UNIT-II

UNIT – II

MARKET SEGMENTATION

CONTENT

Sl.no TOPIC Page No.

1. DEFINITION 3

2. HISTORY OF MARKET SEGMENTATION 3

3. BASIS OF MARKET SEGMENTATION 4

4. CONCEPTS OF MARKET SEGMENTATION 5

5. REASON FOR MARKET SEGMENTATION 6

6. BENEFITS OF MARKET SEGMENTATION 7-8

7. STEPS OF MARKET SEGMENTATION 8-11

8. TYPES OF MARKET SEGMENTATION 11-13

9. FACTORS AFFECTING MARKET SEGMENTATION 14

10. REQUIREMENTS OF EFFECTIVE MARKET 14-15

SEGMENTATION

11. METHODS OF MARKET SEGMENTATION 15-21

Dr.SHEEBA.E
Assistant Professor,
Department of Commerce with Computer Applications
PSG College of Arts & Science
Coimbatore

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Market segmentation is the research that determines how your

organisation divides its customers into smaller groups based on

characteristics such as, age, income, personality traits or behaviour.

These segments can later be used to optimise products and

advertising to different customers.

DEFINITION
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The term segmentation indicates a process in which a large unit is divided or bifurcated

into a variety of smaller units which have somewhat related or similar characteristics. When

the complete market establishment is divided into smaller subsets constituting consumers

who bear similar preference, demand, and taste, the concept is known as market

segmentation. In other words, market segmentation divides the market into like-minded

individuals with similar interests.

HISTORY OF MARKET SEGMENTATION

The business historian, Richard S.Tedlow, identifies four stages in the evolution of

market segmentation:

Fragmentation (pre-1880s): The economy was characterised by small regional suppliers

who sold goods on a local or regional basis

Unification or mass marketing (1880s–1920s): As transportation systems improved, the

economy became unified. Standardised, branded goods were distributed at a national level.

Manufacturers tended to insist on strict standardisation in order to achieve scale economies

with a view to penetrating markets in the early stages of a product's lifecycle. e.g. the Model

T Ford

Segmentation (1920s–1980s): As market size increased, manufacturers were able to produce

different models pitched at different quality points to meet the needs of various demographic

and psychographic market segments. This is the era of market differentiation based on

demographic, socio-economic, and lifestyle factors.

Hyper-segmentation (post-1980s): a shift towards the definition of ever more narrow

market segments. Technological advancements, especially in the area of digital

communications, allow marketers to communicate with individual consumers or very small

groups. This is sometimes known as one-to-one marketing.

BASIS OF MARKET SEGMENTATION

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Gender: The marketers divide the market into smaller segments based on gender. Both men

and women have different interests and preferences, and thus the need for segmentation.

Organizations need to have different marketing strategies for men which would obviously not

work in case of females. A woman would not purchase a product meant for males and vice a

versa. The segmentation of the market as per the gender is important in many industries like

cosmetics, footwear, jewellery and apparel industries.

Age Group: Division on the basis of age group of the target audience is also one of the ways

of market segmentation. The products and marketing strategies for teenagers would obviously

be different than kids. i) Age group (0 - 10 years) - Toys, Nappies, Baby Food, Prams, ii) Age

Group (10 - 20 years) - Toys, Apparels, Books, School Bags, iii) Age group (20 years and

above) - Cosmetics, Anti-Ageing Products, Magazines, apparels and so on.

Income: Marketers divide the consumers into small segments as per their income.

Individuals are classified into segments according to their monthly earnings.

The three categories are: High income Group, Mid Income Group and Low Income Group

Stores catering to the higher income group would have different range of products and

strategies as compared to stores which target the lower income group. Pantaloon, Carrefour,

Shopper’s stop target the high income group as compared to Vishal Retail, Reliance Retail or

Big bazaar who cater to the individuals belonging to the lower income segment.

Marital Status: Market segmentation can also be as per the marital status of the individuals.

Travel agencies would not have similar holiday packages for bachelors and married couples.

Occupation: Office goers would have different needs as compared to school / college

students. A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it

caters specifically to the professionals.

