Segmentation and Consumer Behavior

Market Segmentation

Divides the market into smaller groups with distinct needs, characteristics, or behaviors. Purpose is to create value for target customers.

Geographic Segmentation

Divides the market by location.

Demographic Segmentation

Divides by age, gender, income, ethnicity, and family size.

Psychographic Segmentation

Divides buyers based on personality, motives, lifestyle, and geodemographics.

Benefit Segmentation

Grouping customers by benefits sought, helping marketers deliver the 4P's (product, price, place, and promotion).

Behavioral Segmentation

Grouping customers by knowledge, attitudes, uses, or response to a product.

Usage Rate & Pareto Principle

Grouping by consumption amount. 20% of consumers generate 80% of demand.

Differentiable Requirement

Segments must respond differently to marketing mixes.

Measurable Requirement

Size, purchasing power, and profiles can be measured.

Substantial Requirement

Segments that are profitable and worth targeting.

Accessible Requirement

Segments that can be reached and served effectively.

Actionable Requirement

Marketing programs can be developed for this segment.

Importance of Brand Loyalty

Existing customers are cheaper to retain and have more lifetime value.

Psychological Factor: Motivation

Internal drive to satisfy goal-oriented needs.

Maslow's Hierarchy of Needs

Physiological, safety, social, esteem, and self-actualization needs.

Psychological factor: Perception

Process of selecting, organizing, and interpreting information to create meaning.

Perception factor Selective Attention

Using relevance, repetition, surprisingness, and prominence to increase focus.

Perception factor: Selective Distortion

Consumers interpreting information to fit their existing beliefs.

Perception factor: Selective Remembering

Recalling only positive/extreme aspects and ignoring negative ones.

Psychological factor: Consumer Attitude

A person's feelings and behavior tendencies toward an object or idea.

Psychological factor: Consumer Learning

Change in behavior resulting from experiences.

Learning factors: Classical vs. Operant Conditioning vs Social Learning

Classical is association. Operant is reinforcing consumer action (rewards and punishments). Social learning is observing others before making a decision.

Psychological factor: Culture and Subculture

Culture is the values, history, and traditions that impact wants and behavior. Subcultures is shared values from common experiences.

Psychological factor: Social influences

People and groups who influence consumer behavior and values. Includes reference groups and group providers.

Social influence factor: Reference Groups

Groups used for comparison for beliefs, feelings, and behaviors. Include membership (belong to) and aspirational groups (want to belong to).

Social influence factor: Opinion Leader Characteristics

High interest, knowledgeable, and the first to buy.

Psychological factor: Situational Factors

Environmental influences include purchasing, shopping, and temporal factors.

Situation factor: Purchasing & Shopping Situations

Purchasing involves crowding/atmosphere. Shopping involves promotions/sensory marketing.

Situational factor: Temporal Factors

Time-based environmental influences like music, color, and time pressure.