Major Bases for Market Segmentation

4. Behavioral Segmentation

Behavioral segmentation divides the market based on consumer knowledge, attitudes, uses, or responses to a product. This includes:

• Occasion Segmentation: Dividing segments based on when buyers get the idea to buy, make the purchase, or use the item.
• Benefit Segmentation: Grouping consumers according to the different benefits they seek from a product. For instance, Schwinn segments its bicycle market by offering e-bikes specifically for the benefit of making a morning commute easier.
• User Status: Segmenting into nonusers, ex-users, potential users, first-time users, and regular users.
• Usage Rate: Categorizing customers as light, medium, or heavy product users.
• Loyalty Status: Identifying consumers who are loyal to specific brands, stores, or companies.

Exam Tip: If a question asks about the difference between demographic and psychographic segmentation, remember that demographics focus on measurable statistics (like age or income), while psychographics focus on internal traits (like lifestyle or personality).

Business and International Markets

Segmentation is not limited to individual consumers; it is equally vital in business-to-business (B2B) and global contexts.

Business Market Segmentation

While business marketers use many of the same variables as consumer marketers, they also employ specialized criteria. Business segmentation typically includes:

• Operating Characteristics: The technology or processes a company uses.
• Purchasing Approaches: How the company buys (e.g., centralized vs. decentralized).
• Situational Factors: Urgency or specific order requirements.
• Personal Characteristics: The individual traits of the decision-makers within the business.

International and Intermarket Segmentation

When moving into global markets, companies must consider more complex variables:

• Geographic Location: The physical country or region.
• Economic Factors: The wealth and purchasing power of a nation.
• Political and Legal Factors: The stability and regulations of a country.
• Cultural Factors: The values and traditions of a society.

Furthermore, companies may use Intermarket (cross-market) segmentation, which involves grouping consumers with similar needs and buying behaviors regardless of their physical location. For example, a luxury car brand might target high-income professionals in both Tokyo and New York, treating them as a single segment despite the distance.

Requirements for Effective Segmentation

Not every group of people qualifies as a "market segment." For a segment to be useful for a marketing strategy, it must meet five specific requirements:

1. Measurable: The size, purchasing power, and profiles of the segments can be measured.
2. Accessible: The segments can be effectively reached and served.
3. Substantial: The segments are large or profitable enough to serve.
4. Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements.
5. Actionable: Effective programs can be designed for attracting and serving the segments.

Summary Checklist: When evaluating a potential segment, ask yourself: Can I measure it? Can I reach it? Is it worth the effort? Does it react differently than other groups? Can I actually create a campaign for it?

By applying these segmentation bases and ensuring they meet the necessary requirements, companies can move from mass marketing to highly targeted, value-driven strategies that maximize competitive advantage.