Benefit segmentation is an approach built around the base need of consumers. In other words, what are they primarily looking for when they purchase the product?
As implied by the term “benefits sought”, brands and products are positioned around a specific benefit that a consumer is seeking.
A common example used in marketing textbooks is the toothpaste product category, where consumers are after potential benefits of: white teeth, tartar control, fresh breath, and so on. And each product line variation is positioned around one, or potentially two, of these benefits.
Benefit segmentation is more appropriate for low-involvement purchases where the consumer is reliant upon a simple choice that is primarily focused on a key benefit. In this type of marketplace, clear product positioning is critical for success.
Covered in this article…
- Introduction to benefits sought segmentation
- An example of benefits sought segmentation
- Advantages of using benefits sought segmentation
- Limitations of using benefits sought segmentation
- A video summary of this article
Introduction to Benefits Sought Segmentation
In some marketing textbooks, benefit segmentation is considered to be a subset of behavioral segmentation. As you may know, behavioral segmentation is how the consumer “behaves” in the marketplace, typically based upon their sales purchases, actions, and attitudes towards brands and product categories.
Please note that there is a separate article on behavioral segmentation, please see the link at the bottom of this article.
Benefit segmentation has been included in this article as a separate form of segmentation, because it is commonly used in low-involvement product purchases, especially in supermarket-style (convenience) goods.
It is also somewhat different to behavioral segments, as it is based upon a core need or benefit. You may recall from the study of the product mix, that products are typically structured around three levels, namely:
- Core product
- Actual product
- Augmented product
The core product refers to the basic need/benefit that the consumer is seeking from the purchase. With benefit segmentation, we are trying to position a product to best meet that basic need/benefit.
You should also note that, as you most likely already know from your study of marketing, behavioral segmentation is just one approach to dividing an overall market into smaller segments. Different marketing textbooks will provide a slightly differing choice of segmentation bases, but will usually include:
- benefits sought, and
- hybrid (a combination of the above)
And remember that each of the above segmentation bases can be broken down further into smaller dimensions.
For example, segments based on benefits sought by consumers are built around the specific benefits provided by the offerings within a specific product category. That is, what are the different benefits that consumers want from the product? These could include:
- Best quality
- Price value
- Great service
- Latest technology
- Taste/diet (food products)
- And even more precise benefits
An example of benefits sought segments
To help make sense of this form with segmentation, let’s consider the snack food market. Obviously, the snack food market can be broken down into smaller product categories, however, common forms of benefit segments could be:
- Gluten-free or other diet needs
- Great for kids
- Good for travelling
- Sweet or savory
- Low calories
- Fun to easy
- Good for entertaining
Advantages of Using Benefits Sought Segmentation
Easy for product design decisions
Product design becomes significantly easier when using segments built around precise consumer benefits. This is because the product has to be designed with an ultimate purpose in mind.
As a result, it is clear which product features and attributes should be included, as well as which ones can be excluded (for the purpose of better targeting the product and reducing its cost inputs).
Clear guidance for product line extensions
Likewise, product line extensions are also more obvious when using benefits segments. We can either build out our product line extensions that strengthen our “hold” on the overall benefit segment, or we can expand our product line to cover additional, potentially niche, benefit segments.
Able to construct clear positioning and differentiation
As mentioned above, clear positioning is critical for success when targeting benefit segments. As the product has been designed with a specific benefit in mind, we work hard to communicate that the product offers a superior benefit (as relative to our competitors) for consumers with that need.
And as we know, our product positioning should include clear differentiation, which is more achievable through a precise benefit offering, rather than a collection of benefits.
As a result, we end up with clear positioning that is distinct from our competition – with the ultimate goal of having our product offering being perceived as the best solution for customers seeking that specific benefit.
Can target product gaps in the market
Through market research and analysis, it should be relatively clear to identify product gaps in the marketplace. We could utilize perceptual maps for this purpose and list key competitors and our brands/products against the main benefit segments in the market.
This should highlight clear gaps between the benefits sought by consumers (as per the segments identified) and suitable offerings. Ideally, it should identify segments that have been under targeted = products that do not carry that precise benefit – leading to a clear new product development program for our brand, where we progressively target a greater range, and potentially smaller, benefit segments.
Quite measurable via sales in many industries
In products sold through large-scale retailers, especially convenience goods, we should be able to obtain or purchase market sales information by product category by brand. This will show us the proportion of purchases per benefit, by matching back the product’s positioning to their market share.
In this way, we can construct a fairly precise measurement of benefits sought per product category. This information would be helpful to identify new products, as per above, as well as identifying segments where our brand is under/after performing relative to competition.
Good insight into the needs of consumers
By matching back purchases to the positioning (= base needs/benefit) of the leading products in the marketplace, we can paint a picture of what the majority of customers are looking for. This gives us good insight into the base needs of consumers, which we can then utilize in our marketing mix programs – especially our product mix and our marketing communications.
Very useful for low-involvement purchases
With low involvement purchases, consumers make a relatively quick purchase decision as they are less interested in the purchase decision, or they see it as a minor risk purchase.
