9.2.2 Segmentation of Markets Notes

Classifications of Consumer Market Segments

Imagine you’re a designer tasked with creating a new product, say, a smartphone. How do you decide what features to include? Should it have a high-end camera or a budget-friendly price? Should it target teenagers or working professionals? These decisions hinge on understanding consumer market segments, which allow businesses to tailor products to meet the needs of specific groups. By segmenting the market, companies can focus their efforts on the most promising opportunities, ensuring better product-market fit and higher customer satisfaction.

Let’s explore how markets are segmented and how this knowledge can guide product design.

What is Market Segmentation?

Market segmentation is the process of dividing a broad consumer or business market into smaller groups, or segments, based on shared characteristics. These segments allow companies to design products and services that better meet the specific needs of their target audience. Without segmentation, a product might try to appeal to everyone and end up satisfying no one.

The main categories for segmenting consumer markets include income, profession, age, family structure, and purchasing behavior. Let’s break these down.

Key Consumer Market Segments

Income

Income segmentation divides markets based on consumers' purchasing power. For example, luxury brands like Rolex target high-income earners, while budget-friendly brands like Casio cater to middle or lower-income groups. Income affects not only what consumers can afford but also their expectations regarding quality, features, and brand image.

Profession

Profession-based segmentation focuses on the type of work consumers do. For instance, office workers might look for ergonomic furniture, while construction workers prioritize durable, heavy-duty tools. Understanding a consumer's profession can help designers tailor products to their specific use cases.

Age

Age is one of the most commonly used segmentation criteria, as consumer preferences often vary significantly across different life stages. For example:

• Children: Products like toys or educational games.
• Teenagers: Trendy gadgets, social media apps, or fashion items.
• Adults: Practical items like kitchen appliances or financial services.
• Seniors: Products emphasizing comfort, safety, and ease of use.

Family Structure

The family life cycle, single, married, with children, or empty nesters also influences purchasing decisions. Parents with young children may prioritize safety and convenience, while single professionals might focus on style and functionality.

Purchasing Behavior

This segmentation considers how consumers interact with products, how often they buy, what influences their decisions, and their brand loyalty. For instance:

• Frequent buyers: may seek subscription models or loyalty rewards.
• First-time buyers: might need more education about the product.
• Brand-loyal customers: are more likely to purchase related products within the same brand.