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19t7,1, No. 3.

301-335
Market Segmentation
A. Caroline Tynan
Lecturer, Department of Business Studies, University of Edinburgh
AND
Jennifer Drayton
lecturer, Department of Marketing, University of Strathctyde, Gtasgew
Market segmentation is a crucial marketing strategy. Its aim is to identify and delineate
market segments or "sets of buyers" which would then become targets for the company's
marketing plans. The advantage to marketing management is that Ais technique divides
total demand into relatively homogeneous segments which are identified by some common
characteristics. These characteristics are relevant in explaining and in predicting the
response of consumers, in a given segment, to marketing stimuli.
The market can be subdivided by geographic, demographic, psychological, psycho-
graphic or behavioural variables. The advantages and disadvarUages of each of these
types of segmentation variables are discussed in detail in this paper. Kotler {1984) has
identified four requirements that a marketer can use in evaluating the desirability of
potential market segments, namely measureability, accessibility, substantiality and
actionability. Once a segment has been identified which meets these requirements, it is
possible to develop a product or service which meets the unfulfilled needs of this
segment. A marketing mix can then be devised to reach the segment identified
economically and efficiently. A strategy of market segmentation attempts to regain some
of the benefits of the closer association with customers which was the strength of
traditional business operations.
INTRODUCTION
This paper presents a review of the literature concerning the concept and
practice of market segmentation. This key strategy is essential to the
development of a strategic plan for a brand. It is a decision-making tool for
the marketing manager in the crucial tasks of selecting a target market for a
given product and designing an appropriate marketing mix.
The uses of this technique are discussed, together with the procedures for
segmenting markets. Possible bases for segmenting consumer markets are
reviewed in detail. The more straightforward objective bases have been
briefly outlined whereas the more complex subjective behavioural bases are
discussed in more depth. The requirements for segmentation to be effective
are noted and some criticisms of the technique presented.
301
302 A. CAROLINE TYNAN AND JENNIFER DRAYTON
Market segmentation has long been "considered one of the most funda-
mental concepts of modern marketing" {Wind 1978, p. 317). Sheth (1967,
p. 728) has described it as "essential to marketing". According to the
definition found in the Oxford English Dictionary "to segment" is to
"divide into parts". In marketing terms these parts can either refer to
groups of consumers with similar requirements or to groups of goods or
services with similar attributes. The term and concept of "market segmen-
tation" have been attributed to Wendell R. Smith, in a paper first published
in 1956. He (Smith 1956, p. 6) commented "Segmentation is based upon
developments on the demand side of the market and represents a rational
and more precise adjustment of product and marketing effort to consumer
or user requirements. In the language of the economist, segmentation is
disaggregative in its effects and tends to bring about recognition of several
demand schedules where only one was recognized before". In a brief
"Retrospective Note on Market Segmentation" published in the intro-
duction to the special edition of the Journal of Marketing Research edited
by Wind, Smith (1978, p. 316) asserts that "the roots of early market
segmentation research, carried on almost a quarter of a century ago, can be
found in the writings of a group of marketing practitioners and scholars
whose undisputed leader was the late Wroe Alderson".
Baker (1984, p. 123) considers the "concept of market segmentation rests
upon recognition of a differentiated demand for a product, while its use as a
marketing tool depends uf)on identification of the most appropriate variable
or variables with which to subdivide total demand into economically viable
segments. Economically viable segment may be understood as being of
sufficient size to enable a marketer to earn an adequate profit by catering
to the specific needs of its members. In fact Haley (1968, p. 30) considers
that "the idea that all markets can profitably be segmented has now
received almost as widespread acceptance as the marketing concept itself".
Howard and Sheth (1969, p. 70) have noted market segmentation depends
on the idea that "the company should segment or divide the market in such
a way as to achieve sets of buyers". These sets of buyers, or subsegments of
the market, would then become targets for the company's marketing plans.
The potential methods of subdividing total markets must be validated by
research. It is then the responsibility of management to devise marketing
mixes which are effective in the market segments. Thus market seg[men-
tation has as its aim the identification and delineation of market segments
with a view to providing more efficient and satisfactory marketing service.
"The strategy of market segmentation recognises that people differ in their
tastes, needs, attitudes, motivations, life-styles, family size and composition
etc." (Chisnall 1985, p. 264).
