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Market Segmentation

Companies segment a market on the basis of different criteria called segmentation bases. The different segmentation bases used for the consumer market are:

Geographic segmentation: Grouping people on the basis of geographic location is known as geographic segmentation. Geographic segmentation is usually done by region or as rural vs. city markets. This type of segmentation is primarily followed for business markets or for markets where the requirements are location based.

Example of geographic segmentation: Global Information Technology Company Intelligroup has worldwide operations in the Americas, India, Japan, Asia-Pacific, and Europe. Its headquarters is at Princeton, NJ in the United States of America. Its other global offices in each of its key regions are at Al Khobar, Kingdom of Saudi Arabia; at Tokyo, Japan; and at Buckinghamshire, United Kingdom. It primarily offers IT solutions and Support services to companies across the globe with their IT support centers in India.

Demographic segmentation: Grouping the market in terms of different demographic measures like age, gender, income, education, stage of the family life cycle, ethnic background is called demographic segmentation.

  • Example of segmentation by age: advertising of the toothpaste highlighting the taste is done when addressing the children’s segment of the market.
  • Example of segmentation by gender: female cosmetic products like lipsticks, foundation etc are all targeted to the female population.
  • Example of segmentation by income: Aldi (a discount food retailer), Airtours holidays, and discount clothing retailers such as TK Maxx focus segment is the lower income group.

Psychographic segmentation: When the market segmentation is done on the basis of the lifestyle of the people then it is called as psychographic segmentation. The key measures for grouping are the personality type, social status, lifestyle etc. This segmentation is based on the assumption that the individual purchases reflect the individual’s characteristics and lifestyle.

A good example of psychographic segmentation is the different car models available in leading cars. For example Volkswagen has a car to meet all the groups whether through its Polo, Beetle, Passat, Toureg etc. each of these cars suit a specific personality type and lifestyle.

Behavioural segmentation: In this form of segmentation the customers are grouped on the basis of the way they respond to or use a product or service. The parameters used for behavioural segmentation are occasion of purchase or consumption, usage, loyalty and benefits sought.

Example: Kelloggs is perceived by the consumers the world over as a breakfast cereal. The company is planning to make the consumers change this perception and think of Kelloggs as an anytime snack food.

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