The segmentation methods discussed so far have all used customer characteristics as a way to identify clear groups. However, identifying customer behavior rather than their individual attributes may be a more effective way to identify market segments.
Geographical boundaries: UK and Ireland
Description: Average age and income profile (English as a common language)
Population: 60.3 million
Geographical boundaries: Central Germany, Central and Northern France, Southern Belgium and Luxembourg
Description: High proportion of elderly people and low proportion of middle-aged people; Average income (German and French)
Population: 54.5 million
Geographical boundaries: Portugal and Spain
Description: Young population; Below average income (Portuguese and Spanish language)
Population: 50.4 million
Geographical boundaries: Southeastern France, southern Germany, northern Italy
Description: High proportion of middle-aged people; above average income; (French, German and Italian languages)
Population: 71.5 million
Geographical boundaries: Southern Italy and Greece
Description: Young population; below average income; (Italian and Greek)
Population: 31.2 million
Geographical boundaries: Northern Germany, Netherlands, Northern Belgium, Denmark, Sweden, Finland, Norway, Iceland and Switzerland
Description: High proportion of middle-aged people; very high income; multilingual; (German, French, Italian and Scandinavian languages)
Population: 57.6 million
Note: Norway, Iceland and Switzerland are not currently in the European Union.
The main sources of behavioural variables are usage, benefits and purchase occasions.
Benefit segmentation
Benefit segmentation uses the underlying reasons why a person buys a particular product or service, rather than trying to identify specific personal attributes of that person. Benefit segmentation is based on the concept that the main reason a customer buys a product or service is because of the benefits the product or service provides them. Identifying groups of customers seeking common benefits in a particular market allows a manufacturer to develop specific product or service offerings. An example of profit segmentation would be in the management education market. A survey found that there are many benefits segments in the market for an MBA qualification.
"Benefit segmentation is a market-oriented approach. Benefit segmentation allows organizations to identify customer needs and try to satisfy them".
.jpg "Quality seekers want access to high quality education. They believe that a higher education will benefit them throughout their professional life and lead to job advancement or career change. Special seekers want to pursue special education and become experts in their field of special interest. Focused courses suit their needs and they will look for institutions that offer them. Career changers are looking for new jobs or employers and believe that an MBA qualification will open up opportunities for career progression and mobility. They have years of work experience and feel they are in a career. Knowledge seekers have a desire to learn, and as experience increases knowledge increases their power. They believe that MBA will be an asset not only in their career but in all aspects of their life. Status seekers believe that an MBA will increase income and prestige. Degree seekers believe that a first degree is no longer enough and that an MBA is necessary to be competitive in the contemporary job market. These individuals are active, self-oriented and independent. Professionals strive to climb the corporate ladder. They are looking for professional advancement, higher pay and job flexibility. They are upwardly mobile, serious, future-oriented and want to build a career within existing corporate structures. Avoiders look for MBA programs that require minimal effort to complete. He believes that in the future all business schools will offer essentially the same education. Their motivation is other-directed and they will seek out low-cost, low-quality programs. Convenience seekers will join MBA programs that are close to their home or workplace and have an easy admission process. They are interested in any business school that provides these facilities and is affordable. Non-matriculators wish to pursue MBA courses without going through any formal application process. So they are attracted to a business school that allows them to start an MBA program without any formal application.")
Quality seekers want access to high quality education. They believe that a higher education will benefit them throughout their professional life and lead to job advancement or career change. Special seekers want to pursue special education and become experts in their field of special interest. Focused courses suit their needs and they will look for institutions that offer them. Career changers are looking for new jobs or employers and believe that an MBA qualification will open up opportunities for career progression and mobility. They have years of work experience and feel they are in a career. Knowledge seekers have a desire to learn, and as experience increases knowledge increases their power. They believe that MBA will be an asset not only in their career but in all aspects of their life. Status seekers believe that an MBA will increase income and prestige. Degree seekers believe that a first degree is no longer enough and that an MBA is necessary to be competitive in the contemporary job market. These individuals are active, self-oriented and independent. Professionals strive to climb the corporate ladder. They are looking for professional advancement, higher pay and job flexibility. They are upwardly mobile, serious, future-oriented and want to build a career within existing corporate structures. Avoiders look for MBA programs that require minimal effort to complete. He believes that in the future all business schools will offer essentially the same education. Their motivation is other-directed and they will seek out low-cost, low-quality programs. Convenience seekers will join MBA programs that are close to their home or workplace and have an easy admission process. They are interested in any business school that provides these facilities and is affordable. Non-matriculators wish to pursue MBA courses without going through any formal application process. So they are attracted to a business school that allows them to start an MBA program without any formal application.
Usage segmentation
Customer usage characteristics and patterns are the essence of this segmentation method. Consumers generally fall into the categories of heavy users, moderate users, occasional users, and non-users of a particular product or service. Identifying heavy users can be useful because they consume a larger percentage of an organization's sales than other groups, as the Pareto effect would suggest. This may lead to the identification of new segmentation opportunities for the organization.
For example Mangers relaunched their cleaning product Sugar Soap as a universal non silica based household cleaner recognizing that the majority of users of this product were professional house painters and decorators. In fact the reason why this group of products has so many users is because it can be used to clean surfaces that need to be painted, and because it is a non-silica-based cleaner, it can be painted directly onto the surface. Once managers identified this group of heavy users, they relaunched the product in the do-it-yourself market for individuals who wanted to decorate their own homes.
Airlines use frequent flyer programs to retain heavy users of their services. Many companies in other sectors use incentives to retain these important customer groups.
Banks and building societies can keep charging scales on their accounts that encourage heavy users while increasing the relative charges for light users as they are relatively more extensive to manage.
Purchase Occasion: Customer groups can be identified based on the occasions on which they purchase a particular product or service. Some products may be purchased as gifts or for certain formal social occasions such as weddings or New Year celebrations. The convenience store concept is an example of occasion segmentation where individuals can shop at a time and place that suits them.
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