The concept of market segmentation hsis only been recognised compara-
tively recently. Historically sellers engaged in mass marketing. That is they
mzss produced, mass distributed, and mass promote! one product to all
consumers in an attempt to obtain economies of scale. In the face of the
competition inevitably generated by this approach producers sought to
MARKET SEGMENTATION 303
obtain a differential advantage through making their products or services
different from those of competitors. This product differentiation strategy is
"designed to offer variety to buyers rather than to appeal to different
segments" (Kotler 1984, p. 251). According to Staudt et al. (1976 p. 6)
product differentiation has followed the approaches shown below:
(a) physical differentiation of product
(b) psychological differentiation of product
(c) differences in purchasing environment
(d) difference by virtue of physical distribution capability
(e) differences in after-purchase assurance of satisfaction in use
(f) differences in prices and terms of sale.
Product differentiation proved moderately successful but because it does
not centre upon the needs and requirements of the consumer it has failed to
yield maximum benefits to the producer and consumer (Ogwo 1980, p. 24).
Companies are increasingly embracing market segmentation strategies as a
result of the dissatisfaction they have experienced with product
differentiation.
At a superficial level the theory of market segmentation appears to
conflict with basic economic theory. The tailoring of a product to meet the
needs and wants of a market segment militates against long production runs
and the resulting economies of scale. The development of the segmentation
approach to market planning was associated with the end of rationing after
the war, the acceleration of technological progress, increased social mobility
and growth in the variety of wants felt by consumers and the revival of
competition as a market force (Crimp 1985). Manufacturers were thus able
to identify marketing opportunities, design and launch a product to fulfil
the requirements of that segment and concentrate marketing effort on that
segment. This yielded a two-fold benefit. The manufacturer could adjust
prices, distribution channels, promotions and advertising to reach the target
market efficiently. "Instead of scattering their marketing effort ('Shotgun'
approach), they can focus it on the buyers who have the greatest purchase
interest ('rifle' approach)" (Kotler 1984, p. 251). In addition the manu-
facturer could develop sufficient loyalty for his product to withstand the
price appeal of retailers own label products.
USES OF THE MARKET SEGMENTATION APPROACH
The importance of the market segmentation approach has already been
stressed in the introduction to this paf)er. It can help to set the basic
objectives for the whole marketing operation, and to indicate appropriate
strategies by which these objectives can be realised. The type of objective
and strategy will affect the type of segmentation problem posed, which in
turn will determine the kind of research necessary. Lunn (1978 p. 346) has
304 A. CAROLINE TYNAN AND JENNIFER DRAYTON
identifled four characteristic types of marketing problem which would
normally be solved through a market segmentation study.
(a) Defining the market
It is important to view a market from a consumer's viewpoint rather than
from that of the manufacturer. Products which are viewed as substitutes by
the customer may come from several distinct product fields when the
manufacturers perspective is considered. On one hand the consumers
product field concept may range quite widely, and on the other she may
not necessarily consider all the brands from any one field as being suitable
for a particular need or set of needs.
(b) To rationalise policies for existing brands and products
The company is constantly seeking to devise optimum strategies for its
products. The objective may be to improve market share, weaken the
pMDsition of a key competitor, or protect a brand from competitive activity.
In the light of the market segmentation research, attempts may be made to
increase the purchase rate of current buyers, to convert buyers from
competing brands or to attract a new group of customers to the product
field.
(c) To position ranges of brands and of product varieties
In a market with several different segments of consumers who have different
needs a company is well advised to cater for several of the more important
segments if it has sufficient resources. At the same time compietition between
the company's brands in any segment should be minimised.
(d) To idmtify gaps in tbe market wbicb oFer new product
opportunities
The aim here is to identify customer segments whose needs are not being
met by any existing brand. These needs may be met by launching a new
product or by altering an existing product.
PROCEDURES FOR SEGMENTING MARKETS
Yoram Wind (1978) has identified four basic methods for segmenting
markets, the traditional a priori and cluster based designs and the newer
flexible and componential procedures. The classification of segmentation
studies into the first two of these categories, that is a priori and cluster based
or post hoc, was suggested by Green (1977). He maintains that a priori
segmentation models have had as the dejjendent variable (the basis for
segmentation) either product specific variables like product usage or loyalty,
or general customer characteristics in demographic terms. Survey results
show the segments' estimated size and their demographic, socio-economic,
MARKET SEGMENTATION 305
psychc^raphic and other relevant characteristics. A typical research design
for an a priori segmentation model involves the following seven stages:
(a) Selection of the a priori basis for segmentation.
