Advantages and limitations of the main market segmentation bases

Geographic Segmentation Base Advantages

• Considers cultural differences of different regions
• Good for firms with limited geographic reach needing to select a specific target market
• Great when there is significant socio-economic diversity and significant consumer behavioral differences across regions

Geographic Segmentation Base Limitations

• Assumes that consumers in a geographic area are similar, which is generally unlikely across a broad area
• Usually needs to be used in conjunction with another segmentation base

Demographic Segmentation Base Advantages

• Simple to apply and use
• Data can be obtained quickly and at low cost
• Census data provides an excellent and rich source of demographic information
• Easy to understand – from management to customer service and sales staff
• Good for in-store profiling of consumers
• Can be used as a surrogate measure for the consumer’s life stage – such as, getting married, having children, retiring, and so on

Demographic Segmentation Base Limitations

• Descriptive only – little understanding of the consumer themselves
• Assumes that consumers in the same demographic group have similar needs and lifestyle – which is unlikely, all 30 year olds are unlikely that have the same needs, for example.

Psychographic Segmentation Base Advantages

• Should provide a much greater insight into the consumers their lifestyles and their needs
• Helpful for uncovering motivations and reasons for product and brand purchases
• Often more helpful for developing promotional campaigns

Psychographic Segmentation Base Limitations

• Requires market research – usually a mix of qualitative and quantitative – which can be expensive
• As a result of the research cost, probably more suitable for larger firms/brands
• Sometimes qualitative market research has a concern regarding the interpretation of the findings
• Psychographic segments may not be as easy to reach via promotional methods or to identify in-store

Benefits Sought Segmentation Base Advantages

• Quite suitable for brands with multiple offerings and targeting a precise market positioning
• Can create an opportunity for niche marketing
• Can aligned multiple products to small market segments, in a congested market
• Helps ensure that the product design and communication hits a known consumer need

Benefits Sought Segmentation Base Limitations

• Can be quite product focused – where products are concentrated on single needs
• The firm may end up with too many products, as a result
• Mainly considers current needs and benefits, rather than trends or future needs

Behavioral Segmentation Base Advantages

• Quite suitable for competitive and mature markets
• Good consideration of factors like loyalty and usage rates
• This segmentation is quite unique to the product category under review

Behavioral Segmentation Base Limitations

• There is no consideration given to why consumers buy
• Relies upon detailed market intelligence – analysis of sales data