CONCEPTS OF MARKET SEGMENTATION:

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The process of dividing the total heterogeneous market for a product or service into sub-

markets or segments, each of them being homogeneous in all significant aspects, is known as

market segmentation. According to William Station, market segmentation is, “the process of

taking the total heterogeneous market for a product or service and dividing it into several

markets or segments, each of which tends to be homogeneous in all significant respects.” For

example, the total market for ready-made garments may be divided into segments like kids,

teenagers, ladies and gents.

Market segmentation is based on the fact that a market is composed of different buyers

who respond differently to the same marketing programme. Therefore, all the potential

customers are grouped into sub-groups so that each sub-group is different from others but all

customers in a particular sub-group have by and large similar characteristics.

Market segmentation is customer-oriented philosophy. It is a technique of recognising

effectively the differences among customers. It is well-tested system for guiding marketing

strategy. It enables a bank (or any other organisation) to offer specialised services and need-

based (user- oriented) schemes for optimum deployment of funds.

The basic aim of market segmentation is to identify the varying and specific needs of

different types of customers so that appropriate mix of products/services may be designed

and offered to satisfy different types of customers. In this age of intense competition for the

mass market, individual sellers can prosper by serving specific market segments in a creative

manner.

REASONS FOR MARKET SEGMENTATION

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There are five primary reasons why firms go for market segmentation. They are:

1. Competitive Advantage: Through segmentation of the market, competitive advantage is

added to the service or product. In short, the firm is specializing in an area which enables

it to be more accurate and respond faster by reacting according to the opportunities

available. For instance, Unisys has adopted a kind of market segmentation where the

staff and customers think alike – food service specialists cater to the package goods

industry while bankers trade with bankers.

2. New Market Identification: By segmenting the market, new market niches, which are

not always obvious, come to the surface and become visible to the marketer. These new

markets might be very small and specific, existing in very few locations.

3. Cost Cutting: If firms reach the marketplace for a particular and relevant segment

through careful selection, obviously the costs would come down. This applied to all

marketing endeavors, including telephone and direct mail marketing. In the long runs,

the firm is able to save on production and associated costs related to marketing such as

paper, printing, time, people and so on.

4. Reduction of Credit Risks: Through market segmentation, organizations can handle

credit in an efficient manner through eliminating those customers or markets which

cause credit issues. In turn, cancelations and bad debt ratios can be reduced considerably.

On the other hand, those with a good credit rating as per the firm’s analysis can be

rendered extended credit terms. In short, the consumers, markets, and overall business

can be efficiently managed.

5. Streamlining of Lists: Through elimination of suspects having a lower chance of

purchasing from you at present or in the near future, and focusing on the major prospects

who are the impending customers, the rewards of your marketing efforts would be

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greater and profit higher. Moreover, the opportunity for continual relationships also

arrives at a faster pace.

BENEFITS OF MARKET SEGMENTATION

1. Determining market opportunities: Market segmentation enables to identify market

opportu-nities. The marketer can study the needs of each segment in the light of current

offerings by the competitors. From such study, the marketer can find out the current

satisfaction of customers. Segments with low level of satisfaction from present offering may

represent excellent market opportunities. For example, customers may not be satisfied with

the current offering of water purifiers in terms of product or after-sale service. Such situation

enables a marketer to launch a new range of water purifiers and market them well.

2. Adjustments in marketing appeals: Sellers can make best possible adjustments of their

product and marketing appeals. Instead of one marketing programme aimed to draw in all

potential buy-ers, sellers can create separate marketing programmes designed to satisfy the

needs of different customers. Proper advertising and sales promotional appeals can be made

depending on the target audience.

3. Developing marketing programmes: Companies can develop marketing programmes and

bud-gets based on a clearer idea of the response characteristics of specific market segments.

They can budget funds to different segments depending on their buying response.

4. Designing a product: Market segmentation helps in designing products that really match

the demands of the target audience. Products with high market potential can be designed and

directed to meet the satisfaction of the target market.

