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Consumer Psychology (PSY - 514)

Lesson 16

BASES FOR SEGMENTATION:

HYBRID SEGMENTATION STRATEGIES

2. Hybrid Segmentation Approaches

Marketers often segment markets by combining several segmentation variables rather than relying on one. Three

hybrid segmentations are most popular in this regard:

Psychographic-Demographic Profiles Geodemographic Profiles, VALS, and Yanklovich's mind base segmentation

1. Psychographic, Lifestyle and Demographic Profile

Psychographic (lifestyles) and demographic profiles are highly complimentary, combining the two marketers are

provided with powerful information about their target markets

While designing the Psychographic, Lifestyle and Demographic Profile, marketers must answer the three

important questions, that include:

1. Whom should we target?

2. What should we say?

3. Where should we say it?

To help advertisers answer the third question many advertising media vehicles sponsor life-style research on which

to base very detailed audience profiles

Example A Popular US Magazine

For a popular US Magazine a professional audience research firm conducted a research study to identify

demographic and psychographic lifestyle profiles of the magazine readers. The collected profiles looked something

like:

Demographic Profile

Total Readers

5,227,000

Gender

Men

66%

Women

34%

Age

18-49

62%

25-54

65%

55+

27%

Average Age

Education

Attended College or beyond

77%

College graduate or beyond

55%

Occupation

Professional Managerial

34%

Top/Middle Manager

33%

Employed

80%

Income (Annual)($)

75%

50,000 or more

66%

60,000 0r more

50%

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Consumer Psychology (PSY - 514)

75,000 or more

31%

Selected Lifestyle Profile

(Leisure Activities)

Attended movies in the last six months

73%

Bought music CD's/tapes in the last 12 months

46%

Attended live music performance in the last 12 months

29%

Book reading

45%

Entertained friends or relatives in the last 12 months

48%

Household subscribes to cable

69%

2. Geo-Demographic Segmentation

Basic Notion

People who live close to one another are likely to have similar financial means, tastes, preferences, lifestyles and

consumption habits.

Process

Computer software are used to cluster the population into lifestyle groupings based on postal or zip codes.

Clusters are created based upon consumer lifestyles. Specific cluster includes zip codes that are composed of

people with similar lifestyle scattered throughout the country

Using Cluster Data

Marketers use cluster data for:

Direct mail campaigns

Select retail sites

Design marketing strategies for specific market segments

3. Criteria for Effective Targeting of Market Segments

To be an effective target market a segment should be:

Identifiable

Sufficient (in terms of size)

Stable or growing

Accessible in terms of both media and cost

To divide the market into separate segments on the basis of common or shared needs or characteristics that are

relevant to the product or service, a marketer must be able to identify the relevant characteristics. Variables such as

Geography (location) and Demography (age, gender, occupation, race) are easy to identify. Education, income and

marital status can be known through questionnaires. Other characteristics such as benefits sought and lifestyles are

more difficult to identify

Most marketers prefer to target segments that are relatively stable in terms of demographic and psychological

factors and are likely to grow larger over time. Teenagers are sizable and easily identifiable market, eager to buy,

able to spend and easily reachable, yet when a marketer produces merchandise for a popular teenage fad, interest in

it may have waned

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Consumer Psychology (PSY - 514)

4. Implementing Segmentation Strategies

Once an organization has identified it most promising segments it must decide whether to target one segment or

several segments.

Each targeted segment receives a specially designed marketing mix i.e. a specially tailored product, price,

distribution network and/or promotional campaign

Segmentation Implementing Strategies

Differentiated Marketing

Concentrated Marketing

Targeting several segments

Targeting just one segment

Differentiated Marketing is highly appropriate for:

Financially strong companies

Well established in a product category

Competitive with other firms that are also strong in the category (soft drinks, automobiles or detergents)

Concentrated Marketing is an appropriate strategy when:

A company is small or new to the field

A company can survive and prosper by filling a niche not occupied by stronger companies

Gum disease fighting toothpastes

4. Countersegmentation

Some segments concentrate over time to a point where they don't warrant an individually designed marketing

program

In Countersegmentation a company seeks more generic needs or consumer characteristics that would apply to the

members of two or more segments into a larger single segment that could be targeted with individually tailored

product or promotional campaign

Example

Some business schools with wide course offerings in each department were forced to use Countersegmentation

strategy when they discovered that students simply did not have enough available credits to take a full spectrum of

in depth courses in their major areas of studies. They had to use Countersegmentation, e.g. by combining

advertising, publicity, sales promotion and selling course into a single course called promotion

Key Terms of Chapter 3

AIO's (activities, interests, opinions)

Market Segmentation

Benefit Segmentation

Positioning

Concentrated Marketing

Psychographic Inventory

Countersegmentation

Psychographic Segmentation

Demographic Characteristics

Sociocultural Variables

Demographic Segmentation

Use related segmentation

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Consumer Psychology (PSY - 514)

Differentiated Marketing

Usage situation

Geographic Segmentation

Hybrid Segmentation

Mass Marketing