The Marketing Book 5th Edition

Market segmentation 249

One of the relatively recent developments in
these respects is the cultivation of the more
profitable customers via relational campaigns
in order to encourage greater loyalty and
retention. Relationship marketing has been a
topical issue at the heart of much effort to gain
strategic competitive advantage. See also Chap-
ters 3 and 19.

Segmentation categories

Segmentation approaches can be categorized
as being objective or subjective. An objective
base may be measured unambiguously (e.g.
age and gender) or may be taken from regis-
trations of transactions (e.g. checkout scanning
data). Subjective bases need to be measured
with the respondents themselves and are often
‘mental constructs’ such as attitudes and
intentions.
As suggested later, new metrics for seg-
menting markets are shifting the balance
toward the former category in many segmenta-
tion programmes.
Further categorization of segmentation
bases can be made as shown in Table 10.1. Here,
three ‘levels’ are proposed. At the general level,
segmentation is based on permanent or rela-
tively long-lasting consumer characteristics
such as gender, education level occupation,
family composition and lifestyle. These charac-

teristics are the same for different products,

services and usage situations.

For domain-specific segmentation, there

are different product classes and consumption

domains, such as breakfast, washing clothes or

commuting. When these are taken into account,

segmentation is domain-specific.

For specific level segmentation, customers

are segmented into, for example, heavy and

light users of specific brands. Segmentation of

present customers is also at the specific level.

Combining the three levels of segmenta-

tion and the distinction of objective and sub-

jective variables is shown in Table 10.1. All

segmenting bases can be categorized within

this framework.

As mentioned earlier and as will be

explored and explained in greater depth later,

the ‘objective’ variables are becoming more

dominant for many organizations.

‘Traditional’ segmentation bases

‘Traditional’ refers to those approaches that

were employed before the advent of the data-

driven era. The bases used are still around

today and used by many organizations, but for

those with access to personalized customer

data they are perhaps now used more as

Table 10.1 Classification of segmentation variables

Objective Subjective

General level (consumption) Age, education level, geographic

area

Lifestyle, general values,

personality

Domain-specific level (product

class)

Usage frequency, substitution,

complementarity

Perception, attitude, preference,

interests, opinions, domain-

specific values

Specific level (brand) Brand loyalty (behaviour), usage

frequency

Brand loyalty (attitude), brand

preference, purchase intention