5. Media selection: It helps in selection of advertising media more intelligently and in

allocating funds to various media. The funds are allocated to various media depending on the

target audi-ence, impact of the media, competitor advertising, and so on.

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6. Timing of marketing efforts: It helps in setting the timings of the promotional efforts so

that more emphasis is placed during those periods when response is likely to be at its peak.

For instance, consumer goods can be heavily advertised to Christians during Christmas

season and to Hindus during Diwali time.

7. Efficient use of resources: By tailoring marketing programme to individual market

segments, management can do a better marketing job and make more efficient use of the

marketing resources. For example, a small firm can effectively use its limited resources –

money, sales force, etc. – in one or two segmented markets rather than unsuccessfully aiming

at a wider market.

8. Better service to customers: Market segmentation enables a company to concentrate its

market-ing efforts in a particular market area, thereby, providing a better service to the target

customers. Proper marketing segmentation can facilitate customer satisfaction.

9. Helps in fixing prices: The marketing segmentation also enables to fix prices of the goods

and services. Since different market segments have different price perceptions, it is necessary

to adopt different pricing strategies for the markets. For instance, the prices for lower-income

groups have to be lower and the product and promotional efforts are adjusted accordingly.

10. Assist in distribution strategies: Segmentation also assists in adopting suitable distribution

strategies. Different market segments may require different distribution mix. For example, if

the product is of very high quality intended to target the upper class, then it must be

distributed at prestigious outlets located at selective places.

STEPS IN MARKET SEGMENTATION

1. Identify the target market: The first and foremost step is to identify the target market.

The marketers must be very clear about who all should be included in a common segment.

Make sure the individuals have something in common. A male and a female can’t be included

in one segment as they have different needs and expectations. Burberry stocks separate

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merchandise for both men and women. The management is very clear on the target market

and has separate strategies for product promotion amongst both the segments. A Garnier

men’s deodorant would obviously not sell if the company uses a female model to create

awareness.

Segmentation helps the organizations decide on the marketing strategies and

promotional schemes. Maruti Suzuki has adopted a focused approach and wisely created

segments within a large market to promote their cars.

Lower Income Group - Maruti 800, Alto, Middle Income Group - Wagon R, Swift, Swift

Dzire, Ritz, High Income Group - Maruti Suzuki Kizashi, Suzuki Grand Vitara Suzuki Grand

Vitara would obviously have no takers amongst the lower income group. The target market

for Rado, Omega or Tag Heuer is the premium segment as compared to Maxima or a Sonata

watch.

2. Identify expectations of Target Audience: Once the target market is decided, it is

essential to find out the needs of the target audience. The product must meet the expectations

of the individuals. The marketer must interact with the target audience to know more about

their interests and demands. Kellogg’s K special was launched specifically for the individuals

who wanted to cut down on their calorie intake. Marketing professionals or individuals

exposed to sun rays for a long duration need something which would protect their skin from

the harmful effects of sun rays. Keeping this in mind, many organizations came with the

concept of sunscreen lotions and creams with a sun protection factor especially for men.

3. Create Subgroups: The organizations should ensure their target market is well defined.

Create subgroups within groups for effective results.

Cosmetics for females now come in various categories.

Creams and Lotions for girls between 20-25 years would focus more on fairness.

Creams and lotions for girls between 25 to 35 years promise to reduce the signs of ageing.

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4. Review the needs of the target audience: It is essential for the marketer to review the

needs and preferences of individuals belonging to each segment and sub-segment. The

consumers of a particular segment must respond to similar fluctuations in the market and

similar marketing strategies.

5. Name your market Segment: Give an appropriate name to each segment. It makes

implementation of strategies easier. A kids section can have various segments namely new

born, infants, toddlers and so on.

6. Marketing Strategies: Devise relevant strategies to promote brands amongst each

segment. Remember you can’t afford to have same strategies for all the segments. Make sure

there is a connect between the product and the target audience. Advertisements promoting

female toiletries can’t afford to have a male model, else the purpose gets nullified.

A model promoting a sunscreen lotion has to be shown roaming or working in sun for the

desired impact.

7. Review the behavior: Review the behavior of the target audience frequently. It is not

necessary individuals would have the same requirement (demand) all through the year.

