This document outlines the process of market segmentation. It discusses the key steps of identifying groups of people with shared characteristics and combining them into larger market segments. There are several types of segmentation including behavioral, geographic, demographic, psychographic, and geodemographic segmentation. The document provides details on each type of segmentation and how variables like benefits sought, region, age, values and lifestyle can be used to define segments. Finally, it addresses limitations like oversimplifying consumers and challenges in estimating potential profits from targeting segments.

1. THE PROCESS OF
SEGMENTING THE CONSUMER
MARKET
Rebecca Hermetz
MRK-2100-100
17 February 2019
Market
Segmentati
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demograp
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behaviori
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psychograp
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2. INTRODUCTION
2 important steps in the market segmentation process:
1. Identifying groups of people or organizations with shared needs and
characteristics
2. Combining the groups into larger market segments by their interest in product’s
utility
 Utility: product’s ability to satisfy functional needs and symbolic wants
Results in market segments large enough to target and reachable
through a mix of marketing activities
Target market: market segment that all marketing activities will be
directed towards
 Advertisers try to reach these markets through media outlets that overlap with the
target market
Target audience: specific group of individuals the advertising
message is directed to
 The group available to advertisers through the chosen media outlet

3. TYPES OF SEGMENTATION
Behavioristic segmentation: method of segmenting consumers based
on purchasing behavior
Geographic segmentation: method of segmenting markets by
geographic regions based on shared characteristics of people within a
region
Demographic segmentation: based on a population’s statistical
characteristics
Psychographic segmentation: method of defining consumer markets
based on psychological variables

4. BEHAVIORISTIC SEGMENTATION
Determined by variables such as:
 User status: reflects varying degrees of brand loyalty
 Sole users: most brand loyal; requires least amount of advertising
 Semisole users: typically use Brand A but may buy Brand B if it’s discounted
 Discount users: typically use Brand B but may buy Brand A if it’s discounted
 Aware nontriers: use competitive products in the category but dislikes Brand A
 Trial/rejectors: tried Brand A but didn’t like it; only a reformulation will bring
them back
 Repertoire users: brand switchers and respond to persuasive advertising based on
wants/desires; a primary target for brand advertising
 Usage rate: extent to which consumers use a product (light, medium, heavy)
 Easier to increase usage by heavy user vs. light user

5. BEHAVIORISTIC SEGMENTATION
(CONT)
Variables cont.:
 Purchase occasion: segmenting on the basis of when consumers buy and use a
good/service
 Might be affected by frequency of need, a fad, or seasons
 Benefit segmentation: segmenting consumers based on benefits being sought
 Benefit: particular product attributes offered to customers (i.e. high quality, low
price, status, etc.)

6. GEOGRAPHIC SEGMENTATION
People in one region of the country or the world have specific needs,
wants, and purchasing habits that are different from those in other
regions
Analysis of geographic data includes sales by:
 Regions
 Country size
 City size
 Specific locations
 Types of stores
Marketers want to advertise in areas where sales potential is best

7. DEMOGRAPHIC SEGMENTATION
Statistical characteristics can include:
 Gender and sexual identity
 Age
 Ethnicity
 Education
 Occupation
 Income
 Sexual orientation

8. GEODEMOGRAPHIC
SEGMENTATION
Combination of demographic and geographic segmentations
Based on:
 People who live in the same neighborhood often demographically similar
 Neighborhoods can be categorized in terms of characteristics of populations
 Neighborhoods can be placed in the same category even though they are
geographically separate

9. PSYCHOGRAPHIC SEGMENTATION
Psychographics groups people by their values, attitudes, personality,
lifestyle, etc.
Appealing to emotions and cultural values can be persuasive to
consumers
Enables marketers to see people as individuals with emotions and
inclinations
Consumers can be classified according to what they feel and believe,
how they live, and what products, services, media they use
Values and Lifestyles typology (VALS) is best-known classification
system
 Assigns consumers to one of eight groups based on:
 Primary motivation: can be motivated by ideals, achievement, or self-expression

10. AGGREGATING MARKET
SEGMENTS
Second step of market segmentation process
Involves 2 substeps:
1. Selecting groups with mutual interest in product’s utility
2. Reorganizing and aggregating (combining) into larger market segments based on
potential for sales and profit
1. Company needs to know primary demand trend: projection of
future consumer demand for a category based on past demand and
other influences

11. LIMITATIONS AND CHALLENGES
Psychographics sometimes add little value for some products
 Oversimplifies consumer personalities and purchase behavior
Classification systems are sometimes criticized for being too
complicated
Estimating profits the company might realize if it aims at the whole
market vs. caters to specific segments

12. SOURCE
Weigold, Michael F., and William F. Arens. Advertising. 3rd ed.,
McGraw-Hill Education, 2018.