6. The socially active.Lifestyle Segmentation<br />This form of segmentation is concerned with identifying market targets that share an approach to living. This does not relate only to high-flyers and high-achievers. Environmentalists have a chosen/preferred lifestyle which certain packages can help to satisfy. Again it is necessary to profile and describe individual sub-segments since not all within the overall segment share exactly the same needs.<br />Psychographic Segmentation<br />Here segments are defined on the basis of social class, lifestyle and/or personality characteristics. Personality variables classify individuals by the traits that they exhibit and some brands have been equipped with quot;
personalitiesquot;
to match those believed to exist within strong (or measurable in sufficient detail and accuracy) to justify this form of segmentation.<br />Behavioural Segmentation<br />Based upon what people are actually observed to be doing (observed behaviour), this form of segmentation is quite reliable. It can be based around orange juice as a breakfast drink, greeting cards segmented by Christmas, Easter, Get Well, etc. The intention is to look for major occasions that mark life's phases to see if they are (or can be made to be) accompanied by certain needs.<br />Benefit Segmentation<br />This is a powerful form of segmentation that classifies buyers according to the different benefits they seek. Timex watches were created because research found that only 31% of the American watch-buying market bought for symbolism; there was a market gap for a lower-priced watch with durability.<br />Benefit segmentation usually implies that a brand should focus on satisfying one benefit group. Thus a second, third and fourth brand may be needed to cover the market – but each, although perhaps very similar, must be positioned uniquely.<br />Geodemographic Segmentation<br />The original, and now definitive, model of geodemographic segmentation was designated ACORN (A Classification of Residential Neighbourhoods). It was developed in Britain and is now available worldwide, wherever post or zip codes exist.<br />ACORN depends for its success on the probability that like people lives together and behave in similar fashion. Thus if a grouping can be identified, labelled and its behaviour studied, it is likely that a similar grouping elsewhere will share similar behaviour. Cluster analysis is applied, via powerful computer software, to the census data taken by the Government in the first year of every decade (and updated by a sample census every sixth year of each decade). All relevant data is now considered, rather than the simplistic, inaccurate quot;
head of householdquot;
classifier.<br />
![MARKET SEGMENTATION<br />Apart from the highly specialised companies which deal with very few customers, organisations have to find their buyers. However, the number of people, and organisations, in the world make it almost impossible for any organisation to reach, and serve, every potential customer. This means that there must be some way of quot;
splitting upquot;
the overall market into smaller, more manageable portions. This is done by segmentation.<br />The word quot;
segmentquot;
refers to one part of an item which can be split into several pieces. Therefore quot;
segmentationquot;
is the process of splitting something up into parts, or sections. Because the separate pieces all come from the main item they will be broadly similar, but there will be differences. For example, if you open an orange and divide up the fruit into segments, the segments will all be pieces of orange and will look almost the same, but there may be slight differences in size between the segments. Some pieces may have more juice than others, or you could even have one piece which is beginning to go rotten because of age or because it hasn't been stored correctly.<br />The situation is exactly the same with market segments – some market segments (or sectors) look the same but have slight differences. Consider all of the adults in London at any one time – they are all people and yet there is a wide range of differences. Some are men, some women. Some are English, some from other countries. Some are tall, some short. Some can drive a car, some cannot. Some are rich, some are not. Some like music, some do not. I could list thousands of quot;
differencesquot;
if I either chose, or had the time, to do so but I think you will understand what I am saying. We begin with a quot;
commonquot;
factor and then we sub-divide into characteristics to suit our own needs.<br />Imagine we are selling clothing in London. We may have products which are suited to only men, or only women. That fact alone would force us into segmenting. Our products may be quot;
fashionablequot;
or quot;
functionalquot;
– another variable in the target sector to be selected. The products may be expensive – another variable, and so it goes on.<br />Each additional quot;
variablequot;
or quot;
segment characteristicquot;
means a more closely defined target audience. The better we define the target sector, the better we can match our offerings to meet the needs of the sector.<br />As this is what marketing is all about, it follows that one of the tasks of the marketing planner is to identify suitable market segments. This can, of course, be done by quot;
instinctquot;
but instinct is notoriously unreliable and it is much better to use recognised bases of segmentation to identify target audiences.<br />Criteria for Segmentation<br />The rules for segmentation are easy to accept as they are simply common sense. Always<br />remember that while the marketer is trying to identify a segment which matches the product<br />or service being offered, a profitable outcome is also required. This means that the segment<br />must be:<br />,[object Object],It must be capable of being identified as a separate section of the overall market and must display some common characteristic which sets it apart from the overall market –for example, distinctive needs, geodemographics or psychological traits.<br />,[object Object],Do the members of the segment recognise themselves as being quot;
differentquot;
and do other organisations in the chain of distribution recognise the segment? If neither the buyers nor those who serve them recognise the segment it is unlikely to be a successful option. It is more likely to be a quot;
createdquot;
segment in the mind of a person who believes strongly in the benefits of a particular product. This, though, is not true marketing – it is quot;
product ledquot;
marketing.<br />,[object Object],It must be large enough to warrant activity on the part of the marketer. In the extreme example above, the woman with green hair could not be described as a quot;
substantialquot;
