Demographic Segmentation

In demographic segmentation, the market is divided into groups on the basis of age and the other variables in Table 3.5. One reason this is the most popular consumer segmentation method is that consumer wants, preferences, and usage rates are often associated with demographic variables. Another reason is that demographic variables are easier to measure. Even when the target market is described in nondemographic terms (say, a personality type), the link back to demographic characteristics is needed in order to estimate the size of the target market and the media that should be used to reach it efficiently.

Here is how certain demographic variables have been used to segment consumer markets:

^ Age and life-cycle stage. Consumer wants and abilities change with age, as Gerber realized when it decided to expand beyond its traditional baby foods line because the market was growing more slowly due to lower birthrates, babies staying on formula longer, and children moving to solid foods sooner. The company hopes that parents who buy its baby food will go on to buy its Graduates foods for 1- to 3-year olds.13 However, age and life cycle can be tricky variables. For example, Ford originally designed its Mustang automobile to appeal to young people who wanted an inexpensive sport car. But when Ford found that the car was being purchased by all age groups, it recognized that the target market was not the chronologically young, but the psychologically young.

^ Gender. Gender segmentation has long been applied in clothing, hairstyling, cosmetics, and magazines. Occasionally other marketers notice an opportunity for gender segmentation. The Internet portal iVillage.com reaped the benefits of gender segmentation after initially trying to appeal to a broader market of baby boomers. Noticing that Parent Soup and other offerings for women were the most popular, iVillage soon evolved into the leading women's on-line community. Its home page entreats visitors to "Join our community of smart, compassionate, real women."14

Table 3.5 Major Segmentation Variables for Consumer Markets

Geographic

Region

City or metro size

Density Climate

Demographic

Pacific, Mountain,West North Central,West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England

Under 4,999; 5,000-19,999; 20,000-49,999; 50,000-99,999; 100,000-249,999; 250,000-499,999; 500,000-999,999; 1,000,000-3,999,999; 4,000,000 or over Urban, suburban, rural Northern, southern

Family Size Family life cycle

Gender Income

Occupation

Education

Religion Race

Generation Nationality

Social class

Psychographic

Under 6,6-11,12-19,20-34, 35-49,50-64,65 + 1-2,3-4,5 +

Young, single; young, married, no children; young, married, youngest child under 6; young, married, youngest child 6 or over; older, married, with children; older, married, no children under 18; older, single; other Male, female

Under $9,999; $I0,000-$I4,999; $I5,000-$I9,999; $20,000-$29,999; $30,000-$49,999; $50,000-$99,999; $100,000 and over

Professional and technical; managers, officials, and proprietors;

clerical, sales; craftspeople; forepersons; operatives; farmers;

retired; students; homemakers; unemployed

Grade school or less; some high school; high school graduate;

some college; college graduate

Catholic, Protestant,Jewish, Muslim, Hindu, other

White, Black,Asian, Hispanic

Baby boomers, Generation Xers

North American, South American, British, French, German, Italian, Japanese

Lower lowers, upper lowers, working class, middle class, upper middles, lower uppers, upper uppers

Lifestyle Personality

Behavioral

Straights, swingers, longhairs

Compulsive, gregarious, authoritarian, ambitious

Occasions

Benefits

User status

Usage rate

Loyalty status

Readiness stage

Attitude toward product

Regular occasion, special occasion Quality, service, economy, speed

Nonuser, ex-user, potential user, first-time user, regular user Light user, medium user, heavy user None, medium, strong, absolute

Unaware, aware, informed, interested, desirous, intending to buy Enthusiastic, positive, indifferent, negative, hostile

Income. Income segmentation is a long-standing practice in such categories as automobiles, boats, clothing, cosmetics, and travel. However, income does not always predict the best customers for a given product. The most economical cars are not bought by the really poor, but rather by those who think of themselves as poor relative to their status aspirations; medium-price and expensive cars tend to be purchased by the overprivileged segments of each social class.

Generation. Each generation is profoundly influenced by the times in which it grows up—the music, movies, politics, and events of that period. Some marketers target Generation Xers (those born between 1964 and 1984), while others target Baby Boomers (those born between 1946 and 1964).15 Meredith and Schewe have proposed a more focused concept they call cohort segmentation.16 Cohorts are groups of people who share experiences of major external events (such as World War II) that have deeply affected their attitudes and preferences. Because members of a cohort group feel a bond with each other for having shared these experiences, effective marketing appeals use the icons and images that are prominent in the targeted cohort group's experience.

Social class. Social class strongly influences preference in cars, clothing, home furnishings, leisure activities, reading habits, and retailers, which is why many firms design products for specific social classes. However, the tastes of social classes can change over time. The 1980s were about greed and ostentation for the upper classes, but the 1990s were more about values and self-fulfillment. Affluent tastes now run toward more utilitarian rather than ostentatious products.17

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