BASES FOR SEGMENTING CONSUMER MARKETS AND BUSINESS MARKETS

INTRODUCTION
It is important to highlight the concept of market segment and segment marketing in the context of arriving at the basis for consumer markets and business market segments.

What is a market segment?
A market segment consists of a group of consumers who share a similar set of needs and requirements. What is segment marketing? This is the process of identifying a certain group of consumers having common needs or wants and then to decide which one to target. It is also significant to distinguish segment marketing and mass marketing.

Segment marketing vs. mass marketing
Segment marketing has distinct advantages over mass marketing as shown below:  Seller engages in mass production, mass distribution and mass promotion of one product for all buyers in mass marketing  

In segment marketing the seller can offer better design, better price and flexible market offerings to all members of a segment. Example:Example:- Automobile companies may offer different versions of the same model such as car with a/c, power windows and power steering at additional cost.

Description of different bases for consumer markets
Bases for segmenting consumer markets have to identify various characteristics such as  Geographic  Demographic  Psychographic  Behavioral In order to study the changing consumer lifestyles, it is important to describe the above characteristics. The following chart will describe the different bases for consumers markets.

Geographic region city

southern, western, eastern, northern class 1/class2/metro city/sub metro city criteria population of 1 million and above ruralrural-villages with population of over 10,000 urbanurban-towns with a pop. Of 50,000-200,000 50,000Under 6 years,6-11 years,12-19years, 20-34 yr s years,6- years,12203535-49 years, 50-60yrs, 60+ years 50Young, single , young married ,youngest married, child under 6,older married, no children under 18 etc Male, female Low(upto Rs.40,000p.a)lower middle(Rs.40,00180,000p.a)Upper middle(Rs.80,001-120,000)And high above 160,000 p.a(per annum)

Rural and urban DEMOGRAPHIC Age Family size

Gender Income

occupation Education

Unskilled worker,skilled worker, petty traders, shop owners, bussinessman/industrialist,self-employed Illiterate,school upto 4 yrs,school between 5 and 9 yrs,ssc,hsc, nongraduate,graduate/post graduate(professional)

PSYCHOGRAPHIC Socioeconomic classification(sec) Lifestyle Personality BEHAVIORAL Regular,special Ocassions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product Non-user,ex-user,potential user first-time user,regular user. Light, medium,heavy None,medium,strong,absolute Unaware,aware,informed,interested,desirous ,intending to buy Enthusiastic,positive,indirect,negative,hostile Quality, service,economy, speed A1,A2,B1,B2,C,D,E1,E2 Sports-oriented,culture-oriented,outdoor
oriented

compulsive,gregarious, authoritan,ambitious

Geographic Segmentation
It is important to divide the market into Different geographic units such as  Different states  Different regions  Different cities  Different neighbourhoods

Urban vs rural regions and divisions
This division is necessary due to the regional diversities between rural and urban consumers For example:example:Variations in consumer preferences Variations in consumer s buying habits Variations in consumer s income Variations in their purchasing power Availability of infrastructure such as electricity,telephone networks roads social and cultural orientations. People affecting the market potential need to segment the market geographically becomes all the more important if we look at the following illustrations In India there are more than 5000 towns and 6,38,000 villages.

For many products penetration levels in the villages are lower than in the urban areas and this indicates that the potential for increasing consumption in rural areas is there Demographic segmentation:segmentation:We divide the market into groups on the basis of the following factors  Age  Family size  Family lifecycle  Gender and  Income

Age and lifecycle
Consumer wants change with age example: baby talc(jonsons and ghonsons are popular for infants and children. children.

Family lifecycle:
Persons in the same part of the lifecycle may differ in their life stage. Life stage may imply getting married, sending child to the school, planning for retirement and so on. These life stages present opportunities for new sellers who can help people to fulfill their needs.

Gender Men and women have different attitudes and behave differently due to genetic makeup and socialization problems  Income:Income:Income determines the ability of consumers to parcipate in the market 

Psychographic
Psychographic is a science of using psychology to better understand consumers. In this segmentation, buyers are divided into different groups on the bases of  Personality traits  Lifestyles  values    

Values and lifestyles affect product and brand of choice of customer Religion also has a important influence on values and lifestyles For example large no. of consumers in India are strictly vegetarian The main dimensions of the value and lifestyles segmentation are consumer motivation 

1. 2. 3.

