Hybrid segmentation is an approach using a combination of different segmentation bases.
As you most likely already know from your study of marketing, there are multiple approaches to segmentation. And while different marketing textbooks will provide a slightly differing choice of segmentation bases, they will usually include:
- benefits sought
Therefore, hybrid segmentation is using a combination of the above segmentation bases to construct market segments and select target markets.
Please note that there are similar articles on each of the above segmentation bases available on this website, please see the links at the bottom of this article.
Covered in this article…
- Introduction to hybrid segmentation
- Advantages of using hybrid segmentation
- Limitations of using hybrid segmentation
- A video overview of hybrid segmentation
Introduction to Hybrid Segmentation
Hybrid segmentation is effectively multiple segmentation using segmentation bases from different categories and combining them into one overall segmentation approach.
For example, we could combine aspects of demographic segments, psychographic information, and consumer behavior data into the one segmentation structure.
An obvious advantage to this approach is that we will form richer and more powerful profiles of the segments, which in turn should lead to improved target market selection, as well as improved marketing strategy and marketing mix development.
Advantages of Using Hybrid Segmentation
More powerful than using a single base (or from the same category of bases)
As can be seen from the other articles on this website outlining the advantages and limitations of each major segmentation base, there is no ideal segmentation approach. Each segmentation base has its own fors and against to consider.
However, by using a hybrid/multi-form of segmentation, it is possible to overcome many of these limitations with a more powerful segmentation approach. This is because many of the disadvantages of the individual segmentation base approaches are related to their focus and specialties.
In other words, their limitation is often because they focus on describing a particular characteristic or aspect of the consumer. For example, demographics describes the consumer using population characteristics, and psychographics describe their general lifestyle, and behavioral segments reflect their purchasing behavior and attitudes.
But with a hybrid approach, we can combine those specialties into an overall profile and set of market segments that utilize these pieces of information together. This means that we should end up with a richer and deeper and more insightful set of segments.
This means that we will know much more about the consumer – who they are, their actions, their motivations, and how all of that fits together. This is valuable information from a marketer’s perspective and should enable us to greatly enhance our marketing strategy performance.
Combines consumer’s actions, motivations, and descriptors
While the key benefit is listed above, this point/advantage highlights how that is achieved – through the combination of actions, motivations and descriptors.
Actions come from behavioral segments, which profile the consumer based on their purchase usage, their in-market behavior, and their attitudes to product categories and brands.
Motivations come from psychographic segments, which are formed from the consumer’s lifestyle, and what is important to them and why?
And descriptors come from demographics and geographic information, where we can describe the consumer in terms of a population characteristic (e.g. age, income) or in terms of geographic location and environment.
The combination of these will provide the advantages listed in the above point.
Creates a detailed segment profile and brand personas
In today’s marketing world, segment profiles and brand personas are quite common. This is because they are handy tools for focusing the organization on clear segments and market needs, by giving us clear direction (and a representative symbol) of a target market.
Hybrid segmentation will be able to deliver a more detailed segment profile than any other segmentation base alone.
Provides the advantages of the other segmentation bases
As noted, there are multiple articles on this website covering the advantages of each of the major segmentation bases, please see the links below.
Therefore, in addition to the specific advantages of hybrid segmentation, we will also gain from the benefits of each form of unique segmentation base that we include. For example, if we use psychographics and demographics together, then we will have the advantages of those segmentation bases individually. So, please refer to the relevant articles, as per the links at the bottom of this page.
Limitations of Using Hybrid Segmentation
Likely to create more market segments
Because we are using multiple variables to construct our segments, we are likely to create many, potentially too many, market segments at our first configuration.
For example, if we use one demographic variable, one psychographic variable, one behavioral variable, one benefits sought variable, and one geographic variable – that is, five variables in total – we will create at least 32 market segments, if not many more.
Obviously, for the average business, that is too many to deal with. Therefore, considerably more time and effort has to be utilized in constructing hybrid segments, and ensuring that the variables utilized effectively split the overall market on a logical and useful basis from a marketing perspective.
May not be useable by the firm, given its resources and marketing mix capabilities
Using multiple segmentation bases may mean that we have very narrow, potentially niche, market segments identified that have a precise mix of needs. Again, depending upon our organization, that may be a good approach for us, but in many cases, it may lead to segments that we cannot action.
For example, the segment needs may be too precise, or we do not have capability to develop suitable products or execute a suitable marketing mix.
Keeping in mind that a key outcome of segmentation is to identify market segments that we can target for more effective use of our marketing resources, in some regards, hybrid segmentation may be counterproductive to that outcome by providing segments that are more difficult to work with, as opposed to more top-level generic segments.
Some of these segments could be too defined or too small, requiring some segments to be combined
Building upon the above points, the over definition of segments (very tightly defined needs) or too many segments will require counter segmentation = combining segments.
This is a somewhat challenging process and would require the use of an experienced marketing analyst who has a good understanding of the overall market and its consumers. This is because we need to combine segments that have key aspects in common and will still deliver a logical segmentation outcome.
Takes more analytical effort and time and most likely cost
Because we are using a combination of segmentation bases, there is a lot more analytical skill and data involved in the construction of hybrid segments.
Consider the difference between constructing age-based demographic segments, as opposed to segments built on a combination of demographics, psychographics and behavioral data.
In order for us to do this, we need data that is interconnected at a customer level (or a customer cohort level), have access to skilled analysts and marketers, and are willing to invest the time and effort to build these market segments and profiles.
Even for a large company, this would take weeks if not longer to construct and validate.
Requires an integrated database linking the customer data – making it more suitable for larger firms
One of the limitations of hybrid segmentation is that it is more suitable for large companies and is usually beyond the scope and value for a small to medium business.
When we are compiling demographics, psychographics, and behavioral information, we need the ability to link it somehow at a customer level – otherwise it is just unrelated data. And, as we are looking at many variables, we need a sizable database for our segmentation process to be statistically valid and measurable.
As a result, the combination of the analytical challenge, the scale of the data required, and the cost of acquiring and combining such data, limits it to a large company with resources and data access.
Carries the limitations of the other segmentation bases
As with the final advantage listed above, the individual limitations of the other segmentation bases may also carry across to hybrid segments. Again, please review the advantages and limitations of each segmentation base, as provided in the links below.
A Summary Video outlining the Advantages and Limitations of Hybrid 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 benefits sought segmentation