Segmentation criteria starts with identifying all potential buyers of a product. That is, people who have the need and the means to buy what the market offers. In most cases, this is a large collection of people or organizations that are similar in some ways but different in many other ways. It's the kind of process that helps marketers focus their attention on the most promising groups in this universe.
There is no single correct criterion for product segmentation. Determining the target consumer base can be done using various methods. Several general criteria and methods for market segmentation are discussed below. Marketers can use a combination of these techniques to better understand the target market and the customers they want to serve. In fact, good employees usually try differentcombinations to find out which approach is most successful. As people and their needs change, effective market segmentation criteria can also evolve over time.
Geographic process
Segmentation criteria - countries, states, regions, cities, neighborhoods or zip codes. They determine the geographical processes of the market. The concept represents the oldest basis for segmentation. Regional differences in consumer tastes for foods are well known, such as the propensity for barbecue in southern Russia or the preference for he althy menus in the Leningrad region. Geographic criteria for product market segmentation suggest that items such as raincoats, umbrellas and rubber boots can be sold in rain-prone areas. And in hot regions - summer clothes.
Geographic market segmentation criteria are easy to identify and usually make large amounts of data available. Many companies simply don't have the resources to expand beyond local or regional areas, so they must focus on just that one segment. Marketing efforts are kept to a minimum as the product and ancillary activities such as advertising, physical distribution and repairs can be directed to the customer. In addition, geography provides a convenient organizational structure. Products, merchants and distribution networks can be organized around a central specific location.
Disadvantages of using basic segmentation criteriamarket also deserve attention. There is always the possibility that consumer preferences are not dictated by location - other factors such as ethnicity or income may be more important. For example, the stereotypical Siberian is hard to find in Tyumen, where a third of the population immigrated to earn money. Another problem is that geographic areas can be defined as very large locations. The participants in the process may be too heterogeneous to be considered a meaningful target audience.
Demographic component, signs and criteria of market segmentation
Demographics are statistics that describe the various characteristics of a population. This segmentation consists of dividing the market into groups based on variables such as age, gender, family size, income, occupation, education, religion, ethnicity, and nationality. It is demographic segmentation criteria that are one of the most popular bases for separating customer groups. This is due to the fact that the data are numerous. And consumer market segmentation criteria are often closely related to these variables.
For example, the youth market (approximately five to thirteen years old) affects not only how parents spend money, but also how children shop for themselves. Manufacturers of products such as toys, records, snacks and video games have developed promotions aimed at this group. Adolescents are children between the ages of ten and fourteen who are discovering what it means tobe a consumer, and shape the brand attitudes and perceptions they will carry with them as they mature and increase their purchasing power. The senior market (aged sixty-five and over) is growing in importance for manufacturers of products such as cheap accommodation, cruises, hobbies and he althcare.
Life stage is another demographic trait associated with age, gender and marital status. There is evidence that people go through predictable shopping behaviors. For example, a young couple with one small child has very different shopping needs than retirees in their fifties or single middle-aged professors.
Income is perhaps the most common demographic basis for consumer product segmentation criteria, as it indicates who a particular person can or cannot afford. For example, it's perfectly reasonable to assume that minimum wage earners can't easily buy an $80,000 sports car. Revenue is especially useful as an input to the main market segmentation criteria as the price of a product increases. It can also help in understanding certain types of shopping behavior, such as the most likely to use coupons.
Similarly, different demographics may influence other consumer segmentation criteria.
Despite the obvious advantages of this process (i.e. low cost and ease ofimplementation), there is uncertainty about its effectiveness. The method may be misused. For example, the typical Thai food consumer could be said to be under the age of thirty-five, college educated, earning over $10,000 a year, living in the suburbs of a small community in the West. While these characteristics may describe the typical Thai food consumer, they also describe many other consumer segmentation criteria. And they may draw a too broad or inaccurate portrait of the intended buyer. When the selection is too broad, it loses its defining characteristics and therefore fails to differentiate the target segment from the general population.
