Market segmentation

Market segmentation

Difference between


L 5

Ing. Jiří Šnajdar 2013

Difference between consumers

People behaviour and consumer behaviour effect

some influences. Their penetration and final

repercussion in particular purchase decision is

unique – individual.

However : some are in their purchase behaviour in

some spheres more similar then others. This

similarity is very sought and used value in firm

marketing. It enables at the same time also higher

satisfaction of need of some group of consumers.

The task of market segmentation, one of resources

of decision about marketing strategy, is to discover

segments, how to recognise in which segments

belong which customers and what is specific for


Market segmentation (in the meaning state) can

businessman use :

• Intuitively,

• on base of experience,

• systematically and purposely.

The same is valid for market segmentation in

meaning of segment uncovering. It is possible to

progress on base of intuition, experience,

experiments or to analyse consistently potential

segmentation positions on base of most objective


Segmentation of consumable market (in the

meaning process) is searching for such groups of

consumers on given market, which fulfil two basic

conditions :

consumers inside segment are most similar with

their market presentation on given market – it is a

condition of homogenous segments, market

presentation of different segments on given market

are mutually most different - it is a condition of

heterogeneous segments.

Homogenous segments secure inside segment

bigger probability of similar reaction on marketing

impulse, shaped by appropriate way.

Heterogeneous segments mean, that

segmentation has marketing importance, sense, that

different groups, segments are different to each

other in relation to given category of product, that

they will react differently.

The way to uncover segments in the form which is

usable for decision about market orientation,

composes from four phases :

delimination of given market, covering of important

criterions, usage of important criterions (own

uncovering of segments), development of segment


Exist other practical conditions to use strategy

based on segmentation :

• segments are enough big,

• segments are accessible by media and marketing


• segments are adequately fixed, in time stabile,

• segments are measured in other necessary


5.1. Dimensions of investigated market

It is a characteristic of market space, where we want

to uncover market segments.

5.2. Segmentation variables

Those criterions are chosen, which lead to the best

fulfil of homogenous and heterogeneous conditions.

Following overview shows complex of criterions

(also signed as segmentation variables), which

enforce markedly at market segmentation.

Descriptive criterions – based on characteristics

Traditional segmentation variables

demographic segmentation

• age

• sex

• family size

• family life cycle (household)

• education

• profession(also called social economic criterions)

• income

Participation of age cohorts as segments is

sometimes marked as generation marketing.

ethnographic segmentation comes out from

connection of ethnographic characteristics on

different consumer behaviour. In view of variables it

is :

• nationality,

• race,

• religion,

• ethnic group,

• subculture.

Participation of last mentioned criterion already

overlaps into psychological segmentation.

physiographic segmentation is connected with

that our physiographic situation predetermines often

form of necessities :

• physiographic, physiological dispositions

• health condition

Although physiographic segmentation is not

mentioned very often in literature as specific group

of segmentation criterions, has large sphere of

influence from toothpaste to healthy food, sport

shoes, clothes, …

geographical segmentation comes out of that

changes, differences in consumer behaviour are

conditional on geographical characteristics. The use

mainly variables, as :

• world territory,

• countries,

• regions,

• town extent,

• town segmentation,

• density of settlement (town, suburb, country)

• landscape morphology,

• climate.

It is spoken about geo-demographics.

Non-traditional psychographic segmentation

Differences in purchase behaviour are connected

with social and psychological influences.

Consumers with the same “traditional”

characteristics behave on market different.

Criterions :

Social class : different social classes represent

different segments.

Warner stratification schema of social classes

Social classes:

Upper Uppers, Upper classes, Lower Uppers, Upper

Middlers, Middle classes, Lower Middlers, Upper

Lowers, Lower classes, Lower Lowers

As the base are gates of following variable :

education of the head of household

position at work of the head of household

highest finished education of the head of


Lifestyle : uncovered different lifestyles can

represent relevant market segments.

Complex approach represents research of lifestyle

repeated every two years by AISA agency : (11


protagonists of old orders, authoritative head of

family, modest grandmother, family from

prefabricated block, buck passers, ageless, hustlers,

good family, emancipated modern woman,

manager, young people

Value orientation – research of lifestyle (value

structure : 150 statements)

• intellectual (birds-eye-view)

• manager (business spirit)

• senior (prudent)

• mother (family type)

At integrating of lifestyle into role of market

segments it is necessary to take into consideration

extent of its homogeneity from view of marketing

against given product category. There is a reserve

against lifestyles – they are too abstractive.

Personality : is understood in marketing maybe to

simply as relatively constant reaction of person on

the surroundings.

At segmentation are different approaches, based

on research of different attributes of personality

(dominant, submissive, … - impulsive, rational, …-

melancholic, flegmatic …) and joins to typology.

It is not commended to use personality as only one

segment criterion. Then segments have not

adequate homogenity.

Profile of segment “ influential young”

Geography : map with signed areas of high, better

than average, average and subnormal occurrence.

Example U.S.

Basic demography : - yupee of suburban inner


- mainly white, singles and

couples without children

- high school education

- white collars

Politics : - dominated ideology : moderate

voting in presidential votes 84 : Reagan (61%)

key problems : fiscal conservatism, nuclear


Segmentation criterions of market exposures

Segmentation according to behaviour – specific

market situations - has two main positions :

• criterions based on reasons (question why)

• criterions based on description (question how)

Criterions type “WHY” based on reasons (also

segmentation according to use)

segmentation according to expecting value –

expected benefit (benefit segmentation) : what

consumer expect from product category, what

benefits. Basic phases of scale : price – quality –

social effect . According to concrete situation is

especially quality followed more in detail. Here

belong also purposes of use (consumer

motivation) and parameters of decision about


segmentation according to perceived value :

based on how the customers differences in

perceiving of certain products, marks

segmentation according to opportunity (time,

social, fashion relations, context of possible use

of product)

segmentation according to attitudes –

segmentation according to marks preferences

and according to ideal product.

