Geographic Segmentation
This is perhaps the most common form of market
segmentation, wherein companies segment the market by attacking a restricted
geographic area. For example, corporations may choose to market their brands in
certain countries, but not in others. A brand could be sold only in one market,
one state, or one region of the United States. Many restaurant chains focus on
a limited geographic area to achieve concentration of force. Regional
differences in consumer preferences exist, and this often provides a basis for
geographic specialization. For example, a company might choose to market its
redeye gravy only in the southeastern U.S. Likewise, a picante sauce might
concentrate its distribution and advertising in the southwest. A chainsaw
company might only market its products in areas with forests. Geographic
segmentation can take many forms (urban versus rural, north versus south,
seacoasts versus interior, warm areas versus cold, high-humidity areas versus
dry areas, high-elevation versus low-elevation areas, and so on). These
examples also reveal that geographic segmentation is sometimes a surrogate for
(or a means to) other types of segmentation.
Distribution
Segmentation
Different markets can be reached through
different channels of distribution. For example, a company might segment the
“tick and flea collar” market by selling the product to supermarkets under one
brand name, to mass merchandisers under another brand, to pet stores under
another brand name, and to veterinarians under yet another brand name. This
type of distributional segmentation is common, especially among small companies
that grant each channel a unique brand to gain distribution within that
channel. Other examples of distributional segmentation would be an upscale line
of clothing sold only in expensive department stores, or a hair shampoo sold
only through upscale beauty salons.
Media
Segmentation
While not common, media segmentation is sometimes
a possibility. It is based on the fact that different media tend to reach
different audiences. If a brand pours all of its budget into one media, it can
possibly dominate the segment of the market that listens to that radio station
or reads that magazine. Media segmentation is most often practiced by companies
that have some control over the media and can somehow discourage competitors
from using that media.
Price
Segmentation
Price segmentation is common and widely
practiced. Variation in household incomes creates an opportunity for segmenting
some markets along a price dimension. If personal incomes range from low to
high, the reasoning goes, then a company should offer some cheap products, some
medium-priced ones, and some expensive ones. This type of price segmentation is
well illustrated by the range of automotive brands marketed by General Motors
historically. Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac varied in
price (and status) along a clearly defined spectrum to appeal to successively
higher income groups.
Demographic
Segmentation
Gender, age, income, housing type, and education
level are common demographic variables. Some brands are targeted only to women,
others only to men. Music downloads tend to be targeted to the young, while
hearing aids are targeted to the elderly. Education levels often define market
segments. For instance, private elementary schools might define their target
market as highly educated households containing women of childbearing age.
Demographic segmentation almost always plays some role in a segmentation
strategy.
Time
Segmentation
Time segmentation is less common but can be
highly effective. Some stores stay open later than others, or stay open on
weekends. Some products are sold only at certain times of the year (e.g.,
Christmas cards, turkeys, fireworks, cranberry sauce). Chili is marketed more
aggressively in the fall, with the onset of cooler weather. Football is played
in the fall, basketball in the winter and spring, and baseball in the spring
and summer (or at least this used to be the pattern). The Olympics come along every
two years. Department stores sometimes schedule midnight promotional events.
The time dimension can be an interesting basis for segmentation. In addition to
the foregoing, markets can be segmented by hobbies, by political affiliation,
by religion, by special interest groups, by sports team loyalties, by
universities attended, and hundreds of other variables. You are only limited by
your marketing imagination.
Psychographic
or Lifestyle Segmentation
Lastly, we come to psychographic (or lifestyle)
segmentation, based upon multivariate analyses of consumer attitudes, values,
behaviors, emotions, perceptions, beliefs, and interests. Psychographic
segmentation is a legitimate way to segment a market, if we can identify the
proper segmentation variables (or lifestyle statements, words, pictures, etc.).
Qualitative research techniques (focus groups, depth interviews, ethnography)
become invaluable at this stage. Qualitative research provides the insight, the
conceptual knowledge, and the consumer’s exact language necessary to design the
segmentation questionnaire. Typically, verbatim comments from consumers are
used to build batteries of psychographic or lifestyle statements (these two
terms are used interchangeably). A large representative sample of consumers (generally,
1,000 or more) are then asked about the degree to which they agree or disagree
with each statement. For example, if you were designing a market segmentation
questionnaire for an airline, you might conduct a series of depth interviews to
help design the questionnaire. You probably would include a behavioral section
(frequency of flying, how purchased tickets, who traveled with, cities flown
to, where sat, airlines flown, money spent on airline tickets, etc.). You would
include a major section on attitudes toward air travel (motivations for air
travel, fears related to air travel, positive emotions of flying, attitudes
about airline employees, checking luggage, buying tickets, and so forth). You
would also want to include a section on perceptions of the different airlines;
that is, their “brand images.” You could go further and add a section on media
consumption, or personal values, as well. It is at this point that you realize
the questionnaire is too long, and you have to make some hard decisions about
what questions or statements to include.