Psychographic component
Such consumer goods market segmentation criteria are divided according to the general characteristics of their lifestyle, personality, attitude and social class. Evidence suggests that exposure of potential buyers to certain products influences their subsequent purchase. If people with similar attitudes can be isolated, they represent an important psychological segment. Touch can be defined as the predisposition to behave in a programmed way in response to a given stimulus.
Consumer market segmentation criteria is defined as long-term human characteristics and behaviors that determine how they deal with and respond to their environment. Consumptionsome products or brands is associated with the individuality of the consumer. For example, risk-takers are drawn to extreme sports and travel, while extroverts tend to dress conspicuously.
Social class segmentation identifies people based on a combination of socioeconomic factors such as education, occupation, income, marital status, and attitudes associated with these points.
Another view
The signs and criteria of lifestyle segmentation refer to the orientation that a person or group has towards food, work and play. And they can be defined as a pattern of attitudes, interests and opinions held by a person. Lifestyle segmentation has become very popular among marketers due to the availability of consumer data, gauges and tools, and the intuitive categories that result from the process. In general, manufacturers target versions of their products and advertisements to different lifestyle segments.
Analysis usually begins with questions about the activities, interests and opinions of the consumer. If a woman earns $100,000-$150,000 a year as an executive, is married, and has two children, what does she feel about her role as a professional, wife, and mother? How does she spend her free time? What groups does she belong to? What is she reading? How does she use electronic devices? What brands does she prefer and why? The stock of AIOs (Activities, Interests, Opinions) reveals vast amounts of information relating to attitudes towards product categories,brands, as well as user characteristics.
In general, psychographic segmentation tends to focus on how people spend their money. Their patterns of work and play, core interests, opinions about social and political issues, institutions and themselves. While the process can generate intuitive groupings and useful information about consumer behavior, it can also require significant research and effort to develop a more complex and detailed approach to defining market segmentation criteria.
Behavioral system
Consumers are divided into groups according to the common deeds they share. Typically, these behaviors are related to their knowledge, attitude, use, or reaction to the product.
The most common type of behavioral segmentation is the user process. In 1964, market researcher Twedt made one of the earliest departures from the demographic system when he suggested that the heavy or frequent consumer was an important base. He wanted product consumption to be measured directly to determine usage levels. So the promotion should be aimed directly at the heavy user. This approach has since become very popular. Significant research has been done on people who purchase various products. The results show that looking for other characteristics that correlate with usage often increases marketing efforts significantly.
Other behavioral bases forMarket segmentations include the following, which are discussed below.
User status
Beyond active shoppers, it can be useful to identify segments based on a broader set of usage patterns, such as disposables. Mobile service providers are exploring usage patterns to create optimal plans and target based on specific sets of user needs - family plans, individual plans, unlimited calls, etc.
New car manufacturers have become very sensitive to the need to provide buyers with a lot of useful information after the sale in order to minimize post-purchase unhappiness.
Purchase case
This approach is to try to determine the reason for buying the product and the way to use it. For example, airlines tend to divide customers into segments based on the passenger's travel motive - business versus personal travel. Someone traveling on business usually has different needs than someone who travels for pleasure. Business people tend to be less price sensitive and focus more on timing, location and convenience.
Loy alty
In this approach, consumers fall into reward categories based on their buying patterns of certain brands. The key criterion for segmenting the service market isbrand-loyal consumer. Companies assume that if they can identify people who prefer a certain firm and then determine their commonalities, they will find the ideal target market. There is still high uncertainty about the most reliable way to measure brand loy alty.
Ready
This segmentation suggests that potential customers can be segmented based on how willing they are to purchase a product:
- don't know;
- aware;
- informed;
- interested;
- wish;
- intend to buy.
Using this approach, the marketing manager can develop an appropriate market strategy to get through the various stages of readiness. These stages are rather vague and difficult to measure accurately. But readiness can be a useful lens for understanding the mindset of a customer and how to push them to buy, especially when there is a learning process involved before the purchase.
Decision maker segmentation
This approach groups people according to who makes the purchasing decision in an organization or household. There is usually a "primary consumer": the person who makes the final decision about what to purchase and allocates the budget. Many of the plans also involve "influencers". These are people who do not make the final purchase decision, but can influence the choice of products.
