The segmentation approaches that have been discussed so far are all using characteristics of the consumer as a way of identifying clear groupings. However, identifying consumer behaviour rather than personal attributes can be a more effective way of identifying market segments. The main behavioural variables in this category are benefits, usage and purchase occasion.
Benefit segmentation uses the underlying reasons why an individual purchases a particular product or service, rather than trying to identify an individual’s particular personal attributes. Benefit segmentation is based on the concept that the key reason a consumer buys the product or service is for the benefit that product or service gives them. Identifying groups of consumers that are seeking a common benefit in a particular market allows a producer to develop specific products or service offerings. An example of benefit segmentation would be in the management education market.
A survey in the USA found that there were several benefit segments in the market for MBA qualifications (see Figure below).The advantage of benefit segmentation is that it is a market orientated approach which, by seeking to identify consumers’ needs, allow organizations to set about satisfying them.
The characteristics and patterns of consumer usage are the essence of this segmentation approach. Consumers will generally fall into categories of heavy users, medium users, occasional users and non-users of a particular product or service. Identifying heavy users can be useful as they are likely to consume a larger percentage of an organization’s sales than other groups, as the Pareto Effect would suggest (see Figure below). This can lead to the identification of new segmentation opportunities for an organization.
For example, Mangers relaunched their cleaning product Sugar Soap, which was a universal non-silica based household cleaner, by identifying that the heavy users of this product were professional household painters and decorators. In fact, the reason this group were heavy users of the product was because it could be used to clean surfaces that needed to be painted and because it was a non-silica based cleaner they could paint straight onto the surface. Once managers had identified this group of heavy users they relaunched the product to the Do It Yourself market for individuals wishing to decorate their own houses. Airlines use frequent-flyer programmes to retain the heavy user of their services. Many other companies in other sectors use incentives to retain this important customer grouping.Banks and building societies may wish to have charging scales on their accounts that give incentives for heavy users while at the same time increasing relative charges for light users as they are relatively more expensive to manage.
MBA benefit segments
Consumer groups can be identified on the basis of the type of occasion for which they buy a particular product or service. Some products may be bought as gifts, or for specific formal social occasions such as weddings or New Year celebrations. The convenience store concept is an example of occasion segmentation, where individuals can make purchases at a time and place that are agreeable to them.
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