Advantages and limitations of the main market segmentation bases

Geographic Segmentation Base Advantages

  • Considers cultural differences of different regions
  • Good for firms with limited geographic reach needing to select a specific target market
  • Great when there is significant socio-economic diversity and significant consumer behavioral differences across regions

Geographic Segmentation Base Limitations

  • Assumes that consumers in a geographic area are similar, which is generally unlikely across a broad area
  • Usually needs to be used in conjunction with another segmentation base

Demographic Segmentation Base Advantages

  • Simple to apply and use
  • Data can be obtained quickly and at low cost
  • Census data provides an excellent and rich source of demographic information
  • Easy to understand – from management to customer service and sales staff
  • Good for in-store profiling of consumers
  • Can be used as a surrogate measure for the consumer’s life stage – such as, getting married, having children, retiring, and so on

Demographic Segmentation Base Limitations

  • Descriptive only – little understanding of the consumer themselves
  • Assumes that consumers in the same demographic group have similar needs and lifestyle – which is unlikely, all 30 year olds are unlikely that have the same needs, for example.

Psychographic Segmentation Base Advantages

  • Should provide a much greater insight into the consumers their lifestyles and their needs
  • Helpful for uncovering motivations and reasons for product and brand purchases
  • Often more helpful for developing promotional campaigns

Psychographic Segmentation Base Limitations

  • Requires market research – usually a mix of qualitative and quantitative – which can be expensive
  • As a result of the research cost, probably more suitable for larger firms/brands
  • Sometimes qualitative market research has a concern regarding the interpretation of the findings
  • Psychographic segments may not be as easy to reach via promotional methods or to identify in-store

Benefits Sought Segmentation Base Advantages

  • Quite suitable for brands with multiple offerings and targeting a precise market positioning
  • Can create an opportunity for niche marketing
  • Can aligned multiple products to small market segments, in a congested market
  • Helps ensure that the product design and communication hits a known consumer need

Benefits Sought Segmentation Base Limitations

  • Can be quite product focused – where products are concentrated on single needs
  • The firm may end up with too many products, as a result
  • Mainly considers current needs and benefits, rather than trends or future needs

Behavioral Segmentation Base Advantages

  • Quite suitable for competitive and mature markets
  • Good consideration of factors like loyalty and usage rates
  • This segmentation is quite unique to the product category under review

Behavioral Segmentation Base Limitations

  • There is no consideration given to why consumers buy
  • Relies upon detailed market intelligence – analysis of sales data