The four major segmentation variables in consumer markets include:
It is one of the earliest and still most commonly used methods of segmentation. It involves dividing markets into different geographical units such as countries, regions, states, cities or neighborhoods. Few or all of these are chosen by the marketers as areas of operation. For instance, Japanese automobile makers produce different versions of auto for American and European markets.
"American spec" is different from "European spec". Nokia is currently designing rugged and easy to navigate mobile phones for illiterate populations in rural India, working closely within the peculiarities of these rural communities.
The second major method of segmentation, and probably the one most frequently used, rests on the assumption that markets can be subdivided into groups on the basis of one or more demographic variables such as age, sex, income, education, occupation, religion, race and so on.
The following demographic variables can be used to segment markets.
Consumer needs vary with age. For example: West African Milk Company, in addition to its premium powder and evaporated milk recently developed a more nutritional product branded 1-2-3 for babies between the age of 1 and 3 years; and 4-5-6 for children between the ages of 4 and 6 years.
Many products like clothes, shoes, wristwatches, jewelries, wine and coffee are either targeted at men or women. For instance, salons break their market into barbing salon and hair dressing salon.
Segmentation by is a long-standing practice in such product and service categories as automobiles, boats, clothing, cosmetics, travels, airlines and alcohol. Many airlines, for example break down their market into economy, business and first-class.
Buyers are divided into different groups on the basis of lifestyle or personality and values. This is necessary because people within the same demographic group may exhibit different life-styles and value.
The types of goods and services bought by consumers express their life-styles. Night crawlers patronize nightclubs, people who seek adventure buy tourism and sports lovers attend sport events.
Marketers endorse their products with brand personalities that correspond to consumer personalities. For instance, MTN has used high style personalities as people who achieve what they want to achieve.
Some marketers segment by core values, the belief systems that underlie consumer attitudes and behaviors. For instance, Coca Cola promotes sharing value among families with its 1-litre Coke.
Buyers are divided into groups on the basis of their knowledge, attitude and product usage. Variables under consideration include: occasions, benefits, user-status, usage rate, loyalty status and so on. Some of these are discussed below:
Buyers can be isolated on the basis of the occasions they develop a need, purchase a product or use a product. Attendance at cinemas theaters, musical shows and other events in Nigeria, for example, usually takes place on Sundays, public holidays or festive periods.
Buyers can be segmented according to the benefits they seek. Glomobile, the high-flying Nigerian GSM provider touts itself as the pioneer of pay-by-the-second billing system. Also, buyers of toothpaste seek any of these benefits: economy, oral hygiene, peer acceptance and taste as benefits.
Markets can be segmented into non-users, ex-users, potential users, first-time users and regular users of a product. Blood banks, for example, must not rely only on regular donors to supply blood. They must recruit new first-time donors and contact ex-donors.
Market can be segmented into light, medium, and heavy product users, Bournvita has three sizes: Big, medium and small sizes, with big size targeted at heavy users.
Conditions For Effective Segmentation
To be effective, market segments must be:
The size, purchasing power, attitude and characteristics of the segments can be measured.
The segments are large and profitable enough to serve.
The segments can be effectively reached and served with a distinct marketing mix.
The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs
Effective marketing programs can be formulated to attract and serve the segments.