If you have responsibility, either as part of University assignment or in your role as a marketer for an organization, of constructing a suitable approach for the segmentation of consumers – then you will probably benefit from this article, which highlights the main generic approaches to constructing market segments.
In other words, here is a list of 15 possible market segments (as shown in the below diagram) that could be argued exist in virtually any market. Therefore, if constructing your own segmentation approach, the following list and discussion should be quite helpful. Keep in mind, however, that there are more segments listed here than you would probably need – but it is likely that only some of these segments will be appropriate for your particular challenge.
Ideally, what you should look to do is to select 4 to 8 of the following market segment examples and then fine tune them for your requirements.
A generic list of possible market segments
Convenience driven consumers
Many markets will have a large segment of consumers that are looking to simplify the purchase or the process. For example, the fast food industry was able to generate a large market and share of food consumption because it offers the benefit of convenience. And obviously, as suggested by its name, convenience stores offer the same benefit.
Convenience is also important in many service industries where a complicated process may exist. For example, many banks have tried to simplify and speed up the loan application process – this is another example of convenience.
Online shopping websites and information sites also provide the benefit of convenience, which attract many consumers.
Budget conscious shoppers
Virtually all markets will have a group of consumers that are very price sensitive. These consumers may make their purchase decision based on the lowest price, or select the product that represents the best value for money.
These consumers are very attracted to sales promotions and special offers. As a result, they have limited brand loyalty as they see limited financial benefit in remaining loyal while paying a price premium.
Some consumers in the segment may have a limited income, but many see themselves as “smart shoppers” and enjoy the challenge of saving money.
Focus on quality
The opposite of the budget conscious consumer market segment are those consumers interested in higher quality products and services. This does not necessarily mean that this market segment likes to “waste” money – instead, many consumers in this segment believe that buying higher quality represents better value over time.
In some markets, consumers are attracted to high prestige products and brands in order to demonstrate their success to others. And some other consumers in this segment simply like having nice products and good service.
Rational, value for money
The consumers in the rational market segment are typically higher involved consumers in the purchase decision and look to make decisions on a “best product solution” basis wherever possible.
They are more likely to conduct Internet and word-of-mouth research and will compare products on an attribute and price basis. Therefore, product design is probably more important to this particular market segment.
Attracted to strong brands
This market segment is less involved in their purchase decision, and will rely upon a strong brand to guide their purchase decision. In particular, we may see this in purchases of electronic and entertainment products, whether market segment will be primarily attracted to a brand with a strong reputation
Consumers in this market segment will take comfort in that buying from established brand is a safe and low risk decision, particularly for purchases that they do not undertake frequently.
An emerging consumer segment in many markets consists of people who take into account the environmental impact of their purchases.
This will extend to components of the product itself, packaging, ability to easily dispose of product after use, reputation of the brand itself (that is, its corporate social responsibility reputation).
This market segment is a family or household unit that has one main grocery buyer. This consumer is purchasing on behalf of themselves and other people in the family unit. The goal is to purchase array of products that are suitable for a range of age groups and needs.
They may be more attracted to variety, as well as brands that resonate well with their family members. It is in this type of market segment that the various decision roles (such as user, influencer, decider) needs to be considered more closely.
Health and diet conscious
In various markets, particularly food, beverages, medicines, vitamins, health centers – this is a size-able market segment that is quite interested in the health and well-being aspects of the product.
This market segment can be broken down into two further sub-components – the first consists of consumers interested in general well-being – and the second group consisting of consumers that have specific health requirements and goals.
Particularly in service industries, there would be a size-able market segment of consumers that would be interested in quality of service provided and/or developing a relationship with the firm and its staff. It is the service and relationship aspects that become more important, as opposed to price, product or the other elements of the marketing mix.
Industries in particular that would need to consider this market segment would include: hospitality, travel agents, hairdressers, beauty spas, banking, fitness centers, local restaurants, and so on. That is, any industry where there is a reasonable degree of customer-employee direct contact.
Flexibility is important
The tailoring of a product offer is becoming more important to some groups of consumers, as highlighted by this particular market segment. The era of mass marketing and generally passed its prime and some consumers are looking for the ability to have products tailored to the particular needs.
This is quite common in service industries of course, but is now extending to the production of physical good (for example, it is possible to tailor a sports shoe to your needs, via an online ordering system).
This particular market segment can be considered an extension of “focus on quality” customers segment discussed above. However, in many cases, the size of this market segment is large enough to be warranted as its own target market.
Consumers in this segment use brands and products as a means to signal their self-identity and social status. This would be quite common in markets such as cars, alcohol, cigarettes, holiday destinations, restaurants, clothing, jewelry, and so on. That is, visible public products which other consumers (friends, family, and work colleagues) would be aware of.
Many markets will have a group of consumers who seek out variety. Some consumers simply like change and choice, whereas others like to experience new things.
These consumers are quite responsive to product line extensions and new products – as a result, they are an attractive initial target market to generate sales for a new product, as they are more responsive and are likely to have a greater proportion of opinion leaders.
In some markets, there are usually multiple segments that are seeking a particular benefit from a product – making benefit segmentation the most suitable market segmentation approach. The classic example is in the toothpaste market, where consumers after a particular product benefit, such as teeth whitening, fresh breath, cavity protection, and so on.
There is a good example on this website for using benefit segments in the cold beverage market. Obviously, the marketing key in this segment is to position products tightly around a unique product benefit – which would be an appropriate marketing strategy in a clustered and competitive market (often in fast moving consumer goods).
Just for me
The “just for me” market segment of those consumers interested in their own needs and pleasures. They will seek out product solutions that make them feel good, even though they may be expensive or not necessarily healthy.
Markets that would have this sort of consumer segment would include: restaurants, travel, beauty spas, personalized services, alcohol, cigarettes, some food and beverage markets, and so on.
The final market segment provided in this list of potential market segments is simply the firm’s/brand’s existing customer base. Although this would need to be segmented down further, as per the above market segments, it is highlighted here as it is sometimes accidentally overlooked.
This oversight situation occurs because some marketers are overly focused upon growing the business through new customer acquisition, rather than the mechanics of retaining existing customers.