Consumers are inspired by three motivations IdealsIdeals-guided by knowledge Achievement SelfSelf-expression 

1. 2. 3. 4.

Consumer with high resources are Innovators Thinkers Achievers Experienced

Consumers with lower resources are:are:1. BelieversBelievers-conservative/conventional 2. StriversStrivers- Fun loving people 3. MakersMakers-practical, down to earth and self sufficient 4. SurvivorsSurvivors-Elderly, passive people concerned about change

Behavioral Segmentation
In this segmentation, marketers divide buyers into groups on the basis of their knowledge of the product, attitude towards the product or response to a product. Decision Roles:Roles:People play five types of roles in buying decision a) As initiators b) As influencer c) As decider d) As buyer e) As user.

Study of the above mentioned roles is useful for the designing the communication strategy. For example women play significant role for influencing and deciding for kitchen appliances. Factors for behavioral segmentation: The following factors are important:important: OccasionsOccasions-greeting card brands such as Archies and Hallmark make cards for different occasions such as birthdays,weddings,Diwali, Newyear etc. Cadburys market gift packs for festivals like Diwali and Christmas.  UserUser-status: every product has different users as a) nonnon-users b) ExEx-users c) PotentialPotential-users d) FirstFirst-time users e) Regular users Blood bank cannot depend on regular donors, they have to approach first time donors also Usage Rate:Rate:Markets can be segmented into:Light product users Medium product users Heavy product users like usage of mobile phones

Buyer Readiness stage
Some people are unaware, some people are aware of the product,some are informed, some are interested and some intend the product. Loyalty status: Marketers divide the buyers into four groups based on the brand loyalty 1. Hard core loyals-buying only one brand loyals2. Split-loyalsSplit-loyals-loyal to two or three brands 3. Shifting loyals-shifting loyality from brand to other loyals4. SwitchersSwitchers-Consumers who have no loyality. Attitude:Attitude:- Five attitudes about products are Enthusiastic Positive Indifferent Negative Hostile 

Bases for segmenting Business Markets.
Demographic 1.industry: Which industries should we serve? 2. Company size: what size companies should we serve? 3.Location: what geographical areas should we serve Operating Variables 4. Technology: what customer technologies should we focus on 5.User or non-user status. Should we serve heavy users, medium users, nonlight users, or nonusers? Purchasing Approaches 7.Purchasing function organization. Should we serve companies with highly centralized or decentralized purchasing organization 8.Power structure: should we serve companies that are engineering dominated, finanancially dominated ,and so on? 9.Nature of existing relationship: should we serve companies with which we have strong relationship or simply go after the most desirable companies. 10.General purchasing policies: Should we serve companies that prefer leasing? Servicing contract? Sealed bidding? 11.Purchasing criteria: should we serve companies that are seeking quality? service? Price?

Situational Factors 12.Urgency: should we serve companies that need quick and sudden delivery or service? 13. Specific application: should we focus on certain application of our product rather than all applications? 14. Size or order. Should we focus on large or small orders? Personal characteristics 15.Buyer-seller similarity :should we serve companies whose people and values are similar to ours? 16. Attitude toward risk: should we serve risk-taking or risk-avoiding customers? 17.Loyality: Should we serve companies that show high loyalty to their suppliers.

In segmenting business markets, the following factors are taken into consideration.  Demographic: demographic factors are the most important as the marketers decide to determine which segments of customers to serve. A tyre manufacturing company sells tyres to automobile companies and aircrafts. Within a chosen target industry a company can further segment it by determining which size of company to sell.  Further, the company might locate separate outlets in different areas for selling to large and small buyers.  Operating variables:- the company may determine what customer variables:technologies to focus, which type of customers to serve-heavy users, servemedium and light users or non users etc.  Purchasing approaches:- a company can segment further by approaches:purchase criteria. For example govt. labs need low prices contract for scientific contracts, university and college labs need equipments requiring minimum service and industrial and pharmaceutical labs need equipments that is highly reliable.  Personal characteristics:-marketers identify segments by determining characteristics:personal characteristics of the buyers such as risk taking customers or risk avoiding customers, loyal customers for example autoautocompanies are giving loyalty bonus to regular customers.

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