Market segmentation

Date: 2015-10-07; view: 485.

"Know your prospects" is the first cardinal rule of advertising. The "prospects" are the target group of consumers. They are the people most likely to buy the product and to be satisfied with it. The major instrument for reaching the right audience is market segmentation. The total market is divided into homogeneous subgroups. Then the adver­tising campaign is directed toward a particular market segment.

For market segmentation, consumers are analyzed and defined in three ways: demographically, psychographically, and geographically. Demographic data are measurable facts; they are generally available from census reports. Useful demographic data include information about number of total population, rate of population growth, population density, per capita income, marital status, spending patterns, employ­ment, ethnic origin, age, and education.Demographic information might, for example, suggest an advertising campaign aimed at married people of thirty to forty-five years of age, with a high school education and an income of under $15,000 a year. A campaign would be very different for single people under thirty, with a college education and an income over $25,000 a year. Demographic facts usually receive the most emphasis in market segmentation, because they are the easiest to ob­tain and measure.

However, especially as people become able to spend more on luxuries, psychographics become more important. They deal with both the quantity and quality of prospects. The potential market is seg­mented according to such factors as way of life and personality traits. Some people like to stay at home and watch television; others prefer more active outside entertainment. Some are careful shoppers who look for bargains; others buy on impulse, or because of a brand's pres­tige as they perceive it. Psychographic data cut across demographic lines. For instance, according to income, a grocery store clerk and a classical musician might be in the same demographic category. Psy­chographically, they are likely to be very different in their values, atti­tudes, and purchasing patterns. Demographics show what people do. Psychographics are concerned with why they do it. Thus psychograph­ics more clearly show the relation between consumer and product.

The family life cycle combines demographic and psychographic approaches to market segmentation. It identifies potential consumers by age, marital status, and number and ages of children. It also implies differences in their attitudes and habits.