Criterions type “HOW” based on describing of

use, on view site of consumer behaviour

Users status (users – non users, past users,

potential users)

Rate of use (frequency, volume) : strong,

average, subnormal users.

• Loyalty : as incline to purchase and use the

same mark is for needs of segmentation follow

as in position :

* frequency – always the same mark, so

* unit – share of purchase of a mark and use of


• Rates of diffusion process (intake of new

products) : according to placing in scope of

diffusion graph it is possible to differentiate

segments of innovators, early accepting, fast

majority, slow minority, latecomers).

• Knowledge of products, marks. How the

consumers differentiate in knowledge of marks

(as on general level, so in given product


Criterions of reaction on marketing tools

Criterions of reaction on marketing tools belong to

one of most important spheres of criterions,

cultivating segments profiles.

Example of segmentation according to reaction on

tools of purchase support are segments, which

discovered in 1997 in Great Britain agency AC

Nielsen : Lapsed to support, Searching for low

prices, Impassive, Pillars of marks and EDLP (Easy

distribution Low Prices).

Criterions of reactions on marketing tools belong to

one of most important sphere of criterions,

cultivating profile of segments

Definition of important criterions

The base of uncovering of market segments is to

affect bindings between followed criterions. In

marketing perspective are the decisive measure of

differences between consumers – define


To define criterions we search the most appropriate

explanatory variables – describing criterions.

Describing criterions explain or associate

movements of define criterions. Customer goes for

lunch to exclusive restaurant, because he belongs

to upper lower class, young family equips

household with things of long term consumption.

So first we decide : which define criterions we will

examine, which we will integrate in own

segmentation research. Further what we use as

criterions uncovering segments. Then we try to find

out, which describing criterions have the strongest

binding on define criterions. By gradual selection we

come to important criterions. Also are followed

bindings between criterions mutually defining.

Methodically are used in simple situations cross

relations, tables, corresponding association

rates, group indexes, affinities. From more

complicated methods of multidimensional

statistics is used factor analysis “R” type.

Uncovering of market segments

Segmentation A priory : in advance we choose

one of criterions, which determines membership to

segment. Can arise two situations :

1. We know in advance how many segments we

obtain – at use of one basic define criterion with

fixed and final scale (strong – average –

subnormal users = 3 segments) or mutual

eliminating situation (variants).

2. A priori choice of one define criterion, which is

multidimensional, does not lead immediately to,

what in the number of segments.

Segmentation Post hoc: Number of segments is

not given in advance. At uncovering of segment are

followed connections between important criterions,

examining their combinations and consequential is

chose those, which provide such elements, which

suit the conditions of homogeneity and

heterogeneousness best.

At a priory and post hoc segmentation we can

use mentioned “ forward segmentation” or

“backward segmentation”.

• When for uncovering of segments are used

criterions of behaviour towards product, this

process is sometimes called “forward


• Sometimes it is possible to proceed from effort to

use difference in described variables, which

attend to differentiation of possible market

segments. But always follows verification if

hypothesis about impact of describing criterions

on different consumer orientations on given

market were confirmed. Such approach is

characterised as backward segmentation.

Problem can be lower homogeneity of segments in

relation to product.

Appropriate cross tables and analysis of obtained

data – tree disintegration

gradually defined profiles of segments according to

investigated criterions to homogeneity and

heterogeneousness. From multidimensional statistic

is used cluster analysis (is followed similarity of

consumers at current view of all important criterions).

Picture of market segments

In this phase we renew view of segments with

other useful information considering :

• further show of consumer behaviour of segments

(example following media),

• needs of choice between segments (size of

segments and development, …)

Usage of discrimination analysis if we chose process

a priory segmentation ore cluster


Steps of process of consumer segmentation

- Delimitation of given market (geographical

dimension and product category)

Exploration of famous criterions :

exploration phases

groups interview

secondary information (statistic of families accounts,

data mining of agency data etc.)

interview of professionals

primary solutions :

interview (decision about content and form of

questionnaire in connection with way of analysis,

kind of selection and selected units,…)

• analysis

- verifications of criterions (cross tables, analysis of

diffusion, factor analysis and other multiply

statistic methods)

- Uncovering of segments (cross tables, cluster

analysis, factor analysis of Q type and other

multiply statistic methods)

- Expansion of segment profiles (backwards cross

tables against new variable in segment,

discrimination analysis)

Interpretation of results and evaluation results of

segmentation :

• By interpretation to take into consideration

conditions of successful segmentation :

- corresponding homogeneity and

heterogeneousness of segmentation,

- measurement of segments,

- importance of segments,

- dynamic of segments, stability

- objectivity

• Segmentation maps

- difference evaluating criterions,

- contractor's expanse

Stated ways of segmentations are called inductive –

searching for variables to segments designation.

Problem solution from other side – deduction.

According to firm behaviour on given market. Then

we follow :

• what product mix offers the firm,

• in which price levels,

• what distribution ways (what kind of shops their

articles are sold),

• what media they use,

• what kind of communication reports.

For two last levels are useful content analysis.

Is obvious selected orientation of firm on given

market in meaning of purpose marketing ? If yes,

then :

• What segmentation variables they use ?

• What segments of consumers try to accost other

relevant companies ?

• What are their characteristics ?

• Is used segmentation of market comprehensive ?

• Are used ways of segmentation of market most

effective, most accurate ?

If no, then should follow own effort to uncover the

most appropriate criterions and segments –

transition to inductive way of market


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