Market Segmentation

1. Geographic Market Segmentation

Geographic market segmentation is related to the geographical area of the market. It divides the market into different geographical units such as nations, states, regions, cities etc. A company may decide to operate in one or few geographical areas or to operate in all areas but could not pay attention to all geographical differences and needs and wants.

The assumption for doing this type of segmentation is that consumer needs and responses vary geographically. Here, regional difference in term of topography, climate, population and its density are used as base for market segmentation. This type of segmentation is commonly used for preparation of marketing plans and for the allocation of territories of salesmen or distribution.

For example people in South India prefer coffee while those in North India prefer tea. Hence companies prepare separate marketing mix for different region. People staying with in the same region tend to share same values, attitudes, beliefs, and preferences. Again there may be difference between urban people and rural people. For example, people reside in urban areas are more conscious, exposed to different media and having grater awareness of the products so better quality and novel expensive product can be sold here easily, where as in rural area, peoples income being limited, they are price conscious, gifts, discounts, and other promotional tools can be very effective.

2. Demographic Segmentation

Demographic segmentation is related to people or people‘s characteristics such as age composition, gender, education, income, language, family size etc. It is most popular form of market segmentation. Adequate information regarding the people can be easily made available, by going trough consumer reports or other publications. Therefore most of the companies adopt this type of segmentation for example HMT have segmented its market on the basis of sex and manufactured separate watches for male and female.

In the same way bicycle manufactures use this base. Again marketer can segment market on the basis of age considering people belong to 15 years and below or young adults between 18-25 years etc. Family life cycle can be a base as bachelors, newly married, married with children etc. for different purposes (Motor bike or LIC Policy) etc. Education can be a base for some products like newspaper, magazines, computers etc.

Race and religion is also one more important base for segmenting market like Hindus, Muslim, Parsi, etc. Products like garments, meat, alcohol, etc are sold on this basis.

3. Socio – Economic Segmentation

Under this type of segmentation, differences amongst population in terms of income consumption level, castes, communities and other cultural aspects are taken as variable for dividing the consumers in different groups. In India it is necessary as the society is divided into different groups on this factor. Lower class, middle class, working class is one example of economic classification.

4. Psychographic Segmentation

Psychographic segmentation divides buyers into different groups based on social class, life style, or personality characteristics. People in the same demographic group can have very different psychographic make ups.

In the case of psychographic variables, relevant in formation for segmentation is not readily available and has to be collected through behavioural research. It is complicated as it is always difficult to expose individuals to a battery of psychographic test and to find out their specific personality traits.

Generally manufacturers of cars, textiles and home furnishings divide their customers on the basis of life style. Here marketing efforts are adjusted according to variables (reading habit of leisure activity, life style)

So far the personality traits are considered, like leadership, self- confidence ambitious, aggressive etc. Marketer positions their products in such way that consumers are tempted to use them in order to enhance their personality.

5. Behavioral Segmentation

Behavioural segmentation divides buyers into groups based on their knowledge, attitude, use or responses to a product. Many marketers believe that behaviour variables are the best starting point for building market segment. Dividing the market into groups according to occasion when buyers get the idea to buy and it is the actual time when they make purchase or use the purchased item.

Here while segmenting market consumers will be grouped on user‘s status like, user, non-user, ex-user, potential users, first time user, regular user etc. and accordingly segment the market. Then it will be segmented on the basis of benefit sought by the consumer on the part of product. For e.g. soap may be purchase by some for economy, some for fragrance, some for medicinal value, fairness or health purpose.

The behavior can be of readiness stage of product. Like, purchasing products on the basis of unawares of the products some are aware, some are informed about the product, or some may be interested in buying the product. Any one of readiness stage compel to them to purchase the product and finally the behavioural segmentation will be made on buying motives basis as motives may be convenience, comfort, economy, love and affection and prestige. Here marketer as per the above variables uses to design marketing mix.

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