Demographic Segmentation

Demographic segmentation consists of dividing the market into groups based on variables such as age, gender, family size, family life eycle, income, occupation, education, religion, race and nationality. Demographic factors are the most popular bases for segmenting customer groups. One reason is that consumer needs, wants and usage rates often vary closely with demographic variables. Another is that demographic variables are easier to measure than most other types of variable. Even when market segments are first defined using other bases -such as personality or behaviour - their demographics need knowing to assess the size of the target market and to reach it efficiently.

AGE. Consumer needs and wants change with age. Some companies use age and life-cycle segmentation, offering different products or using different marketing demographic segmentation Dividing the markscinto groups based on demographic variables such as age, sex, family size, family life cycle, income, occupation, education, religion, race and nationality.

life-cycle segmentation Offering products or marketing approaches that recognize the consumer's changing needs at different stages of their life.

Chapter 9 Market Scgmencaciori and Targeting approaches for different age and life-cycle groups. For example, Life Stage vitamins come in four versions, each designed for the special needs of specific age segments: chewable Children's Formula for children from 4 to 12 years old; Teen's Formula for teenagers; and two adult versions {Men's Formula and Women's Formula). Johnson & Johnson developed Affinity Shampoo to help women over 40 overcome age-related hair changes. McDonald's targets children, teens, adults and senior citizens with different ads and media. Its ads to teens feature dancebeat music, adventure ;md fast-paced cutting from scene to scene: ads to senior citizens are softer and more sentimental.

LEGO's range shows the limits of age-based segmentation. For babies there are Duplo rattles (0 to 3 months), then there are round-edged activity toys made of two or three pieces (3 to 18 months). All these have the familiar LEGO lugs so that they will fit on to LEGO products. Next come Duplo construction kits or toys (2 to 5 years). Duplo bricks look like LFGO bricks, but are twice the size so that young children can manipulate but not swallow them. Duplo kits start simple, but there are more complex ones - like train sets or 700 sets - that are suitable for children with increasing sophistication. By the age of 3, children have developed the manipulative skills that allow them to progress to LEGO Basic. This is targeted at 3 to 12-year-olds. The progression is made easy by the small LEGO bricks fitting to Duplo ones.

Age-based segmentation works until children are 5 years old when fewer and fewer girls buy LEGO and boys' interests diversify. In comes LEGO Pirates (<M2 years), Space Police (6-12), Railways (6-12), Technic (7-12), Model Team (9-12) and so on. To counter girls' decline in interest, LEGO launched Fabuland, a heavily merchandised product backed by Ladybird books and videos. It failed, leaving Legoland with an incongruous Fabuland monorail and play area. Pastel-coloured Fantia is another attempt to attract girls.

LEGO's product for the new millennium is Mindstorm, intelligent LEGO bricks. The result of a ten-year, DKrlOO million project with Massachusetts Institute of Technology, the bricks are programmed via an infrared transmitter connected to a Pentium-powered PC. According to LEGO's Tormod Askildsen: 'It can be used to make all kinds of devices', such as an intruder alarm set up to empty ping pong balls on an unsuspecting parent visiting a child's room. LEGO has great faith in Mindstorm's ability to enliven stagnant toy sales and woo children away from the virtual world of computer games. It also claims that the intelligent bricks appeals to girls as much as boys.12

LlFE-CYCLE STAGE. Life-cycle stage is important in recreation markets. In the holiday market, for instance, Club 18-30 aims at young singles seeking the four Ss: sun, sand, sea and sex. This boisterous segment does not mix well with the families that the Club Mediterranean caters for. Children's activities and all-day child care are an important part of the latter's provision. Saga Holidays eaters for older people. Its prices are kept low by travelling off-peak. Saga also provides insurance for older people and aims to set up and run radio stations for them. Given the ageing population in Europe and other developed economies, Saga looks set to grow.13

In the United Kingdom housing market, Barratts was the first to identify two life-cycle stage segments. It provided Solo apartments as starter homes for young people. These had full furnishing and household equipment included in the basic

price. These extras would not have appealed to Ba mitts' other target market, older people with'empty nests' trading down to a small, single-floor home.

