Main bases of segmentation (Geographic, Demographic, Psychographic, and
Behavioral)
As discussed in class, market segmentation is the process of dividing a large
target market into smaller, more specific groups based on certain
characteristics. This approach helps businesses tailor their products, services,
and marketing strategies to better meet the unique needs of each group. The main
types of market segmentation include geographic, demographic, psychographic, and
behavioral segmentation.
Geographic Segmentation:
Geographic segmentation divides the market based on location, which is important
because customer preferences can vary widely depending on where they live.
Factors like region and location affect these preferences. For example,
different regions such as North America, Latin America, Middle East, Asia or
Europe have distinct cultural tastes and dietary habits, requiring tailored
product offerings.
Take McDonald as an example, it provides a great example of
geographic segmentation. The fast food chain adapts its menu based on regional
preferences. In Arab countries and Pakistan, McDonald’s offers the McArabia, a
flatbread sandwich that caters to local tastes. In Singapore and Malaysia,
McDonald’s offers the Grilled Chicken Foldover, while in Turkey, it sells the
McTurco. These regional variations allow McDonald’s to meet local preferences
while maintaining a consistent global brand identity. Also, McDonald’s tailors
its sauces to suit local tastes, such as offering curry-flavored sauce with
McNuggets in India, where curry is a staple. This illustrates how geographic
segmentation enables businesses to meet the diverse needs of their customers
around the world.
Demographic Segmentation:
Demographic segmentation is another marketing strategy that divides the market
into groups based on specific, measurable characteristics of the population such
as Age, Gender, Occupation and Income. For example, high-income customers may
tend to prefer luxury products and premium services, while budget-friendly
options may be more appealing to lower-income groups. This segmentation is
widely used because it allows companies to target distinct customer segments
with different needs and preferences.
For example, Hang Seng Bank in Hong Kong
uses demographic segmentation to target different age groups and income levels.
The bank's "Green Banking" services are designed for young customers aged 18-29,
especially tertiary students with limited income. These customers can open
accounts without a minimum balance and benefit from fee waivers, easing their
financial burden. In contrast, Hang Seng’s "Prestige Banking" caters to older,
affluent individuals who seek more personalized banking services, offering
exclusive products and investment options. This tailored approach shows how
demographic segmentation can effectively address the unique needs of different
customer groups.
Psychographic Segmentation:
Psychographic segmentation digs deeper into understanding what drives consumers
by examining their lifestyle (hobbies, interests, and daily activities), values,
and personality. This approach helps businesses understand the underlying
reasons for consumer preferences, offering deeper insights into what drives
their decisions.
IKEA is an excellent example of psychographic segmentation. The
company appeals to consumers who value practicality, minimalism, and style.
IKEA's products are tailored for small, urban living spaces, which are common in
many cities. IKEA's products are designed for small urban spaces, common in many
cities, and the company also targets eco-conscious customers by offering
sustainable products like recycled furniture. Furthermore, IKEA promotes
versatile, multi-functional furniture suitable for family needs, such as
extendable dining tables and space-saving bunk beds. By aligning its offerings
with consumers' lifestyles, values, and personalities, IKEA may be easier to
build a strong connection with its target market, fostering customer loyalty.
Behavioral Segmentation:
Behavioral segmentation is all about understanding how customers use products
and their purchasing habits. It looks at factors such as buying patterns
(Seasonal products vs Daily products, and Heavy users vs Light users), benefits
sought (convenience, price, or quality) and brand loyalty.
For example,
Wellcome, a supermarket in Hong Kong, uses behavioral segmentation to target
customers based on their shopping habits. During some special festivals,
Wellcome offers seasonal products like Mooncakes, Red envelopes, and special
teas, which are typically purchased for specific occasions. In contrast,
everyday items like fresh produce, rice, and milk are bought regularly. Wellcome
also divides its customers based on how often they shop—some are frequent
shoppers, while others shop less often. This allows Wellcome to tailor its
offerings, providing promotions or discounts to encourage regular shoppers to
return, while offering special deals to occasional shoppers to foster their
loyalty. At the same time, Wellcome’s loyalty programs, like lucky draws and
stamp collections, reward brand loyalty, further incentivizing customers to
stick with their preferred products.
By using geographic, demographic,
psychographic, and behavioral segmentation, businesses can gain a clearer
understanding of their target market. This allows them to create more
personalized marketing strategies that lead to higher customer satisfaction and
loyalty. These four segmentation bases often work together to guide marketers in
crafting ideas and promoting products effectively.
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