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Basics of Marketing - Kotler Philip

SEGMENTATION BY THE DEMOGRAPHIC PRINCIPLE

Demographic segmentation is the breakdown of the market into groups based on demographic variables such as sex, age, family size, family life stage, income level, occupation, education, religious beliefs, race and nationality. Demographic variables are the most popular factors that serve as a basis for distinguishing between consumer groups. One reason for this popularity is that the needs and preferences, as well as the intensity of the consumption of goods, are often closely related to demographic characteristics. Another reason is that demographic characteristics are lighter than most other types of variables. Even in cases where the market is not described from the demographic point of view (say, on the basis of types of personalities), it is still necessary to communicate with demographic parameters.

We will now illustrate how specific demographic variables are used to segment markets.

Age and stage of the life cycle of the family. The needs and opportunities of buyers vary with age. Even a 6-month-old child already has a different consumer potential, say, from a 3-month period. Realizing this, the toy company "Elib Products" has developed 12 different toys for consistent use by their children from three months to a year. One is for use when babies are just beginning to reach for objects, the other is when the child develops grasping movements, etc. This segmentation strategy helps parents and other donors easily select a suitable toy based on the knowledge of the child's age.

And yet, the variables of the age and stage of the life cycle of the family can be unreliable. For example, Ford Motor Company used the age characteristics of customers when creating a target market for its Mustang model. The car was designed to attract young people who needed an inexpensive sports car. However, the firm soon discovered that the Mustang was bought by representatives of all age groups. The real target market of "Mustang" were not those who are young for years, but all who are young at heart.

Paul . Segmentation on the basis of sex has long been carried out with regard to clothing, accessories for hair care, cosmetics and magazines. From time to time, the possibility of segmentation on the basis of sex is also found in other market leaders. A perfect example is the cigarette market. Most brands of cigarettes are used without distinction by both men and women. However, "women's" cigarettes, such as "Virginia Slims", with the appropriate flavor, in the appropriate packaging and accompanied by advertising, emphasizing the image of the femininity of the goods, are increasingly appearing on the market. As a result, today you are unlikely to see a man smoking a cigarette, "Virginia Slims," ​​as well as a woman smoking Marlboro. Another industry that is beginning to realize the potential for segmentation on the basis of sex is the automotive industry. In the past, cars were made so that they liked both the male and female half of the family. However, with the growing number of working women and women with their own cars, some manufacturers are exploring the possibility of creating purely "female" cars, especially for female drivers.

Level of income. Another ancient method of dividing the market for such goods and services as cars, boats, clothing, cosmetics and travel, is segmentation based on income level. Sometimes the opportunities for such segmentation are realized in other areas of activity. For example, the Japanese company Santori, which manufactures spirits, has put Scotch whiskey on the market at a price of $ 75 per bottle, hoping to attract consumers who need only the best.

At the same time, it is not always possible to determine the consumers of a particular product by income level. It is generally believed that workers buy cars Chevrolet, and managers - Cadillacs. But in practice, many managers acquire a Chevrolet (often as a second car), and some workers (such as highly paid plumbers and carpenters) - Cadillacs. Workers were among the first buyers of color TVs, which cost them ultimately cheaper than going to the movies and restaurant.

Segmentation by several demographic parameters. Most firms conduct segmentation of the market based on a combination of two or more demographic variables. For example, a boarding house takes care of blind people, cares about maintaining their psychological state, provides professional training. However, due to limited possibilities, the boarding house is not able to help all blind people of different social status. In Fig. 44 shows an example of a multifactorial segmentation of these individuals on the basis of age, gender and income level. The boarding house chose to serve blind working-age men with low incomes, since its management believes that it is able to best meet the needs of this particular group of potential customers.

Fig. 44. Segmentation of the blind by three demographic variables