Target Market Segmentation and Evaluation

Target Market Segmentation and Evaluation

Often, buyers of a product or a service are not homogenous groups of individuals; each buyer has individual needs, preferences, resources and behaviors (Why segmentation). According to this same source, since it is impractical to cater to every customer's individual characteristics, marketers segment customers by variables they have in common that distinguish market segments from other segments so marketers can develop a standardized marketing mix for all customers in a particular segment.

Segmentation variables should be related to consumer needs for, and uses of, or behavior toward the product (Variables that can be used to segment markets). There are four major groups of segmentation variables: geographic, demographic, psychographic and behavioralistic (Market segmentation). Examples of geographic segmentation variables include region, size of metropolitan area, population density and climate. Demographic segmentation variables include variables such as age, gender, family size, family life cycle, income, occupation, education, ethnicity, nationality, religion and social class. Psychographic segmentation variables are related to lifestyle and include the activities, interests, opinions, attitudes, and values of consumers. Behavioralistic segmentation variables deal with actual consumer behavior toward products. These are variables such as desired benefits, usage rate, brand loyalty, user status, readiness to buy and holidays and events that stimulate purchase.

Depending on the product, some segmentation variables are more useful than others. Below is a list of common products and the segmentation variables likely to produce the greatest rate of success.

a) Shoes. The best segmentation variables appear to be demographic (gender and age). For example there are distinct consumer needs for shoes based on whether the buyer is male or female and whether the consumer wants children's or adult shoes.

b) Cameras. Behaviorlistic (desired benefits) is an important segmentation variable for cameras because these products have many different features and it's important to understand what the consumer really wants from the camera. Along with desired benefits, demographic segmentation (income) would be very useful to understand what the consumer can actually afford and the consumer's price sensitivity.

c) Magazines. Because magazines focus on so many different topics, e.g. business, beauty, sports, travel, etc., psychographic segmentation (interests) would be very useful to understand which consumers are interested in what topics. Demographic segmentation (gender) would also be very useful because so many magazines are devoted to either men or women.