Two broad types of variables are commonly used for market segmentation. Socioeconomic characteristics of consumers, such as gender, age, occupation, income, family lifestyle, education, and geographic location make up one type. The other type consists of behavioral variables, including benefits sought from products and services, usage behavior, lifestyle, and attitudes. For industrial buyers, socioeconomic characteristics may include company size and location, an industry or customer served. Behavioral variables may include purchasing objectives and practices as well as product and service benefits. The appropriateness of anyone or combination of variables in a specific situation will depend on whether or not a variable relates to purchasing, use, or consumption behavior and responsiveness to a given marketing program or strategy
Market segmentation is a means to an end: to identify and profile distinct groups of buyers who differ in their needs, preferences, and responsiveness to an your firm’s marketing programs and/or practices. Effective market segmentation should provide answers to six fundamental buyer related questions for each market segment:
- Who are they?
- What do they want to buy?
- How do they want to buy?
- Where do they want to buy?
- When do they want to buy?
- Why do they want to buy?
More often than not, the answers to these questions should be expressed in the narrative form documented with qualitative and quantitative research.
From a strategic marketing perspective, effective market segmentation means that each segment identified and profiled satisfies for fundamental requirements. Each market segment should be:
- Measurable: The size and buying power of a market segment can be quantitatively determined.
- Differentiatable: Market segment is distinguishable from other segments and responds directly to different market programs.
- Accessible: A segment can be effectively reached and served there an economically viable marketing program.
- Substantial: The segment should be large enough in terms of sales volume potential to cover the cost of the organization serving it and return a satisfactory profit.
The details contained in the piece are presented from high-level vantage point. If you have any questions, relative to this post, please do let know. I am always here to help. Together, we can sift through it all.
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Kerin, R. A. & Peterson, R. A. (2010). Strategic marketing problems. Cases and comments. (12th ed.). Upper Saddle River, NJ: Prentice Hall