Monday, April 2, 2012

Market Segmentation which is Bases for Segmentation in Market

As can be describe and reviews from Netmba (2009) that consumer markets can be segmented to the following customer characteristics:
1.           Geographic Segmentation
2.           Demographic  Segmentation
3.           Psychographic Segmentation
4.           Behavioral Segmentation

Geographic Segmentation
This type of segmentation concentrates on dividing markets into geographical regions. The following are some examples of geographic variables often used in segmentation: region (by continent, country, state, or even neighborhood), size of metropolitan area (segmented according to size of population), population density (often classified as urban, suburban or rural), climate (according to weather patterns common to certain geographic regions). This method is popular due to the cheap and easily available information.

Demographic Segmentation
This method can include a whole host of variables such as market size, age, gender, family size, family lifecycle, generation (baby-boomers, Generation X, etc.), income, occupation, education, ethnicity, nationality, religion, or social class. It is amazing how some companies turn potentially unattractive segments into opportunities.  Many of these variables have standard categories for their values. For example, family lifecycle often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for example, full-nest I, II, or III depending on the age of the children.

Psychographic Segmentation
Psychographic is the most exciting development in the segmentation technique for brand building, It is especially relevant to firms that seek to develop brands and to firms that wish to establish a growing brand. The customer is grouped according to their lifestyle. Activities, interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic variables include; activities, interests, opinions, attitudes and values. Psychographic segmentation helps in the understanding of why people behave the way they do, and therefore helps in understanding the markets, which are made of people.

Behavioral Segmentation
Behavioral segmentation is based on actual customer behavior toward products. Some behavioral variables include: benefits sought, usage rate, brand loyalty, user status (potential, first-time, regular, etc.), readiness to buy, occasions: holidays and events that stimulate purchases. Behavioral segmentation has the advantage of using variables that are closely related to the product itself. It is a fairly direct starting point for market segmentation.


Source: Nisarat A. 
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