8 Main Bases for Segmentation of Market (2024)

Read this article to learn about the eight important bases for segmentation of market, i.e., (1) Geographic Segmentation, (2) Demographic Segment, (3) Economic Segmentation, (4) Psychological/Psychographic Segmentation, (5) Sociocultural Segmentation, (6) Use Related Segmentation, (7) Benefits Segmentation, and (8) Hybrid Segmentation.

1. Geographic Segmentation:

The characteristics of a market often depends upon its location specially in a country of the size of India with diverse climate, languages and culture in different regions and states which makes a difference in living conditions and demand. For instance in South Indian states because of climatic features woolen clothes are not required except in part of Andhra but climate is very cool in Jammu and Kashmir and heavy woolens are need year round.

In North-Eastern States of Assam, Nagaland, Manipur clothes needed are different than those required in Northern States of the country like Punjab, Haryana, U.P., Bihar and Rajasthan. Thus this is fit case to segment them for promoting sales not only of clothes but of many other products like refrigerators, cold drinks.

In India languages spoken differ widely from region to region and state to state. There cannot be same ad for people of different languages. The advertisem*nt has to be in Hindi for Hindi speaking states, in Assamese for people of Assam, in Telgu for people of Andhra Pradesh and so on. Therefore, in spite of the fact that it is possible to broadcast same ad on radio or televise same one on TV throughout the country but because of language problem different ads will have to be designed for people of different areas.

In India there are also big and glaring differences in the attitudes of rural and urban population. Therefore, they have to be approached in different ways to maximize sales. Again attitudes of people of metropolitan cities where people from different parts of the country live, where there is better employment, higher level of education and income like Chennai, Delhi, Kolkata and Mumbai is differ­ent than that of people residing in other urban areas.

Thus there is divergent consumer buying pattern in different regions, urban and rural, metropoli­tan and other towns. There are different types of households in metropolitan areas with better distri­bution channels and stores. Hence they have to be approached differently. The different areas will have to be identified according to their size, their financial behaviour and their needs.

The revolution­ary changes in transport and communication system has reduced geographical distance but other regional factors remain as they were. There is no or little change in climate and language and markets need to be segmented on the basis of geographical factors.

2. Demographic Segmentation:

The census data publishes details of age group, sex, marital status, education and occupation ones in ten years. These facts often are used for market segmentation. The demand of small children, school going children, adults and old persons differ a lot. The needs of ladies and gents, married and unmarried persons have vast differences. The perception and the needs of educated persons are different than an uneducated person.

The occupation also has great impact on needs; the need of a doctor will be different than that of a businessman or blue or white collar worker. These factors are important for segmenting the market and have been successfully used for sales promotion. These variables are much easier to measure and therefore often are used for segmenting the markets.

Age:

Age is one of the variables which are most often used in segmenting the market. It is because age is one of the most helpful factor for determining motivation and interest because extensive research has been conducted on this factor. Secondly, age segmentation is quite affective because it is pos­sible to reach them as per age groups through print and electronic media to be more effective segmen­tation has to be on the basis of cognitive age rather than chronological age but more on cognition age. There are people who behave in more mature way than the age justifies. The age segmentation has been used in India too for items like milk, chocolates, cold drinks etc.

Sex:

The demands, perceptions, needs differ widely according to gender. Women are main users of certain products like cosmetics, jewellery and men are main users of tools and buyers for many domestic products. It has been researched in USA that working women are responsive to expensive jewellery and in India all ladies love jewellery. Because of wide differences in likings there are separate magazines to cater to the needs of ladies and so of many other products too.

Marital Status:

The family is the focus of all marketer and it is all the more so in India where family attachments are high. For many products and services family is the relevant buying unit. Therefore, marketers study the size of family, its composition, its working members, education, age and income etc.

It has been discovered that personal purchases of a bachelor are more but usually household needs are more and varied. The study of types of goods and quantity purchased is an important guide for segmentation.

Education:

The need of many products and services depend upon the level of education. In India where large part of rural population is uneducated they do not need newspapers, books etc. and their awareness for other product is of low order. Therefore, by studying the population structure and according to the level of education population can be segregated for marketing strategies.

