Consumer As Segmentation Essay, Research Paper
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.
SOCIAL CLASS
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
LIFESTYLE
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.
PERSONALITY
A superficially attractive base for segmenting markets is personality. The logic would be that we buy products and services that in some way reflect or extend our personality traits. Then classic study in the USA by Evans (1959) revealed Ford owners to be more independent and go-getting than their Chevrolet counterparts. Unfortunately, personality has had a mixed reception in research programmes. Even replications of the Evans Study produced conflicting results, so personality appears to be a less reliable segmentation base than others are.
SELF-CONCEPT
This variation on the personality theme in psychographic segmentation is based not on what sort of personality traits customers? process but on how customers perceive themselves. Indeed, it has been suggested that `of all the personality concepts which have been applied to marketing this one (self-concepts) has probably provided the most consistent results and the greatest promise of application to the needs of business firms. (Foxall, 1980)
4. The influence of consumer behaviour on market segmentation
Behavioral variable segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product. Many marketers believe that behavior variables are the best to get starting point for building market segments.
OCCASIONS
Buyers can be grouped according to occasions when they get the idea to by, make their purchase or use the purchased item. Occasion segmentation can help firms build up product usage.
BENEFITS SOUGHT
A powerful form of segmentation is to group buyers according to the different benefits that they seek from the product. Benefit segmentation requires finding the main benefit people look for in the product class, the kinds of people who look for each benefit and the major brands that deliver each benefit. In short, companies can use benefit segmentation to clarify why people sho8ld buy their product, define the brand?s chief attributes and clarify how it contrasts with competing brands. The can also search for new benefits and launch brands that deliver them.
USER STATUS
Some markets segment into nonusers, ex-users, potential users, first-time users and regular users of a product. Potential users and regular users may require different kinds of marketing appeals. A company?s market position will also influence its focus. Market share leaders will aim to attract potential users, whereas smaller firms will focus on attraction current users away from the market leader.
ATTITUDE TOWARDS PRODUCT
People in a market can be enthusiastic, positive, indifferent, negative or hostile about a product. Door-to-door workers in a political campaign use a given voter?s attitude to determine how much time to spend with that voter. They thank enthusiastic voters and remind them to vote; they spend little or not time trying to change the attitudes can be effective segmentation variables.
BUYER-READINESS STAGE
A market consists of people in different stages of readiness to buy a product. Some people are unaware of the product; some are aware; some are informed; some are interested; some want the product; and some intend to buy. The relative numbers at each stage make a big difference in designing the marketing programme.
5. Conclusion
It also has been proofed that market segmentation is a complex and dangerous activity in the sense that the process of choosing of variables, their measurement and their implementation leaves plenty of scope for poor management and disappointment. However, it is still important to remember the potential benefits to be gained, whether looking at the customer, the marketing mix or the competition. The customer could find products that seem to fit more closely with what they want. The marketing mix should itself be a product of understanding the customer. Market segmentation helps the organisation to target its marketing mix more closely on the potential customer, and thus to meet the customer?s needs and wants more exactly. Furthermore, the use of segmentation will help the organisation to achieve a better understanding of itself and the environment within which it exists.
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