Consumer markets can be divided into segments based on different factors that influence customer preferences and buying behavior.
The four major bases for segmentation are:
- Demographic Segmentation
- Geographic Segmentation
- Psychographic Segmentation
- Behavioral Segmentation
1.) Demographic Segmentation:
It focuses on dividing the market based on age, gender, income, education, occupation, family size, marital status, and religion.
- Demographic factors are easy to measure and directly influence consumer needs and purchasing power.
Example:
- Luxury car brands target high-income individuals.
- Baby product brands focus on new parents.
2.) Geographic Segmentation:
It focuses on segmenting the market based on location, such as country, region, city, rural vs. urban areas, or climate conditions.
- Different locations have different cultural, climatic, and economic conditions that affect consumer preferences.
Example:
- A winter clothing brand targets colder regions.
- Fast-food chains offer spicy food in Asian markets and mild flavors in European markets.
3.) Psychographic Segmentation:
It focuses on dividing the market based on lifestyle, values, interests, attitudes, and personality traits.
- Consumers with similar lifestyles and values tend to have common preferences and purchasing behaviors.
Example:
- A fitness brand targets health-conscious individuals who prioritize exercise and nutrition.
- Luxury brands attract status-conscious consumers who value prestige and exclusivity.
4.) Behavioral Segmentation:
It focuses on segmenting the market based on consumer behavior patterns, such as purchase frequency, brand loyalty, product usage, and benefits sought.
- Understanding behavior helps businesses tailor their marketing strategies to meet consumer expectations.
Example:
- A coffee brand targets frequent coffee drinkers by offering subscription plans.
- Hotels offer loyalty programs to retain repeat customers.
Bases for Segmenting Organizational Markets:
Organizational markets (B2B markets) are segmented using various criteria that help businesses effectively target other businesses based on their needs, purchasing behavior, and industry characteristics.
The key bases for organizational market segmentation include:
- Geographic Segmentation
- Demographic Segmentation
- Operating Variables Segmentation
- Purchasing Behavior Segmentation
1.) Geographic Segmentation:
It involves segmenting organizations based on location, such as country, region, climate, or trade zones. Businesses in different locations have different regulations, distribution challenges, and consumer demands.
2.) Demographic Segmentation:
It involves dividing the market based on business size, industry type, number of employees, and revenue. Companies in different industries or of different sizes require different levels of service, pricing, and product features.
3.) Operating Variables Segmentation:
Businesses are segmented based on technological capabilities, production processes, and customer expertise. Companies with different operational structures have different product and service requirements.
4.) Purchasing Behavior Segmentation:
Industrial market can be segmented on the basis of purchase related variable. It includes purchase structure, purchase procedures and negotiation period.
