36 CHAPTER 2 UNDERSTANDINGANDAPPROACHINGTHEMARKET
BasesforSegmentation
Primary Dim ension
Characteristicsof
personororganization
Purchasesituation
ConsumerMarket
Geography,age,sex,race,
income,lifecycle,
personality,lifestyle
Purpose,benefits,purchase
approach,choicecriteria,
brandloyalty,importance
IndustrialMarKet
Industry(SIC),location,size,
technology,profitability,
le gal,buyingsituation
Volume,frequency,application,
choicecriteria,purchasing
procedure,importance
FIGURE2.2 BasesforSegmentingMarkets:ConsumerandIndustrialMarkets
Inlinewiththesebasicdifferenceswewillfirstdiscussthebasesforsegmentingulti-
mateconsumersfollowedbyadiscussionofthefactors usedtosegmentindustrialusers.
SegmentingUltimateConsumers
GeographicSegments Geographyprobablyrepresentstheoldestbasisforseg-
mentation.Regionaldifferencesinconsumertastesforproductsasa wholearewell-known.
Marketsaccordingtolocationareeasily identifiedandlargeamountsofdataareusually
available.Manycompaniessimplydonothavetheresourcestoexpandbeyondlocalor
regionallevels; thus,theymustfocusononegeographicsegmentonly.Domesticandfor-
eignsegmentsarethebroadesttypeofgeographicalsegment.
Closelyassociatedwithgeographiclocationareinherentcharacteristicsofthatloca-
tion:weather, topography,andphysicalfactorssuchasrivers,mountains,oroceanprox-
imity.Conditionsofhighhumidity,excessiverainordraught,snoworcoldallinfluence
thepurchaseofa widespectrumofproducts. Whilemarketersnolongersegmentmarkets
asbeingeastorwestoftheMississippiRiver, peoplelivingneartheMississippimaycon-
stitutea viablesegmentforseveralproducts, suchasfloodinsurance,fishingequipment,
anddredgingmachinery.
Population densitycanalsoplacepeopleinuniquemarketsegments.High-density
statessuchasCaliforniaandNewYorkandcitiessuchas NewYorkCity,HongKong,and
Londoncreatetheneedforproducts suchassecuritysystems.fast-foodr~staurants,and
publictransportation.
Geographicsegmentationofferssomeimportantadvantages.Thereis verylittlewaste
inthemarketingeffort,inthattheproductandsupportingactivitiessuchasadvertising,
physicaldistribution,andrepair canallbedirectedat thecustomer.Further,geographypro-
videsa convenientorganizationalframework. Products,salespeople, anddistributionnet-
workscanallbeorganizedarounda central,specificlocation.
Thedrawbacksinusinga geographic basisofsegmentationarealsonotable.There
isalwaystheobvious possibilitythatconsumerpreferences may(unexpectedly) bearno
relationshiptolocation.Otherfactors, suchasethnicoriginorincome,mayovershadow
location.ThestereotypicalTexan, forexample,is hardtofindinHouston, whereone-third
ofthepopulationhasimmigratedfromotherstates.Anotherproblemisthatmostgeographic
areasareverylarge,regionallocations.Itis evidentthattheEasternseaboardmarketcon-
tainsmanysubsegments. Membersofa geographicsegmentoftentendtobetoohetero-
geneoustoqualifyas a meaningfultargetformarketingaction.
DemographicSegments Severaldemographiccharacteristicshaveproventobepar-
ticularlyrelevant whenmarketingtoultimateconsumers.Segmentingtheconsumermar-
ketbyagegroupshasbeenquiteusefulforseveralproducts.Forexample,theyouthmarket
(approximately 5 to13)notonlyinfluences howtheirparents spendmoney, butalsomake
