Market Segmentation Examples

 

Market Segmentation Examples

Type of Firm

Segmentation Base

Possible Market Segments

Banking Demographic segmentation Young couples, young families, older families, pre-retirement, retired
Mobile phone carriers Benefit segmentation Highly social, work-oriented, safety contact, status symbol
Frozen food manufacturers A broad mix is used here:

  • Demographic segmentation
  • Psychographic segmentation
  • Behavioral segmentation
Single households, diet-conscious, family dining, parties, budget-conscious, variety seekers
Toothpaste Benefit segmentation Teeth whitening, sensitive teeth, fresh breath, cavity protection, tartar control
Restaurant Behavioral segmentation Regulars, special occasion, business lunch, quick spot

 

For more information you should also review Choice of Segmentation Bases (or Business Segmentation if appropriate).

 

The following table includes more examples,

along with a rationale for this segmentation approach

 

Type of Firm

Suitable Segmentation Approach

Rationale

Cosmetics and perfumes firms
(such as L’Oreal)

Demographics (gender, age)

OR

Benefit

Cosmetics and perfumes firms could effectively use a variety of segmentation variables. For example, males and females would have different needs, as would younger and older consumers.

Benefit segmentation could be used (some possible could include: skin repair, remove wrinkles, glowing skin, acne reduction, attractive look, social status, celebrity identification).

Car manufacturer

Psychographic

(social class)

OR

Geographic

Segmenting by social class makes sense for this product category, as cars are often a reflection of a consumer’s lifestyle and used as a social symbol of success.

Geographic segmentation (such as urban versus rural) could also be an effective approach

 This website also has a very detailed example for market segments for retailers (such as supermarkets).

Segmenting Differences in the Same Market

Even firms operating within the same industry can segment the market in different ways (often for strategic reasons). Using the breakfast cereal market as an example, the following diagrams highlight some different possible approaches.

 

Market segmentation tree, highlighting potential market segments that could be created for the cereal market

 

This first segmentation example uses age group (demographics) and then benefits sought to construct nine different market segments. Obviously, each of these segments would be of different sizes and attractiveness, but it does give a good overview of the range of consumer needs in the market. Let’s now look at another approach using the same market.

Another market segmentation tree example, showing potential breakfast cereal market segments

In this example, two quite distinct segmentation variables have been used. The first base is a geographic variable of weather/climate and the second is a psychographic (lifestyle) variable relating to whether the breakfast meal is typically consumed in a family setting (people eating together) or whether the household members usually eat alone.

Remember the point of these examples is to demonstrate that the same market can be segmented and viewed in many different ways. By doing so, the marketer gains a greater understanding of the overall market and is more likely to identify unmet needs (sometimes referred to as market gaps, which are identified through using perceptual maps).