segment.<br />,[object Object],It must be capable of achieving the desired objectives. This may not be in financial terms. Segments can be identified and used as a means of entering a market even though they produce little or no profit. This type of situation is often found in international marketing if an organisation just wants to get a quot;
presencequot;
in the marketplace for some reason or another. A segment, which produces little profit, can also be chosen as an quot;
investmentquot;
because of potential add-on sales at a later date.<br />,[object Object],The marketer must be able to reach the segment both by communication and by the product package. It is no good identifying a potential segment if you cannot serve it because of government regulations or location, etc.<br />,[object Object],You need to know the size of the segment before, during and after your activities. If you cannot measure, you cannot assess your success. Someone once said quot;
If I cannot measure it, I cannot manage itquot;
and this is very true.<br />,[object Object],The chosen segment must demonstrate a history and a future. If a segment suddenly appears, say because of a fashion fad, it may not be either stable or reliable. Unless the organisation is able to move quickly and satisfy the immediate need, the segment may disappear just as quickly.<br />,[object Object],The organisation must be capable of serving the segment in the longer term. It is pointless identifying a segment which is so big that it is impossible to maintain. All this will do is to create dissatisfied customers and wonderful opportunities for competitors to come along and take the segment over – with the resulting losses of investment and effort for the original organisation.<br />Another aspect which should be considered is whether the segment quot;
fitsquot;
with the company image and objectives. For example, a company which sells high quality goods and relies on brand image would be unwise to suddenly start marketing to a lower income group – they could lose their credibility with the loyal customers they have in the higher price bracket which might mean greater losses than the income derived from the new segment<br />Reasons for Segmentation<br />We can summarise the underlying reasons for segmentation as follows.<br />,[object Object],Segmentation allows planners to be much more targeted in their approach. Mix offerings can be tailored to match customer needs more precisely. This should result ingreater satisfaction for the customer and higher profits for the organisation<br />,[object Object],Increased knowledge will always reduce risk factors. There will be less wastage of effort and other resources, and a much greater possibility of success.<br />,[object Object],If a company can find a market segment which matches the offering being made it will have competitive advantage. However, remember that the competition will also be involved in segmentation as they, too, will be looking for some quot;
unique propositionquot;
that they can offer. The more effective and precise the targeting, the better the chance of success over the competition. The race for market share is often won by the company which gets to quot;
the segmentsquot;
first.<br />,[object Object],If the buying customers are understood, their needs will be understood and the marketing effort will be that much better. Following on from this, the customers' future needs will be anticipated and ultimately satisfied, with the company making a profit – marketing in its truest form.<br />,[object Object],Objectives can be more clearly defined, appropriate strategies chosen, pricing levels set in accordance with the target segments capability to pay, communications correctly pitched, etc. The increased knowledge of the buyers, gained in the process of segmentation, should result in much better, and more accurate, planning.<br />SEGMENTATION OF CONSUMER MARKETS<br />We noted above that consumer markets can be segmented in numerous ways, but are generally based on either demographic or psychographic criteria. Here we review the main ways in which marketers segment these markets. There is no right or wrong way to do this – the approach adopted will depend upon the characteristics of the product package under consideration.<br />You also need to bear in mind why we undertake the process of segmentation – to identify groups of customers with shared needs or buyer behaviour. Segmenting a market simply because we can, for example into age groups, is of no value unless age influences buyer behaviour in this market. The degree of sophistication in segmentation is such that, where a few years ago it was necessary to blanket a whole segment, it is now routine to tightly focus onto selected individuals within it who have a known desire/interest/need in or for the type of package that is offered. Usually the package(s) will have been specially created from the segmentation information.<br />Social Class<br />Early segmentation was based on social class and whilst these classifications still provide a useful shorthand description, they are of little value in the targeting policies of today because they are so large and diffuse.<br />Social classification groupings are based upon the occupation and income of the head of the household (accepted to be the man!), and divide the population into six groups, as follows.<br />A Upper Middle Class (Bishops, surgeons, directors of large firms, etc.)<br />B Middle Class (Vicars, police inspectors, etc.)<br />C1 Lower Middle Class (Curates, police sergeants, etc.)<br />C2 Skilled Working Class (Foremen, police constables, etc.)<br />D Manual Workers (Most semi-skilled and unskilled workers)<br />E Benefit takers (Pensioners, widows, anyone using state benefits).<br />Age and Life Cycle<br />Even when certain needs/patterns of behaviour can be identified, segmentation is a complex activity. A bank targeting school leavers must take into account age, but also experience and expectations of youngsters from different types of schools and differing social backgrounds. Within the overall target market there are several individualised niches. This principle holds throughout this type of general segmentation but does not invalidate its major benefit – simplicity.<br />Distinctive Needs<br />Segmentation by need relies upon a succession of techniques to collect data and process it into information. One approach is to use factor analysis initially to remove highly correlated variables and then to apply cluster analysis to create a number of maximally different segments. Each cluster is internally homogeneous and externally very different from every other cluster; it is then profiled in terms of its attitudes, behaviour, demographics, psychographics and media consumption habits. The result is specific segments, unique to a purpose, and named appropriately.<br />Andreasen & Belk found six market segments in one survey:<br />,[object Object]](https://image.slidesharecdn.com/marketsegmentation-110219105325-phpapp01/85/Market-segmentation-1-320.jpg)
