We have talked about segmenting the market. The question is how do we do this? There are many ways to segment. You could do this based upon household income, gender, age, previous purchases etc. In fact there are many ways to identify different market segments and I will briefly the more commonly used methods.
Geographical
It is possible to segment the population according to Geography, people from “the North” drink more Irn Bru than those from the South. This can be measured by the success of advertising, an example being the Jamie Oliver advert for Sainsbury’s was less successful in the north.
Demographics.
This is where segmentation is done by using personal characteristics of the population; Age, gender, income, stage in the family life cycle etc.
Socio Economic Grouping.
This is based upon the occupational status of the head of the household. It is based on the traditional social class system of this country ranging from Upper Class to lowest level of subsistence.
Geo Demographics
Gives a breakdown of demographic characteristics for a given area or charts the geography of a given demographic characteristic.
Benefits Sought
This relates to the different benefits the customer seeks from a product or service. It is concerned with identifying what characteristics customers commonly seek. It is looks at peoples usage rates of these products or services.
Psychographics
This looks at the lifestyle patterns of people and tries to identify how people spend their time and money. It is worth noting that two households with similar incomes, similar social standing, in similar locations may have very lifestyles with regard to holidays for example.
Situation Specific
This refers to the actual situation where the consumption of the product takes place, e.g. special occasions or in groups.
Developing these market segments is done through the use of research. Using qualitative or quantative research and then analysing the results one can potentially identify market segments. However it is worth validating that these are real and are not a chance occurrence within the population sample chosen.
Much research has been done by ourselves and our competitors on shopping behaviour and the following six groups of shopper have been identified.
Habit Bound Die Hard
Generally older person, has traditional views, tends to be frugal and sticks to a traditional eating pattern. The Habit Bound Die Hard displays a great amount of loyalty to his supermarket but hates when things are moved around.
Self Indulgents
Self Indulgents only make up about 15% o the population. They tend not to have any money worries and drink a lot of wine. They generally live in one or two person households and tend to buy expensive coffees. They eat low fat yoghurts and tend to buy convenience ethnic foods. The chicken korma is a firm favourite. Everything is about quality and convenience.
Struggling Idealists
The Struggling idealist believe in recycling and they reuse their carrier bags. There is a common instance of vegetarianism in this segment. They will walk around the store very slowly carefully reading the labels of all the products. This tends to make them a cautious shoppers which ultimately means less revenue for ourselves.
Frenzied Copers
Tend to be mums who can do a weeks shopping in thirty minutes. They always buy the same products, as they do not take the time to look for new ones and also tend to be very loyal. Shopping is usually a chore that they do as quickly as possible to get back to their family.
Comfortable Contented’s
Are whimsical shoppers. They like good food, enjoy cooking, live in nice houses and use their cars to shop. Tend to overspend when they shop but are not worried by this.
Mercenary
The mercenary shopper is primarily driven by money. They will hop between stores to check out prices and are constantly watching for promotions. Because money is their motivator there is little loyalty in this segment.
The Business Market Research Bureau conducts the TGI or Target Group Index and it aims to be the world’s leading single-source measurement of consumers' product and brand usage, media consumption and attitudes. Using a source of 25,000 interviews annually TGI offers a lot of detailed information from a large cross section of the population on many aspects of their consumer attitudes and habits. With this level of information it is possible to gain an accurate picture of the different segments of the population that the customer comes from. This in turn enables the promotion of any products to be specifically geared to appeal to these customer groups.
The use of segments enables a company to specifically target an audience within a population. An example would be if I asked all of you what you would go out and spend fifty pounds on if I were to give it to you now. The chances are that everyone would come back with a different suggestion. However it I likely that some of you would go and buy clothes, some you would go and buy CD’s or DVD’s and some of you may possibly save the money instead. By grouping people together it is possible to target a product at an audience that will wan to buy the product. This should ensure a return on investment quickly for the producer and could lead to rapid growth. However a universal product is unlikely to appeal to a wide range of people so it is possible for a producer to create products for different market segments. Today we are going to discuss in more detail Cola drinks and C.D’s as product within our superstores. For the purpose of illustrating segmentation further it is worth noting that recent demographic shift of men drinking Diet Coke has been noted by Coca Cola and their adverts are targeted far less specifically at woman than the old “Diet Coke break” ads of the nineties.