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