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2 Basis for segmenting consumer markets

2.1 Geographic segmentation

2.2 Demographic Segmentation

2.3 Psychographic Segmentation

2.4 "Positive" market segmentation 2.5 Behavioral Segmentation

2.6 Occasions

2.7 Benefits

Basis for segmenting consumer markets

Geographic segmentation

The market is segmented according to geographic criteria- nations, states, regions, counties, cities,neighborhoods, or zip codes. Geo-cluster approach combines demographic data with geographic data tocreate a more accurate profile of specific [1]

Demographic SegmentationSegmentation by Age, gender, Income, social class, etc.

Psychographic SegmentationPsychographics is the science of using psychology and demographics to better understand consumers.Psychographic segmentation: consumer are divided according to their lifestyle, personality, values.People within the same demographic group can exhibit very different psychographic profiles . [2]

"Positive" market segmentationMarket segmenting is dividing the market into groups of individual markets with similar wants or needsthat a company divides into distinct groups which have distinct needs, wants, behavior or which mightwant different products & services. Broadly, markets can be divided according to a number of generalcriteria, such as by industry or public versus private. Although industrial market segmentation is quitedifferent from consumer market segmentation, both have similar objectives. All of these methods ofsegmentation are merely proxies for true segments, which don't always fit into convenient demographicboundaries.

Consumer-based market segmentation can be performed on a product specific basis, to provide a close

match between specific products and individuals. However, a number of generic market segment systemsalso exist, e.g. the system provides a broad segmentation of the population of the United States based onthe statistical analysis of household and geodemographic data.

The process of segmentation is distinct from positioning (designing an appropriate marketing mix for eachsegment). The overall intent is to identify groups of similar customers and potential customers; to prioritizethe groups to address; to understand their behavior; and to respond with appropriate marketing strategiesthat satisfy the different preferences of each chosen segment. Revenues are thus improved.

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Improved segmentation can lead to significantly improved marketing effectiveness. Distinct segments canhave different industry structures and thus have higher or lower attractiveness

Once a market segment has been identified (via segmentation), and targeted (in which the viability ofservicing the market intended), the segment is then subject to positioning. Positioning involvesascertaining how a product or a company is perceived in the minds of consumers.

This part of the segmentation process consists of drawing up a perceptual map, which highlights rivalgoods within one's industry according to perceived quality and price. After the perceptual map has beendevised, a firm would consider the marketing communications mix best suited to the product in question.

Behavioral SegmentationIn behavioral segmentation, consumers are divided into groups according to their knowledge of, attitudetowards, use of or response to a product.

Occasionssegmentation according to occasions.we segment the market according to the occasions.

BenefitsSegmentations according to benefits sought by the consumer.

Price Discrimination

Where a monopoly exists, the price of a product is likely to be higher than in a competitive market and thequantity sold less, generating monopoly profits for the seller. These profits can be increased further if the

market can be segmented with different prices charged to different segments charging higher prices tothose segments willing and able to pay more and charging less to those whose demand is price elastic . The price discriminator might need to create rate fences that will prevent members of a higher pricesegment from purchasing at the prices available to members of a lower price segment. This behavior isrational on the part of the monopolist, but is often seen by competition authorities as an abuse of amonopoly position, whether or not the monopoly itself is sanctioned. Examples of this exist in thetransport industry (a plane or train journey to a particular destination at a particular time is a practicalmonopoly) where business class customers who can afford to pay may be charged prices many timeshigher than economy class customers for essentially the same service.

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