Occupation:

The need of certain products and services are highly correlated with the type of occupation. For instance, a doctor may need a car to attend patients in emergency but a chartered accountant may not need it that urgently. An IT professional may need a PC at home for practice but it may not be necessary for many others. There are many other needs which are dependent upon the occupation one is engaged.

3. Economic Segmentation:

Income level, decides the overall buying power of a person and the type of goods purchased. In India there are only about 10 per cent people who can buy anything. There is 28 per cent of population which cannot buy even necessities as they are below the poverty line and the rest are middle income class. Thus there are four classes – Persons Below the poverty line, low income group, middle income group and high income group.

The need of these classes differs widely and is an important and effective method of segmentation. A middle class or upper middle class may inspire for low priced car while high income group may settle only for expansive model. The middle class may buy a scooter, small refrigerator while low income group person may not be able to afford it. The income level is very important criteria for market segmentation and has been used effectively by marketer.

4. Psychological/Psychographic Segmentation:

It refers to the inner characteristics of persons like needs, personality, perception, learning, attitudes, life style, level of involvement – psychographics relates to life style and carries out research on types of psychographic variables which influence demand and requirement of various consumers. Based on these studies products and services are segmented to meet requirements of various seg­ments.

5. Social Cultural Segmentation:

Culture, religion, race, region, language, education and economic class is part of socio-cultural factors which influence consumers needs and markets are segmented on these basis. Family life cycle segmentation is based on the hypothesis that most of the families pass through same cycle of formation (marriage), growth (birth of children), and final dissolution (after settlement of children and death of one of the spouse). In each phase the needs of many families are similar. Therefore, they are targeted in a similar manner.

Social Class:

In a society there are different social classes and each class wants to maintain its status. The social classes are identified by measuring various variables on index basis and they are segmented for marketing purposes. It is presumed that people of one class have similar needs, attitudes and percep­tion. This type of segregation is used for producing different products for different classes and approaches them differently.

In order to satisfy different classes the LIC has different types of policies and banks have different types of services. Manufacturer produce ordinary, luxury and extravagant products like ear, furniture, flats etc. to meet demands of various social classes. The lower classes go more for utility but higher classes for status and show.

Religion:

In countries like India religion has great impact on goods demanded specially during their reli­gious functions. During Diwali, Dashera, Holi, etc. Hindus want specific products and the market is flooded with them. Usually Jains do not eat products with eggs and meat, hence the market for them is a separate segment. Certain goods are demanded only by Christians during Christmas. Similarly, there are likings and disliking of people of other religions. This type of segmentation helps promote sales at certain part of the year.

Culture – Subculture – Cross Culture:

Domestic and international markets often are segmented on the basis of culture, sub culture but gradually with larger communication, inter caste marriages, spread of education, urbanisation, rise in the level of income cultural differences are coming down. Still they play very important role in Indian society irrespective of modernisation. Same rituals are performed by people of one culture on occasions of births, marriages, festivals and death. Therefore, cultural factors are very powerful to segment the market.

In a large culture there are sub-cultures and distinct groups. Tribal of Assam, Madhya Pradesh, Orissa, Jharkhand have different perceptions. Hindus of different states are influenced by their his­tory and local traditions.

Racial factors are very strong in Africa and America and when people from other countries migrate they protect their cultural habits and demand some specific goods and services.

The market for advertising purposes in India has to be segmented because of different languages in different states. Mere translation from Hindi or English is not suffice and the words have to be chosen with great care as sometimes literary translation may be offensive in other language.

Education and economic class also influence demand, therefore, these facts are kept in view while segmenting markets.

6. Use Related Segmentation:

Consumers are grouped in different segments based on consumption of certain products and services and usage rate, brand loyalty, adoption of innovative product, time, location, person etc. are, considered in this type of segmentation. This is very popular and effective method of segmentation but it requires extensive survey and research.

There may be group of consumers who may be users of a product but not of a brand. It has to be researched why other brand is preferred. The objective of this segmentation is to penetrate in others market. There are brand loyal consumers but they cannot be taken for granted. The market has to be protected from competitors.

