7/12/2022

Assignment no 02
Submitted To: Syeda Dur-e-Afshan Ali

Submitted By: Aleena Israr

20211-29781
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Assignment

In this review exercise, you need to demonstrate your understanding of the different
consumer segmentation bases.
Listed below is a number of firms and how they approach segmentation. You need to
identify what type of segmentation base that the firm is using (see list of segmentation bases
at the bottom and give rationale
Note: Sometimes more than one segmentation base in combination (that is, hybrid
segmentation) has been used.

How the Firm Defines its Target Market

1. A bank that markets home loans to young married people and financial planning
services to retired people.
2. A mobile phone company that targets people who frequently holiday in remote
parts of the world.
3. A gourmet cheese company that targets people buying cheese platters for a dinner
party or function.
4. Computer software firm that is most interested in households with a high level of
software purchases.
5. Prestige car manufacturers who highlight the status associated with owning one of
their vehicles
6. Smart phone manufacturers targeting those consumers who are interested in
purchasing their first smart phone in the future
7. A plumber deciding to do letterbox drops his local area
8. A book publisher that specializes in children’s books
9. A home-delivered spring water company advertising in a ‘health’ magazine
10. A travel package tour operator targeting retired people who want educational travel
experiences

Choose from the following segmentation bases:

A= Geographic
B = Behavioral
C = Benefits
D = Demographic
E = Psychographic ( VALS)
F = Occasion/situation
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Student Discussion Questions (discuss in detail all

questions)
1. Identify the type of segmentation base being used by each firm. Provide rationale

1. A bank that markets home loans to young married people and financial planning
services to retired people.

Demographic & Benefits Segmentation

In this statement, bank segmented people on the basis of demographic segmentation
(due to difference in their age and income) and benefits segmentation (due to their
different needs and benefits they will be getting from the loan).

2. A mobile phone company that targets people who frequently holiday in remote parts
of the world.

Behavioral/Geographic Segmentation
Mobile phone company is targeting market on the basis of behavior of people who
holiday in remote part of the world. Also, they are targeting only remote areas where
people do spend their holidays. It works on the assumption that individuals in that area
have comparable requirements, desires, and cultural factors.
3. A gourmet cheese company that targets people buying cheese platters for a dinner party
or function.

Situations /Psychographic Segmentation

The gourmet cheese company is targeting people on the basis of occasion i.e., who buys
cheese platter for a dinner party or function. The company also uses psychographic
segmentation as it depicts user interest in cheese for their dinners or status and
consumers’ loyalty to the specific gourmet cheese platter for their parties and functions.

4. Computer software firm that is most interested in households with a high level of
software purchases.

Demographic/Psychographic Segmentation
Here the people who are interested in purchase of high-level software households for
their unique life styles is targeted by the company. Also, the company segmented the
people on the basis of their incomes as upper class can easily afford such advanced
equipment for their homes.
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5. Prestige car manufacturers who highlight the status associated with owning one of their
vehicles

Behavioral/Psychographic Segmentation
This is an example of psychographic and behavioral segmentation since the corporation
aims to appeal to those, who have personalities that consider or value status and are
completely loyal to such brands while shopping for a vehicle, which reflects on the type
of personalities and needs such individuals have.

6. Smart phone manufacturers targeting those consumers who are interested in purchasing
their first smart phone in the future

Behavioral Segmentation
Here people who are interested in buying their first smart phones are being targeted.
This is behavioral segmentation as people exhibiting behavior of buying smart phones
are being targeted.

7. A plumber deciding to do letterbox drops his local area

Geographic Segmentation
It is geographic segmentation as the plumber decides to drop letters to those people only
who resides in his area.

8. A book publisher that specializes in children’s books

Demographic Segmentation
Here segmentation is done on the basis of age as books are to be sold to children.

9. A home-delivered spring water company advertising in a ‘health’ magazine

Psychographic/Benefits Segmentation
People who are health conscious and staying fit and healthy is a part of their personality
trait will read magazine in which home delivered water is advertised and get benefited
by it, as it offers two benefits:
• Home delivered water
• Healthy water
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10. A travel package tour operator targeting retired people who want educational travel
experiences

Demographic/ Psychographic Segmentation

As retired people are being targeted, so segmentation is demographic as it is being done
on the basis of age. Secondly those retired people are targeted who prefer educational
travel experiences which is their personality trait.

2. Are there any examples above where the approach used could be classified as more
than one of the segmentation base options? If yes which one and why?

In below mentioned more than one segmentation are being used.

Example no 01: In this bank segmented people on the basis of age which is newly
married couple and retired ones (Demographic Segmentation) and also bank segmented
on the basis of their needs or benefits they will be getting which is loan for their homes
and for financial planning after retirement respectively to attract them (Benefits
Segmentation).

Example no 02: Mobile phone company first segmented people who prefer spending
holidays in remote areas (Behavioral Segmentation), secondly, they targeted only those
remote areas and market as per their needs and wants there (Geographic Segmentation).

Example no 03: Gourmet cheese company first targeted those people who prefer
cheese platters due to their tastes (Psychographic Segmentation) secondly, their
segmentation is dependent on their functions and dinner parties’ frequency (Situation
Segmentation).