Demands vary, perceptions change and interests differ. A detailed study of the target

audience is essential.

8. Size of the Target Market: It is essential to know the target market size. Collect

necessary data for the same. It helps in sales planning and forecasting.

There are five primary steps of segmentation.

1. Conduct Preliminary Research: Get to know your customers better by asking some

initial, open-ended questions.

2. Determine How to Segment Your Market: Decide which criteria (i.e.

demographics/firmographics, psychographics, or behaviour) you want to segment your

market by.

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3. Design your Study: Ask a mix of demographic/firmographic, psychographic, and

behavioural questions. Be sure to make your questions quantifiable.

4. Create Your Customer Segments: Analyse your responses either manually or with

statistical software to create your segments.

5. Test and Iterate: Evaluate your segments by ensuring they are usable and helpful. If they

aren’t, try segmenting based on other criteria.

TYPES OF MARKET SEGMENTATION

With segmentation and targeting, you want to understand how your market will

respond in a given situation, like purchasing your products. In many cases, a predictive model

may be incorporated into the study so that individuals can be grouped within identified

segments based on specific answers to survey questions.

Geographic Segmentation:

Geographic segmentation creates different target customer groups based on geographical

boundaries. Because potential customers have needs, preferences, and interests that differ

according to their geographies, understanding the climates and geographic regions of

customer groups can help determine where to sell and advertise, as well as where to expand

your business.

Demographic Segmentation

Demographic segmentation sorts a market by demographic elements such as age, education,

income, family size, race, gender, occupation, nationality, and more. Demographic

segmentation is one of the simplest and most commonly used forms of segmentation because

the products and services we buy, how we use those products, and how much we are willing

to spend on them is most often based on demographic factors.

Firmographic Segmentation

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Firmographic segmentation is similar to demographic segmentation. The difference is that

demographics look at individuals while firmographics look at organisations. Firmographic

segmentation would take into consideration things like company size, number of employees

and would illustrate how addressing a small business would differ from addressing an

enterprise corporation.

Behavioural Segmentation

Behavioural segmentation divides markets by behaviours and decision-making patterns such

as purchase, consumption, lifestyle, and usage. For instance, younger buyers may tend to

purchase body wash, while older consumer groups may lean towards soap bars. Segmenting

markets based off purchase behaviours enables marketers to develop a more targeted

approach.

Psychographic Segmentation

Psychographic segmentation takes into account the psychological aspects of consumer

behaviour by dividing markets according to lifestyle, personality traits, values, opinions, and

interests of consumers. Large markets like the fitness market use psychographic segmentation

when they sort their customers into categories of people who care about healthy living and

exercise.

Segmentation base Brief explanation of base Typical segments examples

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(Example)
Demographic Quantifiable population Young, Upwardly-mobile,
characteristics. (Age, Gender, Prosperous,
Income, Education, Socio- Professionals (YUPPY); Double
economic status, Family size or Income No Kids (DINKS);
Situation). Greying, Leisured And
Moneyed (GLAMS); Empty-
nester, Full-nester
Geographic Physical location or region New Yorkers; Remote, outback
(country, state, region, city, suburb, Australians; Urbanites, Inner-
postcode). city dwellers
Geo- Combination of geographic & Rural farmers, Urban
demographic or demographic variables. professionals, 'sea-changers',
geoclusters 'tree-changers'
Psychographics Lifestyle, social or personality Socially Aware; Traditionalists,
characteristics. (typically includes Conservatives, Active 'club-
basic demographic descriptors) going' young professionals
Behavioural Purchasing, consumption or usage Tech-savvy (aka tech-heads);
behaviour. (Needs-based, benefit- Heavy users, Enthusiasts; Early
sought, usage occasion, purchase adopters, Opinion Leaders,
frequency, customer loyalty, buyer Luxury-seekers, Price-
readiness). conscious, Quality-conscious,
Time-poor
Contextual and The same consumer changes in Actively shopping, just entering
situational their attractiveness to marketers into a life change event, being
based on context and situation. This physically in a certain location,
is particularly used in digital or at a particular retailer which
targeting via programmatic bidding is known from GPS data via
approaches smartphones.

