Consumer as segmentation Essay

This essay has a total of 1755 words and 11 pages.

Consumer as segmentation

1. Introduction

Organizations that sell to consumer and business markets recognize that they cannot appeal
to all buyers in those markets or at least not to all buyers in the same way. Buyers are
too numerous, too widely scattered and too varied in their needs and buying practices.
Companies vary widely in their abilities to serve different segments of the market. Rather
than trying to compete in an entire market, sometimes against superior competitors, each
company must identify the parts of the market that it can serve best. Segmentation is thus
a compromise between the rash assumption that all people are the same and the uneconomic
assumption that each person needs a dedicated marketing effort. Within this essay, it is
going to present the main considerations of the market segmentation, as well as the
influence of consumer behaviour.

2. Concepts of the market segmentation

Markets consist of buyers, and buyers differ in one or more ways. They may differ in their
wants, resources, location, buying attitudes, and buying practices. Through market
segmentation, companies divide large, heterogeneous markets into smaller segments that can
be reached more efficiently with products and services that match their unique needs.

3. How to segment market

Because buyers have unique needs and wants, each buyer is potentially a separate market.
Ideally, then, a seller might design a separate marketing programme for each buyer.
However, most sellers face larger numbers of small buyers and do not find complete
segmentation worthwhile. Instead, they look for broad classes of buyers who differ in
their product needs or buying responses. For example, high- and low- income groups differ
in their car-buying needs and wants. It also knows that young consumers’ need and wants
differ form those of older consumers. The task facing the marketing manager is to identity
variable that describe the customers in terms of their inherent characteristics, and to
link those variables to consumer behavior toward the product or service. The market
segmentation planning process can be divided into five stages. Stage 1 involves the
identification of dimensions that a company might use for segmenting its markets. Stage2
is concerned with the development of market segment profiles. Stage 3 is where the
organization needs to forecast the total market potential for each segment. Within this
stage, an analysis of competitive forces operation within each segment should be carried
out as well as the definition of the marketing mix designed to serve each market segment.
Stge4 deals with the application of forecasting procedures in order to calculate the
company’s market share for each segment. During this stage, the company should also
estimate the ratio between allocated costs and delivered benefits for each market segment.
Stage 5 includes the assessment of delivered benefits from each segment in relation to
corporate goals, which will provide the rationale and justification for further
development of each market segment. This market segmentation decision process cycles is
completed when the company decides on the selection of market target segment.

4. The bases of market segmentation

There is no single way to segment a market. A marketer has to try different segmentation
variables, to find the best way to view the market structure. Some researchers try to form
segments by looking at consumers’ characteristics. They commonly use geographic,
demographic, and psychographic characteristic. Then they examine whether these customer
segments exhibit different needs or product responses. Other researches try to form
segments by looking at consumer responses to benefits sought, use occasions, or brands.
Once the segments are formed, the researcher sees whether different consumer
characteristics are associated with each consumer- response segment.

1. Geographic segmentation
Geographic segmentation calls for dividing the market into different geographical units
such as nations, regions, stated, counties, cities, or neighborhoods. A company may decide
to operate in one or a few geographical areas, or to operate in all areas but pay
attention to geographical differences in needs and wants.

2. Demographic segmentation
Demographic segmentation divides the market into groups based on variables such as age,
gender, family size, family life cycle, income, occupation, education, religion, race, and
nationality. Demographic factors are the most popular bases for segmenting customer
groups. One reason is that consumer needs, wants and usage rates often vary closely with
demographic variables. Another is that demographic variables are easier to measure than
most other types of variables.

AGE AND LIFE-CUCLE STAE Consumer needs and wants change with age. Some companies use age
and life cycle segmentation, offering different products or using different marketing
approaches for different age and life cycle groups. For instance, many companies now use
different products and appeals to target kids, teens, baby boomers, or mature consumers.

GENDERT Segmentation has long been used in clothing, cosmetics, toiletries, and magazines.
For example, although early deodorants were used by both sexes, many producers are now
featuring brands for a single sex.

INCOME segmentation has long been used by the marketers of products and services such as
automobiles, boats, clothing, cosmetic, financial services, and travel. Many companies
target affluent consumers with luxury goods and convenience services.

3. Psychographic segmentation
Psychographic segmentation divides buyers into different groups based on social class,
lifestyle, or personality characteristics. People in the same demographic group can have
very different psychographic makeup.

It has been showed that the social classes would affect the performance in cars, clothes,
home furnishings, leisure activities, reading habits and retailers. Many companies design
products or services for specific social classes, building in features that appeal to

People’s interest in goods is affected by their lifestyles. Reciprocally, the goods they
buy express their lifestyles. Marketers are increasingly segmenting their markets by
consumer lifestyles.

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