Summary Notes 5
Consumer behavior is affected by many internal, personal factors, as well as interpersonal ones. Each individual brings unique needs, motives, perceptions, attitudes learning and self-concepts to buying decisions.
2. What is Market Segmentation?
The market place is heterogeneous with differing wants and varying purchase power. The heterogeneous marketplace can be divided into many homogeneous customer segments along several segmentation variable. The division of the total market into smaller relatively homogeneous groups is called market segmentation.
3. Roles Market Segmentation Plays
- Segmentation helps the marketer by identifying groups of customers to whom he could more effectively ‘target’ marketing efforts for the product or service
- Segmentation helps the marketer avoid ‘trial-and-error’ methods of strategy formulation by providing an understanding of these customers upon which he can tailor the strategy
- In helping the marketer to address and satisfy customer needs more effectively,
- segmentation aids in the implementation of the marketing concept
- On-going customer analysis and market segmentation provides important data on which long-range planning (for market growth or product development) can be based.
4. Characteristics of a market Segment ?
- Segments must be internally homogeneous — consumers within the segment will be more similar to each other in characteristics and behavior than they are to consumers in other segments.
- Segments must be identifiable — individuals can be ‘placed’ within or outside each segment based on a measurable and meaningful factor
- Segments must be accessible — can be reached by advertising media as well as distribution channels. Only then, the segments can be acted upon.
- Segments must have an effective demand — the segment consists of a large group of consumers and they have the necessary disposable income and ability to purchase the good or service.
5. Variables of Market Segmentation:
- Geographic Segmentation
- Demographic Segmentation
- Psychographic Segmentation
- General Life style
- Product Usage
- Product Benefit
- Decision process
6. Geographic Segmentation :
Geographic segmentation is one of the oldest and most basic of market descriptors. In most cases, it alone is note sufficient for a meaningful consumer segmentation. It involves
- Region of product distribution
- Cultural differences
- Mobility of consumers
7. Demographic Segmentation:
Also basic and included as a variable in most segmentation analyses. Demographic profiles of segments are important especially when making later advertising media decisions. It Involves :
- Educational level
- Social status
8. Psychographic Segmentation:
Psychographic variables are more useful because there is often no direct link between demographic and market behavior variables. These consumer profiles are often tied more directly to purchase motivation and product usage. It involves:
- Personality traits
- Perceptual styles
- Reference groups
- Social roles
9. Segmentation on General Life Style :
Provides a rich, multi-dimensional profile of consumers that integrates individual variables into clearer pattern that describes the consumer’s routines and general ‘way of life’ It Involves:
- Correlation of demographic and psychographic variables
- Activities and interests
10. Segmentation on Product Usage
Segmenting the market into heavy, medium, light and non-users gives good understanding of present situation in market. It involves
- Frequency of brand/product use
- Brand loyalty
- Attitudes toward product
11. Segmentation on Product Benefit:
Very useful if product can be positioned in a number of ways. Primary use of this variable segments the market into groups that look for different product
- Expectations of product performance
- Needs product must fill
- Perceptions of brands
- Satisfaction ( and dissatisfaction measures)
12. Segmentation on Decision process : Use of this variable segments the market into price/non-price sensitive, shoppers/impulse buyers and other segments which characterize the market behaviour of each group. Must be used in conjunction with analysis of consumer characteristics to allow identification of the individuals involved. It involves :
- Shopping patterns
- Media-use patterns
- Product information searches
- Sensitivities to price,
- to promotion and to place (channel)
The concept of positioning seeks to place a product in a certain ‘position’ in the minds of the prospective buyers. Positioning is the act of designing the company’s offer so that it occupies a distinct and valued place in the target customers’ minds.