For example, in families, young children can influence whetherparent of Cheerios, Chex or Fruit Loops. In companies, the department manager may be the main consumer of the software product. But that employee's work team can influence the choice by helping evaluate options to determine which one best suits their needs. Segmentation by decision role helps marketers understand who really matters in the buying process and figure out who matters most.
Additional process
All of the above segmentation approaches apply to consumer markets. There are many similarities between the behavior of the average consumer and the business consumer. And so similar bases and variables apply. Common business segmentation approaches include:
- Organization size - broken down by large, medium and small clients by revenue, number of employees, global reach, etc.
- Geography: Organize segments based on location.
- Industry - segmentation by the sector in which the organization operates, such as manufacturing, retail, hospitality, education, technology, he althcare, government, professional services, etc.
- User status - frequency of use, volume, loy alty, durability. Products already in use, willingness to buy, etc. For example, longtime loyal customers with "strategic" relationships are often treated differently and given preferential terms compared to new customers.
- Required Benefits - grouped by common elements they are looking for in a product or shopping experience.
- End Use - Identify segments based on how they plan to use the product and where it fits into their operations and supply chain. For example, a manufacturer of electric motors learned that customers run motors at different speeds. After field visits and confirmation of these applications, he decided to divide the market into slow and high speed segments. In the first industry, the manufacturer singled out a product at a competitive price with a service advantage, and in the second case, superiority.
- Purchasing Approaches - organizing the market according to how corporations prefer to shop. These preferences, in turn, determine how the seller builds relationships with the buyer and works through the deal.
Collection of several bases
Marketers may find it most useful to combine different segmentation frameworks to create a more complete picture of their target market. For example, the geocluster approach combines demographic data with geographic data to create a more accurate profile of a particular consumer. The second point, combined with behavioral information, can point companies to places where customers are clustered, showing an action that makes them a good target for the company's product. Overlaying demographic data on lifestyle segments helps marketers better understand their target customers and how to effectively reach them throughmarketing.
Any of these approaches can be "correct" for a given company and set of products. It's also important for marketers to constantly evaluate what's happening in their target market and adjust their approach as customer relationships, behaviors, and other sales dynamics evolve.
Market segmentation is practiced by most businesses in one form or another as a way to streamline their marketing strategy by dividing target systems broadly into specific customer groups and developing marketing techniques. Which will be attractive to every species.
Identification of viable processes
Clearly defined market segmentation criteria not only ensures that customers are more likely to purchase the product that suits them. It also minimizes wastage of resources by reducing the time spent marketing the wrong products to the wrong customers. However, it is important to focus resources on market segments whose size, growth, and profitability are good both immediately and in the long term. The following 5 market segmentation criteria should be helpful when planning a company strategy.
- Measurable. Market segments are usually defined in terms of value or sales volume (that is, the number of customers). A robust study must be able to identify the size of a process with reasonable accuracy so that strategists can then decide whether, how and to what extent they should focus theirefforts on marketing.
- Essential. Simply put, there would be no point in wasting marketing budget on a market segment that is not large enough or has little purchasing power. The viable stratum is usually a homogeneous group with well-defined characteristics such as age group, socioeconomic background and brand perception. Durability is also important here. No market segmentation expert would recommend focusing on a volatile group of customers that could disperse or change beyond recognition within a year or two.
- Available. When delimiting a market segment, it is important to consider how the group can be accessed, and most importantly, whether this relates to the strengths and abilities of the company's marketing department. Different segments may respond better to outdoor advertising, social media campaigns, TV spots, and so on.
- Differentiability. The ideal market segment should be internally homogeneous (i.e., all customers within a selection have similar preferences and characteristics) but externally heterogeneous. Differences between market groups must be clearly defined so that campaigns, products, and marketing tools applied to them can be implemented without duplication.
- Effectiveness. The market segment must have practical value. Its characteristics should provide supporting data for a marketing position or sales approach, and it should have results that are easy to quantify.
A good understanding of the principles of market segmentation is an important building block of a company's marketing strategy. As well as the basis for an efficient, streamlined and ultimately successful customer experience through precise targeting of products and services with minimal waste.
