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MARKET SEGMENTATION
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PART ONE

Introduction

One organisation can't satisfy the "needs and want"s of all consumers; it's almost impossible and probably very expensive to try and do it. This means firms have to divide the market into sections and choose the sections they would like to market their products at. Dividing the market into sections based on their characteristics and behaviours is known as segmentation. Firms commonly split the market based on demographics, income, geography, behaviour and psychographics.

Demographic Segmentation Diagram

 

Demographic Segmentation

Demographics originates from the word ‘demography’ which means a ‘study of population’. The population can be divided into age, gender, income, and family lifecycle amongst other variables.

As people age their needs and wants change, some organisations develop specific products aimed at particular age groups for example  nappies for babies, toys for children, clothes for teenagers and so on.   Gender segmentation is commonly used within the cosmetics, clothing and magazine industry. All Bar One within the UK have developed their bars to attract the female audience, taking opportunity of the rise in the number of women who now enjoy ‘social drinking’. In the UK we have also seen the introduction of Maxim, (www.maxim-magazine.co.uk)  a male lifestyle magazine covering male fashion, films, cars, sports and technology. We have also seen the introduction of unisex cosmetic products like CK1  which works on the similarities between the two genders.

Products and services are also aimed at different lifecycle segments. Holidays are developed for families, the 18-30's singles,  and for those in their 50's.   
   

Segmentation lifestyle and age diagram

 

Income Segmentation

Income segmentation is another strategy used by many organisations. Stores like Harrods, Harvey Nichols are predominantly aimed at the affluent market. Daewoo aim their vehicles at price sensitive buyers who require a bundle of benefits for the price. In today's globally competitive environment brands are specifically developed and positioned within particular income segments in order to maximise turnover.

Geographic Segmentation

Geographical segmentation divides markets into different geographical areas. Marketers use geographic segmentation because consumers in different areas may display certain characteristics and behaviours in that particular region, for example, in London UK certain parts of the West End of London are more affluent then the East End and you will find particular products sold in these regions based on their affluence. An area can be divided by the town, the region or the country. If you are an organisation working on a global scale you may divide by global regions such as Europe, North America, South America, Asia and Africa. Mcdonalds globally, sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues. In Mexico more chilli sauce is added and so on.

Behavioural Segmentation

Behavioural segmentation refers to why people purchase a product or service. Behavioural segmentation can be broken down into the benefit a consumer seeks from purchasing a product. How will the product enhance their overall lifestyle. When purchasing a computer the benefit sought may be ‘ease of use’ or the ‘need for speed’. Occasion is another variable. When should a product be purchased? For example the demand for turkeys increases during Christmas, flowers and chocolates on Valentine's Day. Occasion segmentation aims to increase the ‘reason to buy factor’ and thus increase sales. Usage rate divides customers into light, medium and heavy users. Heavy users obviously contribute more to turnover then light or medium users, the objective of an organisation should be to attract heavy users who will make a greater contribution to company sales.

Behavioural Segmentation Diagram

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