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FACTORS AFFECTING MARKET SEGMENTATION

Market segmentation is affected by a range of factors. However, the factors can be broadly

classified into four basic categories.

 Appropriate segment identification;

 Measurability of the effective size of the segment;

 How much accessible the segment is with the help of promotional efforts;

 The appropriateness of the segment with respect to the resources and policies of the

company.

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

Measurable: Segmentation of market is operational only when the information on the

buyer's need and characteristics are measurable. Customer response based on quantifiable

information is simply measureable. Otherwise marketing program cannot be articulated and

implemented.

Accessible: The market segment should be accessible through exciting marketing institutions

such as middlemen, advertising media, company sales forces- with a minimum of cost and

wasted efforts.

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Substantial (Profitable): Each segment should be big to be lucrative. It must be able to

create enough demand for the company's product. It should attract the targeted customers

scattered into different parts of the world.

Differential: The segments are conceptually visible and respond differently to different

marketing mix elements and plan. For example, if married and non-married women react

similarly to a sale of particular brand of perfume, they do not count as separate segment.

Actionable: Effective plans can be designed for serving and attracting the segments. For

example, even though, one small airline identifies seven market segments, airlines’ staff is

too small to design separate marketing plan for each segment.

METHODS OF MARKET SEGMENTATION

Geographic segmentation: Geographic segmentation divides markets according to

geographic criteria. In practice, markets can be segmented as broadly as continents and as

narrowly as neighborhoods or postal codes.

Typical geographic variables include:

 Country Brazil, Canada, China, France, Germany, India, Italy, Japan, UK, US
 Region North, North-west, Mid-west, South, Central
 Population density: central business district (CBD), urban, suburban, rural, regional
 City or town size: under 1,000; 1,000–5,000; 5,000–10,000 ... 1,000,000–3,000,000 and
over 3,000,000
 Climatic zone: Mediterranean, Temperate, Sub-Tropical, Tropical, Polar

Demographic segmentation: Segmentation according to demography is based on consumer-

demographic variables such as age, income, family size, socio-economic status,

etc.[43] Demographic segmentation assumes that consumers with similar demographic profiles

will exhibit similar purchasing patterns, motivations, interests, and lifestyles and that these

characteristics will translate into similar product/brand preferences.[44] In practice,

demographic segmentation can potentially employ any variable that is used by the nation's

census collectors. Typical demographic variables and their descriptors are as follows:

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 Age: Under 5, 5–8 years, 9–12 years, 13–17 years, 18–24, 25–29, 30–39, 40–49, 50–59,
60+
 Gender: Male, Female
 Occupation: Professional, self-employed, semi-professional, clerical/ admin, sales,
trades, mining, primary producer, student, home duties, unemployed, retired
 Socio-economic: A, B, C, D, E, or I, II, III, IV or V (normally divided into quintiles)
 Marital Status: Single, married, divorced, widowed
 Family Life-stage: Young single; Young married with no children; Young family with
children under 5 years; Older married with children; Older married with no children
living at home, Older living alone
 Family size/ number of dependants: 0, 1–2, 3–4, 5+
 Income: Under $10,000; 10,000–20,000; 20,001–30,000; 30,001–40,000, 40,001–50,000
etc.
 Educational attainment: Primary school; Some secondary, Completed secondary, Some
university, Degree; Post graduate or higher degree
 Home ownership: Renting, Own home with mortgage, Home owned outright
 Ethnicity: Asian, African, Aboriginal, Polynesian, Melanesian, Latin-American, African-
American, American Indian, etc.
 Religion: Catholic, Protestant, Muslim, Jewish, Buddhist, Hindu, Other
The labels applied to some of the more popular demographic segments began to enter the

popular lexicon in the 1980s. These include the following:

DINK: Double (or dual) Income, No Kids, describes one member of a couple with above-

average household income and no dependent children, tend to exhibit discretionary

expenditure on luxury goods and entertainment and dining out

GLAM: Greying, Leisured and Moneyed. Retired older persons, asset rich and high income.