It is also studied what percentage of consumers are heavy users and what percentage are high users so that proper strategy may be formulated to encourage consumers to use more quantity. For example, Coca-Cola and Pepsi target the same customers, it has to be surveyed why consumption of one brand is more than the other.

The marketer considers not only current level of consumption but also future potentials for framing marketing strategy. If Thumps Up is selling more than Coca-Cola it has to be studied why it is so and what strategy has to be adopted. If one brand of pan masala has low share how it can be increased in future is part of segmentation study.

There are non-users of many products and services. It has to be studied whether non-users can be converted into users and how. They have to be segmented separately and awareness will have to be developed in them so that they may be potential consumers. Efforts are made through ads for the group to make them interested in the product and not merely aware about its existence.

Brand loyal consumers are segmented to keep them intact and special incentive schemes are made for them. This is also done by stores who give them loyalty discount at the end of month or give discount for frequent users in different ways.

Manufacturers often innovate products either due to technical developments, to reduce cost, provide better product to consumers. Many a times consumers hesitate to use innovative products for which both extensive and intensive advertisem*nt campaign is undertaken in selected markets. It is recognized by marketers that potential consumers are required to be persuaded to buy innovative products.

The use segmentation is also done on the basis of time, objective, location and situation. Many products like greeting cards, gifts are for varieties of occasions and companies like Archies have produced varieties of cards to meet different occasions demand.

Florist promote their flowers and bouquets for special occasions of berths, marriages, Valentine Day, Mothers Day, Friendship Day, Fathers day etc.. The jewelers promote wedding rings and garment manufacturer Chunni and Lehanga for marriage. Such situational segmentation is increasing in India on the lines of U.S. A., Europe, Japan etc.

The time segmentation is done to save time in shopping, travelling, banking and other services. But as yet in India there is little consideration for time. If some bank issues draft on the spot instead of customer waiting for an hour it will get more businesses. Similarly, if some banks open on Sundays or holidays they get more customers. For similar reasons ATM (All Time Money) are becoming popular.

7. Benefit Segmentation:

Marketing and advertising executives isolate one particular benefit to consumers and advocate its opportunity to consumers. For instance, when discount sale is offered price benefit is offered. Sometimes convenience benefit is highlighted specially in case of services like banking, courier, travel agency. Sometimes utility benefit is segmented and in other cases prestige benefit like Rolex Watches. BMN motor bike, and certain cars are considered prestigious to own which is en-cashed by marketers.

The benefit segmentation has proved one of the most skillful and dramatic successful segmenta­tion. The combination of price, utility and convenience benefit has helped in boosting sales of many products.

8. Hybrid Segmentation:

Hybrid Segmentation is combination of various characteristics. In this type of segmentation, the segmentation is done on the basis of two or more attributes considering psychographic and demo­graphic profiles of consumers. They consider occupation, education, income, race, age, sex; life activities and taking into consideration these and other factors segmented mixers are evolved.

It is done on the theory of cluster i.e. people who live in close proximity, engaged in similar occupation, belong to same education level, same income level, belonging to same religion, race, culture, age, sex and have similar activities are likely to behave in similar manner. Therefore taking into consideration various geodemographic factors market segmentation is done and for this purpose SRI values and life style is studied.

For this purpose SRI International have described eight VALS segments as described below:

1. Actualizes:

Actualizes are successful, sophisticated active take charge people. They have high self esteem and abundant resources. Such persons are leaders in every sphere of life with high ambition and drive for growth and development. In India businesses leaders and very senior executives fall in this category.

2. Fulfields:

Fulfielders are mature, satisfied, comfortable and reflective people. They value order, knowledge and responsibility. They have great ambitions for growth but they are satisfied with their families, career and they spend leisure time on family and home. Such people decisions are based on certain principles.

As the term fulfiller suggests they are contended persons. In India percentage of such people to total it seems is on the decline on the matter of principle but if one considers income the number and share in the population is growing. They can buy anything and account for about 10 per cent of India’s population or 100 million persons at present.