GENDER. Gender segmentation is usual in clothing, hairdressing, cosmetics and magazines. Recently, marketers have noticed other opportunities for gender segmentation. For example, both men and women use most deodorant brands. Procter & Gamble, however, developed Secret as the brand specially formulated for a woman's chemistry, and then packaged and advertised the product to reinforce the female image, Tn contrast, Gillette's association with shaving makes its deodorant male oriented.

The car industry has also begun to use gender segmentation extensively. Women are a growing part of the car market. 'Selling to women should be no different than selling to men,' notes one analyst. 'But there are subtleties that make a difference.'14 Women have different frames, less upper-body strength and greater safety concerns. To address these issues, car makers are redesigning their cars with bonnets and boots that are easier to open, seats that are easier to adjust and seat belts that fit women better. They have also increased their emphasis on safety, highlighting features such as air bags and remote door locks. In their advertising, some manufacturers target women directly. Indeed, much TV advertising of small cars is now aimed at women, pioneered by Volkswagen: an angry. Smartly dressed woman leaves a town house — she throws away a ring, discards a fur coat but, after hesitating, keeps the keys to the Volkswagen Golf. Volkswagen now devotes 30 per cent of its television advertising budget to advertisements for women.

Large advertising spreads are designed especially for women consumers in such magazines as Cosmopolitan and Vogue. Other companies avoid direct appeals, fearing that it will offend women. It sometimes comes across as condescending. Some companies, such as Toyota and GM, try to include a realistic balance of men and women in their ads without specific reference to gender. Sometimes the medium changes, but the message does not. Alongside the traditionally feminine ads for fragrances and fashion in one issue of Vogue are product ads for the RM\V BSOCsi, Audi S2, Toyota MR2, etc., showing no people. Rover's ad for its Metro Manhattan differentiates: 'For the woman who has everything'. Ford's ad for its Maverick 4 x 4 is interesting: it shows two pictures with a man driving and a woman by his side.

gender segmentation Dividing a market into different groups based on sex.

INCOME, Income segmentation is often used for products and services such as •tars, boats, clothing, cosmetics and travel. Many companies target affluent consumers with luxury goods and convenience services. The brands behind the income segmentation Dividing a market into different income groups.

Caffrey's Irish Ale attracts discerning young males.

Demographic Segmentation

Phoiography: Jonathan Glynn-Srnith.

French LVMII group's initials betray its focus on affluent consumers: Louis Vuitton luggage, Moot & Chandon champagne and Hennessy eognae. The groups links with the LIK's Guinness, which owns Johnnie Walker Red and Black Labels as well as Guinness, mean it has an. interest in five out of Europe's top ten brands. Not surprisingly, LVMH is growing fast and appears recession-proof. The company's brands are growing and it is seeking other luxury brands. Besides its haute couture activities, LVMH owns Parfums Christian Dior, has taken control of Guerain, the French fragrance house, and is stalking Van Clef & Aprels, the Paris-based jeweller."

However, not all companies grow by retaining their focus on the top-income segment. Foreign and long-haul travel was once for the wealthy, but the travel market is now a mass industry. P & O aims to do the same with cruises. Once the preserve of the rich and retired, P & O Cruises are entering the mass market. With the help of its German-built Orianu, it intends to bring prices down. For example, in 1995 a 12-day Mediterranean cruise on P & O's Canberra for two adults and two children cost £2,877, cheaper by £640 than the 1994 price. The mass-market tour operator Airtours is also entering the cruise market and aiming even further down market. It will sail tbe Mediterranean and the Canary Islands with a ship bought from Closter Cruise of Norway. P & O's marketing director welcomes Airtours' market entry: 'What Airtours are good at is talking to a slightly younger, more down-market group of customers. They will put cruising in people's minds.' Airtours' managing director pledged to 'revolutionize the market ... You've seen nothing yet. This is a different end of the market to where cruising has been before.""

Established retailers, following the wheel of retailing and developing more sophisticated stores with added values, have allowed new entrants to succeed by targeting less affluent market segments. In the United Kingdom grocer;' market, Kwili Save did this with a lean organization, economically located stores and a no-frills operation that kept prices to the minimum. The more up-market positioning of other United Kingdom grocers has also allowed Germany's cost-cutting Aldi into the market.

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Responses

  • florian
    How are sales connected to demographic segmentation?
    6 years ago
  • Mirella
    How to present demographic segmentation?
    5 years ago
  • Stephan Egger
    What is the demographic of lego toys?
    2 years ago

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