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Market Segmentation
Segmentation strategies
There are many ways in which a market can be segmented. A marketer will need to decide which strategy is best for a giv
Manager at Bournemouth Borough Council applies a multi-strategy approach to identify segments.
Jon Weaver, Marketing Manager, Bournemouth Borough Council
Figure 7.2 Types of segmentation
Geographic segmentation: Where?
A market can be divided according to where consumers are located. On a trip abroad you might have noticed that people e
the world.
Understanding cultural differences between countries could be pivotal for business success, consequently marketers will n
Geographic segmentation is the division of the market according to different geographical units like continents, countries, r
Geographic segmentation can be a useful strategy to segment markets because it:
provides a quick overview of differences and similarities between consumers according to geographical unit;
can identify cultural differences between geographical units;
takes into consideration climatic differences between geographical units;
recognises language differences between geographical units.
But this strategy fails to take into consideration other important variables such as personality, age and consumer lifestyles.
For example some youth groups across the world appear to be somewhat similar. Youth groups will tend to listen to simila
your same age easily because you share common interests.
Demographic segmentation: Who?
A very popular form of dividing the market is through demographic variables. Understanding who consumers are will enab
Understanding who consumers are requires companies to divide consumers into groups based on variables such as gend
A clear advantage of this strategy over others is that there are vast amounts of secondary data available that will enable yo
Figure 7.3 Demographic segmentation
Life-cycle Social
Age Income
Stage Class
E.g. E.g. E.g. E.g.
under 6, Bachelor State, Under 5,000; A = Upper, upper
6-11, Newly Wed: No kids 5,000-20,000; B = Upper lower
12-19, Full Nest 1: w/child 20,000-50,000; C1= middle class
29-34, under 6 50,000-100,00, C2= Working class (skilled
35-49, Full nest 2: Youngest 100,000-250,000 workers)
50-64, child over 6 etc D= upper lowers
65+ Full nest 3: Older E= Lower, lower
married couples with
dependent children
Empty nest 1: Older
couples no children at
home
Empty nest 2: Retired
Solitary survivor: Still
in the labor force
Solitary survivor:
Retired
If you visit the National Statistic website you should be able to find for example how many adults have access to the Intern
Heather Moore, Marketing and Promotions Officer Marwell Zoo,
Hampshire
Demographic variables are commonly used in indexes and databases measuring consumers' preferences for brands, prod
Recently, both demographic and geographic segmentation have been used in conjunction to create geo-demographic seg
example what consumers within a specific neighbourhood earn and buy.
This type of segmentation works on the premises that �Birds of a feather flock together�. If you visit www.upmystreet.co
Figure 7.4 ACORN Categories
ACORN Categories ACORN Groups
A Thriving 1. Wealthy Achievers, Suburban Areas
2. Affluent Greys, Rural Communities
3. Prosperous Pensioners, Retirement Areas
B Expanding 4. Affluent Executives, Family Areas
5. Well-off Workers, Family Areas
C Rising 6. Affluent Urbanities, Town and Grey Areas
7. Prosperous Professionals, Metropolitan Areas
8. Better-off Executives, Inner City Areas
D Settling 9. Comfortable Middle Agers, Mature Home Owning Areas
10. Skilled Workers, Home Owning Areas
E Aspiring 11. New Home Owners, Mature Communities
12. White Collar Workers, Better off Multi-Ethnic Areas
F Striving 13. Older People, Less Prosperous Areas
14. Council Estate Residents, Better off Homes
15. Council Estate Residents, High Unemployment
16. Council Estate Residents, Greatest Hardships
17. People in Multi-Ethnic, low income ages
However, this form of segmentation does not probe into why consumers buy what they do, hence it does not offer an unde
Psycho-demographic segmentation: Why?
Unlike demographic segmentation strategies that describe who is purchasing a product or service, psycho-demographic s
Figure 7.5 Psycho-demographic segmentation
Lifestyle Personality Values
E.g. Culture, sports
outdoors oriented. E.g. Compulsive,
Research focuses on gregarious, ambitious, E.g. Vals1 and Vals2
Activities, interests authoritarian
and opinions (AIOs)
Segmenting consumers into lifestyles is based on the notion that a person's lifestyle has a direct impact on their interests i
Marketing for Europe, Middle East and Africa for Cunard Line Seaborne Cruise Line, stresses the relevance of psycho-gra
Stuart Perl, Regional Director of Marketing (EMEA), Cunard Line
Seaborne Cruise Line.
Since personality traits have been correlated to (matched with) product categories consumers favour as well as persuasive
phones, etc.
Identifying personality traits can aid in the creative execution of an ad. Consumers with a high self-esteem will respond we
civilisation�. This ad appeals to consumers with a non-authoritarian personality trait because it presents an alternative, so
A commonly used American psycho-demographic segmentation technique is one that places consumers within specific co
their values and lifestyles, the second version is also based on relatively stable psychological characteristics
Figure 7.6 VALs2 system
This type of segmentation is advantageous because it:
provides rich data concerning the psychological make-up of consumers;
enables marketers to better understand the reasons behind consumers' purchases;
provides marketers with an effective way to match a variety of marketing communication tools from packaging to t
can be used to develop customer profiles that will guide promotional efforts and ultimately strengthen a brand.
Despite these advantages, this segmentation technique does not provide marketers with a thorough understanding of how
life.
Behavioural segmentation: How? Answering the how of consumer purchasing behaviour has become a prevalent consider
This segmentation strategy divides markets into consumer groups based on their uses, responses, knowledge and attitude
experiences people want to have.
Occasions: Segmenting a market according to the occasions when consumers use a product or service can provide rich in
Benefits sought: Grouping consumers based on the benefits they seek from a product or service provides unique opportun
Research has found four main benefit segments: economic, medical, cosmetic and taste. While some consumers will dine
User status: Consumers can be divided based on whether or not they are patronising a product. Hence, a consumer can b
to like, but not any more.
Usage rate: Consumers can be light, medium or heavy users. Although heavy users account for a very small percentage o
User readiness: Segments can be divided based on how ready consumers are to make a purchase. Consumers are typec
while your sister is not. This allows marketers to guide consumers through the many stages leading to a final purchase.
Attitudes towards the product or service: Consumers can be segmented according to their attitudes towards products and
Market segmentation: a critique
Products and services are constantly reinvented by consumers. What a marketer intended to be a children’s toy becomes
A fizzy drink is not only drunk but is also used in imaginative ways, it becomes the perfect cleaning companion, removing r
associated with market segmentation.
Market segmentation assumes that consumers are static and stable. Furthermore it places very complex behaviours into n
failing to take into consideration spontaneous and playful behaviour.
The different roles an individual plays everyday also conflict with the somewhat limited categories used to segment market
strategies provide marketers with the illusion of a certain and effective tool to operate, but the question remains as to whet