Tend to exhibit higher spending on recreation, travel, and entertainment

GUPPY: (aka GUPPIE) Gay, Upwardly Mobile, Prosperous, Professional; blend of gay and

YUPPY (can also refer to the London-based equivalent of YUPPY)

MUPPY: (aka MUPPIE) Mid-aged, Upwardly Mobile, Prosperous, Professional

Preppy: (American) Well educated, well-off, upper-class young persons; a graduate of an

expensive school, often distinguished by a style of dress.

SITKOM: Single Income, Two Kids, Oppressive Mortgage. Tend to have very little

discretionary income, struggle to make ends meet

Tween: Young person who is approaching puberty, aged approximately 9–12 years; too old

to be considered a child, but too young to be a teenager; they are 'in between'.
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WASP: (American) White, Anglo-Saxon Protestant. Tend to be high-status and influential

white Americans of English Protestant ancestry.

YUPPY: (aka yuppie) Young, Urban/ Upwardly-mobile, Prosperous, Professional. Tend to

be well-educated, career-minded, ambitious, affluent, and free spenders.

Psychographic segmentation: Psychographic segmentation, which is sometimes called

psychometric or lifestyle segmentation, is measured by studying the activities, interests, and

opinions (AIOs) of customers. It considers how people spend their leisure and which external

influences they are most responsive to and influenced by. Psychographics is a very widely

used basis for segmentation, because it enables marketers to identify tightly defined market

segments and better understand consumer motivations for product or brand choice.

Behavioural segmentation: Behavioural segmentation divides consumers into groups

according to their observed behaviours. Many marketers believe that behavioural variables

are superior to demographics and geographics for building market segments and some

analysts have suggested that behavioural segmentation is killing off demographics. Typical

behavioural variables and their descriptors include:

 Purchase/Usage Occasion: regular occasion, special occasion, festive occasion, gift-

giving
 Benefit-Sought: economy, quality, service level, convenience, access
 User Status: First-time user, Regular user, Non-user
 Usage Rate/Purchase Frequency: Light user, heavy user, moderate user
 Loyalty Status: Loyal, switcher, non-loyal, lapsed
 Buyer Readiness: Unaware, aware, intention to buy
 Attitude to Product or Service: Enthusiast, Indifferent, Hostile; Price Conscious,
Quality Conscious
 Adopter Status: Early adopter, late adopter, laggard
 Scanner data from super market or credit card information data
Purchase/usage occasion: Purchase or usage occasion segmentation focuses on analyzing

occasions when consumers might purchase or consume a product. This approach customer-

level and occasion-level segmentation models and provides an understanding of the

individual customers’ needs, behaviour, and value under different occasions of usage and

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time. Unlike traditional segmentation models, this approach assigns more than one segment

to each unique customer, depending on the current circumstances they are under.

Benefit-sought: Benefit segmentation (sometimes called needs-based segmentation) was

developed by Grey Advertising in the late 1960s. The benefits-sought by purchasers enables

the market to be divided into segments with distinct needs, perceived value, benefits sought,

or advantage that accrues from the purchase of a product or service. Marketers using benefit

segmentation might develop products with different quality levels, performance, customer

service, special features, or any other meaningful benefit and pitch different products at each

of the segments identified. Benefit segmentation is one of the more commonly used

approaches to segmentation and is widely used in many consumer markets including motor

vehicles, fashion and clothing, furniture, consumer electronics, and holiday-makers. Loker

and Purdue, for example, used benefit segmentation to segment the pleasure holiday travel

market. The segments identified in this study were the naturalists, pure excitement seekers,

escapists.

