Segmentation concepts and applications

Market Segmentation

There are a variety of ways to segment a market in order to identify a target market and perform many of the key marketing functions. Determining the basis of an effective segmentation is a multi-step and even multi-disciplinary process that can be incredibly complex. The five key forms of segmentation include:

Geographic

Demographic

Behavioral

Psychological

Price

Geographic segmentation is simply by region. This is especially important to brick and motor retail stores and businesses in the service industry that only cater to certain areas. However, national operations such as Amazon that ship their products have a lot more flexibility in this segmentation category.

Demographic segmentation will focus on factors such as age, income level, and education status. This is an extremely useful way to focus on a target market and can be used in conjunction with geographic or other segmentation methods. For example, an ideal target market figure can be described as a mid-life woman who lives in New York City, or even possibly any major metropolitan area. This allows marketing professionals to create their messages with a particular person or figure in mind which can help fine tune the promotion.

Behavioral and psychological factors consider different consumer behaviors. The concept of consumer behavior represents the behavior that consumers exhibit during activities such as researching, purchasing, using, evaluating, and then the eventual disposal of products and services. This has recently developed into its own academic discipline and the study of consumer behavior began when marketing professional realized that consumers would not act exactly what their current models predicted. For example, some buyers will avoid a product because they do not want to appear to be similar to a neighbor or friend.

Such decisions are made strictly on the basis of psychological considerations and have little to do with the benefits that a product may offer. Some individuals will actually go as far as too define part of their own lives by the goods and services they consume. The rudimentary approaches to this discipline were attempted to be combined to form a comprehensive model of consumer behavior that reflects both the cognitive and emotional aspects of consumer decision-making (Stigler, 1954).