed so far in this section require gathering quantitative data and data. Quantitative information can be improved with qualitative data yous gather past talking to your customers and getting to know them. (Call up that this is how Healthy Selection frozen dinners were created.) Consumer insight is what results when you utilize both types of information. Y'all desire to be able to answer the post-obit questions:
- Am I looking at the consumers the way they see themselves?
- Am I looking at life from their point of view?
Best Buy asked store employees to develop insight almost local consumer groups in guild to create special programs and processes for them. Employees in one locale invited a group of retirees to their store to explicate how to make the switch to digital television. The shop sold $350,000 worth of equipment and televisions in but two hours' fourth dimension. How much did information technology cost? The total toll included xc-ix dollars in labor costs plus java and donuts.
Intuit, the company that makes the revenue enhancement software Quicken, has a "follow me dwelling house" program. Teams of engineers from Intuit visit people'southward homes and spend a couple of hours watching consumers employ Quicken. Then they employ the insights they gain to improve the next version of Quicken. Contrast this story with that of a competing house. When a representative of the firm was asked if he had ever observed consumers installing or using his company'due south product, he responded, "I'm not sure I'd want to be around when they were trying to apply it" (Nee, 2003). This company is now struggling to stay in business.
To read about some of the extreme techniques Nokia uses to empathise cell telephone consumers around the globe, click on the following link: http://www.nytimes.com/2008/04/thirteen/mag/13anthropology-t.html?pagewanted=all.
Segmentation in B2B Markets
Many of the same bases used to segment consumer markets are likewise used to segment B2B markets. For example, Goya Foods is a U.South. nutrient visitor that sells different ethnic products to grocery stores, depending on the demographic groups the stores serve—Hispanic, Mexican, or Spanish. Too, B2B sellers often divide their customers by geographic areas and tailor their products to them appropriately. Segmenting past beliefs is common every bit well. B2B sellers frequently separate their customers based on their product usage rates. Customers that club many goods and services from a seller often receive special deals and are served by salespeople who call on them in person. Past contrast, smaller customers are more probable to have to rely on a house's Web site, customer service people, and salespeople who call on them past phone.
Researchers Matthew Harrison, Paul Hague, and Nick Hague have theorized that at that place are fewer behavioral and needs-based segments in B2B markets than in business-to-consumer (B2C) markets for ii reasons: (1) business organisation markets are made upwardly of a few hundred customers whereas consumer markets tin be made up of hundreds of thousands of customers, and (2) businesses aren't equally fickle equally consumers. Unlike consumers, they aren't concerned about their social standing or influenced by their families and peers. Instead, businesses are concerned solely with buying products that volition ultimately increment their profits. According to Harrison, Hague, and Hague, the behavioral, or needs-based, segments in B2B markets include the following:
- A price-focused segment is composed of minor companies that have low profit margins and regard the good or service beingness sold equally not existence strategically important to their operations.
- A quality and brand-focused segment is equanimous of firms that want the best possible products and are prepared to pay for them.
- A service-focused segment is equanimous of firms that need loftier-quality products and accept top-notch delivery and service requirements.
- A partnership-focused segment is composed of firms that seek trust and reliability on the part of their suppliers and come across them as strategic partners (Harrison, et. al., 2010).
B2B sellers, similar B2C sellers, are exploring new ways to achieve their target markets. Trade shows and direct post campaigns are two traditional ways of reaching B2B markets. Now, however, firms are finding they tin target their B2B customers more cost-effectively via east-mail service campaigns, search-engine marketing, and "fan pages" on social networking sites similar Facebook. Companies are also creating blogs with cutting-edge content nearly new products and business organisation trends of involvement to their customers. For a fraction of the cost of attending a trade evidence to showroom their products, B2B sellers are belongings Webcasts and conducting online production demonstrations for potential customers.
Key Takeaway
Segmentation bases are criteria used to allocate buyers. The main types of buyer characteristics used to segment consumer markets are behavioral, demographic, geographic, and psychographic. Behavioral segmentation divides people and organization into groups according to how they carry with or toward products. Segmenting buyers by personal characteristics such as their age, income, ethnicity, family size, and and so along is chosen demographic segmentation. Geographic segmentation involves segmenting buyers based on where they live. Psychographic segmentation seeks to differentiate buyers based on their activities, interests, opinions, attitudes, values, and lifestyles. Oftentimes a business firm uses multiple bases to get a fuller picture of its customers and create value for them. Marketing professionals develop consumer insight when they gather both quantitative and qualitative information nearly their customers. Many of the aforementioned bases used to segment consumer markets are used to segment business organization-to-business (B2B) markets. However, there are generally fewer behavioral-based segments in B2B markets.
Review Questions
- What buyer characteristics do companies look at when they segment markets?
- Why do firms often utilise more than one sectionalisation base?
- What ii types of information do marketplace researchers gather to develop consumer insight?
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2. Which Of The Following Sales Data Would Be Considered Segmented By Product?,
Source: https://open.lib.umn.edu/principlesmarketing/chapter/5-2-how-markets-are-segmented/
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