Market segmentation and diversity are complementary concepts.

 Diverse market place composed of many different

peoples, with different backgrounds, countries of origin, interests, needs and wants, and perceptions.

The necessary conditions for successful segmentation of any market are a large enough population with sufficient money to spend and sufficient diversity to land itself to partitioning the market in to sizeable variables. What is market segmentation?
arket segmentation can be defined as the process of dividing market in to distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix.  Before segmentation, the general practice was mass marketing. The essence of this strategy was summed up by the entrepreneur Henry ford, who offered Model T automobile to public in any color they wanted, as long as it was black.


Mass marketing (if all consumers were alike- if they all had the same needs, wants and desires and the same background, education and experiences) costs less as one advertising campaign is needed, only one marketing strategy, only one standardized product is offered. Segmentation examples:

 Cars:
www.chevrolet.com Cobalt sporty, styling, minimal rear seat, small trunk for young singles. Impala larger and roomier vehicle family car buyer

 Watches:
Gender of the wearer : Male vs female Age of the user: first or starter watches, children s watches, adult watches. Function or lifestyle watches: business dress, runner s watches, swimmers or divers watches, cell phone watches etc. Price: watches costing less than $100, $100-$200, more than $200.

How market segmentation operates?

 By filling the gaps  By identifying the most appropriate media in

which to place advertisement.

 Businessweek tragets different segemnts by

special editions like : worldwide edition, north edition, asia pacific edition, technological edition, indusatrial edition, elite edition, lite edition etc..

Bases of segmentation:
        

Geographic Demographic Psychological Psychographic (Lifestyle) Sociocultural Use related Use situation Benefits sought Forms of hybrid segmentation

Market segmentation categories and selected variables: Geographical segmentation:

 Market divided by locations  People living in the similar area have similarity in need and

wants.  Ex- different foods for different global regions, differentiated rural and urban demand campbell soup

Demographic segmentation:
Vital and measurable statistics of a population Demographics help to locate a target market (whereas psychological and sociocultural characteristics help to describe how its members think and how they feel.) It is easier to measure than other variables.

AGE Baby boomers:

 78 million born between 1946 and 1964. Spend over $1 trillion annually and

control 70% of the nation s wealth.  40% of all boomers believe that they are currently living the best years of their lives and another 40% feel that the best years of their lives are still ahead of them.  They are wealthy, optimistic and have moved from a materialistic to a more experimental phase of their lives.  Can be divided in to four segments: - those looking for balance , those confident and living well those at ease and those overwhelmed

Age effects: occurrence due to chronological age

Cohort effect : occurrence due to growing up during a specific time period.

 when baby boomers are 70, they ll still eat pizza

and listen to the rolling stones  Table 3.3 : examples of country specific or region specific cohort defining moments.  India : use of khaadi among the old people due to freedom struggle.

Chronological age it is the biological age. Cognitive age most of the time 10 to 15 years younger than the biological age.

SEX
 Women have always been users of products like

beauty products, home making equipment and men have traditionally been users of products like tools, automobiles etc.  Of late, the gender roles have become blurred.  Use of hair colouring and skin products by men and purchase of tool and equipment by women.

MARITAL STATUS:
 Singles, divorced individuals, single parents, and

dual income married couples.  Singles, especially one person households with income greater than Rs.50000/- comprise a market segment that tends to be above average in the usages of products not traditionally associated with supermarkets and below average in their consumption of traditional super market products.

for a supermarket operating in the neighborhood, such insights are important for the purpose of selection of merchandise to be stored.

Psychological segmentation:
 Inner or intrinsic qualities of the individual consumer

(motivations, personality, perceptions, learning and attitudes)

Psychographic segmentation
 Activities interests and opinions (AIOs)

Activity how the consumer and family spend time like working, gardening, vacationing etc. Interest the consumers and family preferences and priorities like home, fashion, food Opinion -- politics, social issues, movies etc.

Socio cultural segmentation

Sociological (group) and anthropological (culture) variables Family life cycle, social classes, core cultural values, sub cultural membership.

Family life cycle Based on the assumption that many families pass through similar phases in their formation, growth and final dissolution. ( bachelorhood, honeymooners, parenthood, post parenthood and dissolution).

Social class It implies to a hierarchy in which individuals in the same class generally have same degree of status and hence preferences are similar and so are buying habits. Ex- A study found that 80% of the upper management workers use toll free numbers as compared to only 32% of blue collar workers.

Resource dimension includes education, income, intelligence, health, energy level, and eagerness to purchase resources that, in general, increase from youth to middle age decline afterwards. Self-orientation is divided into 3 Parts: (1)Principle oriented: having set views. (2)Status oriented: influenced by other's thinking. (3) Action oriented: Seeks activity, adventure, and variety.

Greater Resource Categories: Innovators/Actualisers: (Status Oriented)

Thinkers/Full-Fillers: (Principle Oriented) Achievers: (Status Oriented)

Mature/ Satisfied/ Comfortable/ Reflective. Favor functionality/ durability/ value in product. Successful/ Career/ Work oriented. Favor established/ prestige products that demonstrate success to peers. Young/ enthusiasts/ impulsive/ rebellion. Buy clothing/ fast food/ music/ videos.

Successful/ Active take charge people. Purchases reflect upscale/ niche products.

Experiencers: (Action Oriented)

Fewer Resources Categories: Believers: (Principle Oriented) Conservative (conventional/traditional). Favor familiar/ established products/ brands. Strivers: (Status Oriented) Uncertain/ Insecure/ approval seeking/ resource constrained. Buy stylish products that emulate purchases of wealthy people. Makers: (Action Oriented) Practical/ self sufficient/ traditional/ family oriented. Buy practical/ functional products like tools/ utility products/ vehicles. Strugglers: (Status Oriented) Elderly/ resigned/ passive/ resources constrained. Cautious consumer/ loyal to favorite brand.

The most effective communication is personal. A person is most likely to respond to something that is like them , something that makes them feel understood and adds to their lives. In an ideal world this means communicating with each individual customer separately. This would be a costly exercise and so segmentation was invented.

Fifty years ago it was relatively easy to predict the life of a 55 year old male
 how old his kids are,  how he would dress,  what he would do for work or play.

Now our lives are no longer predictable. Which is why socio-demographic profiling is less effective than it used to be. Rather than dividing consumers by age, gender, postcode or income, lifestyle segmentation divides them by values and attitudes. This leads to groups of consumers who are of the same mindset .

Let s say we are segmenting all consumers who go on holidays abroad.

 One lifestyle segment may be adventurous risk-takers with a very busy social

life who are motivated only by their own goals and desires lets call them segment A.  While another group may prefer the quiet home life, seek safety and security and feel it is important to be respected by their peers lets call them segment B.  In our experience you will find people of all age groups and income levels across all segments.  Meaning there are 45 year olds who go bungee jumping and 25 year olds to whom safety and security are of the utmost importance.

These mindsets of consumers can then be targeted by brands.

 For example if you are selling adventure holidays in the African forest you

would most likely target Segment A whilst a package holiday to an established resort on a quiet Island by a well-known tour operator would probably target segment B.

Not only does lifestyle segmentation make it very easy to identify which product or brand fits with which segment, it also allows for brand value alignment. It would be safe to say that to segment A adventure is important and they will therefore buy into and feel a connection with a brand whose values are based on adventure, exploration and discovery. This could be the beginning of a lifelong relationship, where the brand becomes part of the identity.
 I am an adventurous person I am the type of person

which uses risky brand X.

Ultimately marketing is about understanding and satisfying consumer and visitor needs. Lifestyle segmentation is one of the best starting points to achieve that.