As a result, many consumers in a low-purchase development situation will rely upon their memory, habitual purchases, brand name, or positioning of the product which is usually focused on 1-2 key benefits.
If we compete in the marketplace that has mainly convenience-based purchases where most consumers undertake low-involvement decisions, then benefits sought segments make a lot of sense, as opposed to more sophisticated forms of market segmentation.
Can capture more retailer shelf space
If we are a major brand that is able to offer multiple product lines, then it is possible for us to dominate substantial quantities of retailer shelf space through multiple benefit offerings. This is because the retailer, say a supermarket, can deal with one supplier (our firm) who can offer multiple product variations.
For example, going back to the snack food example above, we can offer variations of our product that are: gluten-free, low-carb, savory, sweet, great for kids, and so on – meeting the needs of a variety of consumers, but under the umbrella of a well-known brand.
This strategy reduces the opportunities for our competitors to increase their market share, as we have proactively targeted more consumers as well as building stronger relationships with retailers and increasing the visibility of our brand.
Limitations of Using Benefits Sought Segmentation
A very product-centric view of the consumer
One significant limitation of using a benefit segmentation approach is that we become very focused upon the product design and its positioning. We constantly think about meeting precise benefits, often on a one-off individual basis, and do not think at a broader sense about the customer.
This means that we will become quite product-centric, and our marketing mix activities will be based around finding product gaps, meeting more benefit segment needs, and offering head-to-head competitive products.
Sometimes this is referred to as marketing myopia where we are focused on products, rather than the needs of consumers. Although benefit segments meet precise needs, they do not take a customer-centric view and do not consider the overall needs of the consumer.
May not see trends or the emerging indirect competitors
This point builds upon the previous one of being too product-centric. Because we are focused on today’s marketplace and our product mix, we are less focused upon changes in the marketplace, and in particular, indirect competitors.
We may become fixated on a precise product category and the direct competitors and not recognize that indirect competitors are growing their product category at the expense of our category. This would happen when consumers stop buying the type of products that we offer and start buying in the alternative product category.
As an example, if we are competing in the snack food market, there may be a shift to “beverage-style” snacks as an alternative, but we do not notice because we are focused on our direct snack food competitors.
Too focused on the current, not the future, marketplace
This is a similar limitation to the above point. As we become focused on competitors and our market share in particular, we are really only considering today’s results and the impact of our upcoming campaigns.
We do not tend to look several years ahead to see how market needs are evolving. Again, as mentioned above, this overlaps with a product-centric viewpoint and is also interrelated with the concept of marketing myopia = which is being short-sighted and focused on product, not customer, solutions.
No real understanding of the consumer
When using benefit segments, obviously we understand the core benefit being sought from the product, but there is no overall understanding of the customer in their totality. How the product fits into their purchases, for instance.
Therefore, benefit segmentation may result in a marketing game of finding you segments and fine-tuning our positioning to meet a particular benefit – again, rather than being overly customer focused and taking a more relationship view of our customers.
Tends to result in a battle for market share, through copying competitor products
As you can see from the above points, for many reasons we could easily end up in a head-to-head marketplace where we match and try to outdo our competitors based on an offer of specific product benefits. As a result, there is likely to be multiple competitive offerings built around the same benefit.
We end up with a market share battle, usually executed through me-too product design and aggressive sales promotions. This is where brand building becomes more important, as brand awareness and likability – along with retailer relationships and shelf presence – become more critical in winning market share.
Suitable for simple product choices only – not offerings with a broad value proposition
As per the advantages above, benefit segments are more appropriate for low-involvement purchases. This means that benefit segmentation is not overly suitable for moderate to high-involvement purchases.
This is because, in these markets, consumers are looking for a package of benefits and are less reliant upon a single benefit. Therefore, the overall value proposition is more important to consumers, and they will use a more considered purchase decision approach.
Indeed, brands/products that are overly positioned around a single benefit are not likely to do as well in sales and profit in a high-involvement purchase product category, as they do not offer a broad range of benefits – at least as perceived by consumers.
We may become too sales promotion based
Because when using benefit segments, it is more likely that we have direct competitors with very similar positioning, the key to winning the consumer’s purchase is often built around brand strength and sales promotions.
Obviously, as brand building takes considerable time, resources, and effort, as opposed to sales promotions – this means that sales promotions are often a “go to” marketing tactic to enhance market share.
Therefore, we end up in a zero-sum game, where market share goes back and forward between the major brands, and there is limited overall growth and profit improvement in the product category.
A Summary Video outlining the Advantages and Limitations of Benefits Sought Segments
- The advantages and limitations of geographic segmentation
- The advantages and limitations of demographic segmentation
- The advantages and limitations of psychographic segmentation
- The advantages and limitations of behavioral segmentation
- The advantages and limitations of hybrid segmentation
- Segmentation Bases
- Advantages and limitations of the different segmentation bases
- Choice of Consumer Segmentation Bases