Wednesday, February 11, 2015

Market Segmentation

Markets can be segmented in the following ways:

  • Product Usage Segmentation. For instance, some people use baking soda to deodorize their refrigerators, while others use it as a surface soft scrub, to treat insect bites or itchy skin or as a toothpaste.
  • Purchase Behavior Segmentation. In many industries, four groups that often emerge to one degree or another are:
             1. Brand loyal consumers
             2. Convenience-driven consumers
             3. Price-driven consumers
             4. Consumers that enjoy seeking out new brands and products within the category

  • Benefit Segmentation. People might buy a sailboat to race, for a daysail, to cruise on a vacation, to live aboard, to entertain friends, or as a second home.
  • Price Segmentation. Price segmentation will yield higher overall revenues and profits if designed properly. Airlines have made a science out of price segmentation. First-class travelers pay more. Business travelers with tight schedules will be less price sensitive. Tourists with fixed budgets, flexible schedules, and a long planning horizon will look for lower fares. Some people will only travel taking advantage of last-minute seat-filling bargain prices. Other last minute travelers have no choice and behaviorally (but probably not attitudinally) are virtually price insensitive. Seats are less expensive on slower days (Saturdays, December 25, etc.).
  • Lifestage Segmentation. There is a system of segmenting adults into eight distinct mindsets using a specific set of psychological traits and demographics that are proven to drive consumer behavior. Consult: Strategic Business Insights VALS (values and lifestyles) at vals/ustypes.shtml, and Yankelovich MONITOR at
  • Cohort Group Segmentation. Refers to people who were born at approximately the same time and who have experienced the same events at the same life stages.
  • Psychographic Segmentation. Refers to segmenting people based on their values, attitudes, and lifestyles.
  • Geographic Segmentation. Segmenting people according to their geographic location can help target people in the same socioeconomic bracket who may share interests or concerns.
  • Geodemographic Segmentation. Refers to segmenting people based on their location—typically zip or postal code—and demographics, such as age and income. Consult: Nielsen PRIZM and Nielsen’s other segmentation tools ( and CACI’s ACORN (

(c) 2015 by Brad VanAuken, excerpted from Brand Aid, second edition

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