Example no 04: Computer software firm targeted people who are interested in purchase
of high-level software households for their unique life styles (Psychographic
Segmentation) secondly, they are also targeting on the basis of income as upper class
can easily afford such items (Demographic Segmentation).

Example no 05: Prestige car manufacturer targeted people that consider or value status
and are completely loyal to such brands (Behavior & Psychographic Segmentation)

Example no 09: The company targeted people who are health conscious by advertising
in health magazine (Psychographic Segmentation) secondly, they are offering benefit
of home delivery to attract them (Benefits Segmentation).
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Example no 10: A travel package tour operator targeted retired people, hence on the
basis of their age (Demographic Segmentation). Secondly, he also targeted only those
people who prefer educational travel experiences due to their personality interests
(Psychographic Segmentation).

3. A number of the firms use hybrid segmentation, what would be the advantages of
this approach?

HYBRID SEGMENTATION

Hybrid segmentation can be defined as simply combining two or more different types
of customer segmentation models to form a unique segmentation strategy. With hybrid
segmentation, managers can eliminate many of the negatives by combining multiple
models together to best fit business’ sales and marketing strategies.
The great advantage of a hybrid segmentation is that any segments that are discovered
are automatically “identified”, since they come with a “built-in” demographic profile.
This has two important consequences, one substantive, the other methodological:

Hybrid clusters are always actionable, in the sense that, since each one is associated
with a particular demographic profile, a marketer always knows where to find them,
and has a “leg-up” on how to talk to them (media plan), as well as knowing what to say
to them.

Hybrid clusters are self-identifying. If one wants to draw another sample containing
these clusters, or to identify them in a customer database, a simple demographic screen
will do the trick. On the other hand, finding purely attitudinal clusters in a new
population depends on re-asking (at least a subset of) the attitudinal questions, or else
depending on correlations with demographics that, because they were not part of the
original clustering, often have a very sketchy relationship with the attitudes.

For this following are the strengths of hybrid segmentation.

• It allows for a single company-wide strategic focus.
• Provides a unified segmentation that may be used by many business operations.
• Product propositions can be efficiently targeted to current customers.
• E-CRM activity may provide content that encourages engagement.
• The financial potential of section activities may now be calculated more precisely.
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4. Do you think there is one best segmentation base that most firms should utilize?
Why and why not

DEMOGRAPHIC SEGMENTATION

Demographic segmentation involves segmenting market based on demographic factors

such as age, gender, family size, family situation, race, ethnicity, annual income,
religion, and education.
B2B businesses can segment their client firms based on their company size, industry,
job role, etc. The ultimate aim of demographic segmentation is the better targeting of
customers.

The importance of demographic segmentation can be understood by looking at the

following use cases.

1. Better marketing
Brands and businesses can integrate the demographic data of their current and
prospective markets into their marketing and advertising systems. This will help them
in targeting each customer section better.
For instance, a clothing store can use its market’s demographic data to promote
women’s clothing to female customers, men’s apparel to male customers, baby clothing
to young couples with families, etc.

2. Luxury targeting
Luxury brands need to ensure that they aren’t wasting their time and effort in attracting
customers who won’t be able to afford their products. Demographic segmentation helps
here by helping them segment the market based on average income, and direct their
marketing efforts towards only the creamy layer of the society.

3. Industrial campaigns
Industrial campaigns are those marketing or advertising campaigns that organizations
run to target businesses that seek their products or services. Demographic
(firmographic) segmentation can help target specific sectors, job designations, and job
roles. This can drastically increase the campaign’s ROI.

Demographic segmentation has several use cases in marketing and advertising.

Below are its benefits.

1. Easily obtainable data

One of the prime benefits of demographic segmentation is that demographic data are
easily available. Businesses can pull specifics of their choice from government-
maintained census data to target their customers. Other than census, demographic data
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can also obtain from administrative records, registrations, lead generation forms, social
media profiles, migration reports, and web surveys.

2. Cost-effectiveness
Segmenting audience on the basis of their demographics doesn’t cost much. Doing it
using census data, wouldn’t cost anything at all.

3. Customer retention and loyalty

When a business or brand caters to the specific needs of each customer segment and
markets to them in a well-tailored manner, its customers become happy with it. The
customers keep coming back for its products and services. Thus, demographic
segmentation acts as one of the best customer retention strategies.

4. Easy to measure
It is easy to assess and measure demographic data due to the simple nature of the data
itself. Demographic data is more straightforward than behavioral segmentation and
psychographic segmentation, which are complex to obtain due to their subjective nature
and ambiguity.

5. Identify potential markets

Demographic segmentation also helps in identifying other potential markets. For, when
look at the analytics, the one’ll be able to figure out those people with specific
demographic attributes are purchasing more than others.

Conclusion
Demographic segmentation can play a vital role in the success of business. So, for
segmenting audience on the basis of their demographics for personalized messaging
and targeted marketing.

This will help to nurture audience easily and quickly. However, marketing solely on the
basis of demographic segmentation can lead to generalization and stereotyping.

Demographic data is quite basic. Digital marketing trends show that successful
segmentation will include the needs, preferences, attitudes, interests, beliefs, online
behavior, and past purchases of the consumers.

The other classes should be psychographic segmentation, geographic segmentation, and

behavioral segmentation. Such a combination of approaches would be most useful as it
can provide a qualitative and quantitative image of target market.