Attitudinal segments: Attitudinal segmentation provides insight into the mindset of

customers, especially the attitudes and beliefs that drive consumer decision-making and

behaviour. An example of attitudinal segmentation comes from the UK's Department of

Environment which segmented the British population into six segments, based on attitudes

that drive behaviour relating to environmental protection:

 Greens: Driven by the belief that protecting the environment is critical; try to
conserve whenever they can
 Conscious with a conscience: Aspire to be green; primarily concerned with wastage;
lack awareness of other behaviours associated with broader environmental issues
such as climate change
 Currently constrained: Aspire to be green but feel they cannot afford to purchase
organic products; pragmatic realists
 Basic contributors: Skeptical about the need for behaviour change; aspire to conform
to social norms; lack awareness of social and environmental issues
 Long-term resistance: Have serious life priorities that take precedence before a
behavioural change is a consideration; their everyday behaviours often have a low
impact on the environment, but for other reasons than conservation
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 Disinterested: View greenies as an eccentric minority; exhibit no interest in changing

their behaviour; may be aware of climate change but have not internalised it to the
extent that it enters their decision-making process.

Other types of consumer segmentation

In addition to geographics, demographics, psychographics, and behavioural bases, marketers

occasionally turn to other means of segmenting the market, or to develop segment profiles.

Generational segments: A generation is defined as "a cohort of people born within a similar

span of time (15 years at the upper end) who share a comparable age and life stage and who

were shaped by a particular span of time (events, trends, and developments)." Generational

segmentation refers to the process of dividing and analyzing a population into cohorts based

on their birth date. Generational segmentation assumes that people's values and attitudes are

shaped by the key events that occurred during their lives and that these attitudes translate into

product and brand preferences.

Demographers, studying population change, disagree about precise dates for each generation.

Dating is normally achieved by identifying population peaks or troughs, which can occur at

different times in each country. For example, in Australia the post-war population boom

peaked in 1960, while the peak occurred somewhat later in the US and Europe, with most

estimates converging on 1964. Accordingly, Australian Boomers are normally defined as

those born between 1945–1960; while American and European Boomers are normally

defined as those born between 1945–64. Thus, the generational segments and their dates

discussed here must be taken as approximations only.

The primary generational segments identified by marketers are:

 Builders: born 1920 to 1945

 Baby boomers: born about 1945–1965

 Generation X: born about 1966–1976

 Generation Y: also known as Millennials; born about 1977–1994

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 Generation Z: also known as Centennials; born 1995–2015

Cultural segmentation: Cultural segmentation is used to classify markets according to the

cultural origin. Culture is a major dimension of consumer behaviour and can be used to

enhance customer insight and as a component of predictive models. Cultural segmentation

enables appropriate communications to be crafted for particular cultural communities.

Cultural segmentation can be applied to existing customer data to measure market penetration

in key cultural segments by product, brand, channel as well as traditional measures of

recency, frequency, and monetary value. These benchmarks form an important evidence-base

to guide strategic direction and tactical campaign activity, allowing engagement trends to be

monitored over time.

Cultural segmentation can be combined with other bases, especially geographics so that

segments are mapped according to state, region, suburb, and neighborhood. This provides a

geographical market view of population proportions and may be of benefit in selecting

appropriately located premises, determining territory boundaries, and local marketing

activities.

Online customer segmentation: Online market segmentation is similar to the traditional

approaches in that the segments should be identifiable, substantial, accessible, stable,

differentiable, and actionable. Customer data stored in online data management systems such

as a CRM or DMP enables the analysis and segmentation of consumers across a diverse set of

attributes.

The segments differ regarding four customers' behaviours, namely:

 The amount of time they actively spend online,

 The number of pages and sites they access,

 The time they spend actively viewing each page,

 And the kinds of sites they visit.

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Commerce with CA, PSGCAS Page 20
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For example, Simplifiers make over 50 percent of all online transactions. Their main

characteristic is that they need easy (one-click) access to information and products as well as

easy and quickly available service regarding products. Amazon.com is an example of a

company that created an online environment for Simplifiers. They also 'dislike unsolicited e-

mail, uninviting chat rooms, pop-up windows intended to encourage impulse buys, and other

features that complicate their on- and off-line experience'. Surfers like to spend a lot of time

online, thus companies must have a variety of products to offer and constant

update, Bargainers are looking for the best price, Connectors like to relate to

others, Routiners want content and Sportsters like sport and entertainment sites.

Dr.SHEEBA.E,
Commerce with CA, PSGCAS Page 21