Identifying Segmentation Approaches

Identifying Segmentation Approaches

segmentation approaches

Demographic Segmentation
Doherty and Ellis-Chadwick (2010) suggest that demographic variables are personal attributes that tend to remain static throughout an individual’s life time, or evolve slowly over time – such as age, gender, race, etc. Key elements of a consumer’s demographic profile that have been found to influence digital behaviour include income, education, and race, age (Hoffman et. Al 2000) gender (Slyke 2002) and life-style (Brengman et al. 2005) cultural and social make-up that influences online behaviour (Shiu and Dawson 2004).
B2B: Company Size, Industry Served, Individual Members of Decision Making Unit
B2C: Age, Gender, Social Group, Geographic Location

Psychographic and Attitudinal Segmentation
Psychographic and Attitudinal variables can be defined as any aspect of a consumer’s perceptions, beliefs and attitudes that might influence online behaviour, and in particular a consumer’s intention to shop. This includes attitudes to risk and value when buying e.g. early adopter, brand loyal or price conscious.

Geographic Segmentation
Collecting and analysing information according to the physical location of the customer or other data source. Geographic segmentation is often used in marketing, since companies selling products and services would like to know where their products are being sold in order to increase advertising and sales efforts there. See also demographic segmentation.

Segmenting customers on profitability can be extremely effective. Using the internet to provide tailored offers to the top 20 per cent of customers by profit may result in more repeat business and cross-sales.
Occasion segmentation is dividing the market into groups on the basis of the different occasions when the buyers plan to buy the product or actually buy the product or use the product. Some products are perceived to be apt for a particular time or day or event. Thus the motive behind occasion segmentation is to increase the ‘reason to buy’ so as to improve the sales of a particular product or service.

Information Need and Trust
Figure 2.19 Segmentation based on information need and trust

Identification Need Trust

Value Segmentation
Value segmentation assesses the current or historical value and future value of each customer segment. The higher value customers will often will often warrant separate communications with different others. Sometimes digital channels are not the best approach for these customers – relationship managers will want direct contact with their most valuable customers.

Lifecycle Stage
Segmentation based on the lifecycle cycle relates to the value and behavior i.e. time since initial registration, number of products purchased, categories purchased in. This is very useful where customers follow a particular sequence in buying or using a service, such as online grocery shopping or online banking.

Brand Loyalty
Customers can be segmented through levels of brand loyalty. Services that appeal to brand loyalists can be provided to support them in their role as advocates of a brand, as suggested by Aaker and Joachimsthaler (2000). Incentives, promotion and a good level of service quality could be provided by the website to try and retain such customers.

Relationship with Organisation
Relationship segmentation is used to segment customers on the basis of whether they are a new customer (prospects), an existing customer or a lapsed customer. Marketers have to consider the cost-effectiveness of having separate communications for new, existing and lapsed customers or to target these groups in the same communications but using different content aimed at each.