(b) Selection of a set of segment descriptors, including hypwtheses on the
jMJSsible link between those descriptors and the basis for segmentation.
(c) Sample designmostly stratified and occasionally a quota sample
according to the various classes of the dejjendent variable.
(d) Data collection.
(e) Formation of the segments based on a sorting of respondents into
categories.
(f) Establishment of the (conditional) profile of the segments using
multiple discriminator analysis, multiple regression analysis or some
other appropriate analytical procedure.
(g) Translation of the findings about the segments estimated size and
profile into specific marketing strategies, including the selection of
target segments and the design or modification of sf>ecific marketing
strategy.
Cluster based or post hoc segementation models differ from a priori models
in that the basis for segmentation is selected after the data has been
collected. Most commonly the variable used in this type of mode! are
needs, attitudes, lifestyle and other psychographic characteristics, or benefits
sought from the product or service. Frequendy the clustering procedure is
preceeded by a factor analysis to reduce the original set of variables. The
variables are grouped according to their correlation with each other and the
amount of variance they can explain in the dependent variable. As in a
priori designs the size and demographics, socio-economic, purchase and other
relevant characteristics are estimated.
Flexible segmentation offers a dynamic approach to the segmentation
problem. It allows management to develop and examine a large number of
alternative segments, each composed of a group of consumers who exhibit a
similar response to new "test" products. The approach is based on the
integration of the results of a conjoint analysis and a computer simulation of
consumer choice behaviour. Conjoint analysis studies usually consist of three
parts:
(a) Preference ranking or rating of a set of hypothetical products.
(b) Perceptual ranking or rating of current brands on the same set of
attributes used in ranking the hypothetical products above.
(c) A set of demographic and other background characteristics.
The simulation uses these three data bases as inputs, and requires
management to assist in the development of "new product offerings". The
consumer response to these offerings is then simulated. When a segment has
306 A. CAROLINE TYNAN AND JENNIFER DRAYTON
been selected, information on its estimated size and discriminating charac-
teristics is available.
The compMDnential segmentation procedure, which was promulgated by
Green ei al. (1977) shifts the emphasis of the segmentation model from the
partitioning of a market to a prediction of which type of person will be
most respKjnsive to what type of product feature. The type of person is
described in terms of demographic and psychographic attribute levels. The
procedure used is an extension of conjoint analysis.
The componential segmentation model offers a new conceptualisation for
market segmentation because it offers both an analysis of the market
segment for a particular product offering and an evaluation of the most
desirable product offering or positioning.
BASES FOR SEGMENTING MARKETS
Realising the potential benefits of market segmentation requires both
management acceptance of the concept and an empirical segmentation
study before implementation can begin. Wind (1978, p. 318) states that
"most segmentation studies have been conducted for consumer goods".
However both the concept of segmentation and the majority of segmen-
tation approaches are equally applicable to consumer and to industrial
markets (Webster and Wind 1972, Nicosia and Wind 1977).
The segmentation model requires the selection of a basis for segmentation,
(the dependent variable), and descriptors, (the independent variables), of
the various segments. There is a very wide selection of variables mentioned
in the consumer literature as possible bases for and descriptors of segments.
The segmentation base chosen to subdivide a market will depend on "the
type of product, the nature of demand, the method of distribution, the
media available for market communication, and the motivation of buyers"
(Chisnall 1985, p. 266). These segmentation bases are rarely used alone, a
combination of two or more of them is more usual. The various bases of
segmentation analysis are discussed under the following headings:
1. Geographic bases in which markets are divided into geographic units.
2. Demographic bases include segmentation studies based on age, sex,
socio-economic group, family size, life cycle, income, occupation,
education, etc.
3. Psychological bases in which personality factors, attitudes, risk, moti-
vation, etc. are used to divide the market.
4. Psychographic bases include lifestyle, activities, interests, opinions,
needs, values and the like as market delineators.
5. Behavioural bases include brand loyalty, usage rate, benefits sought,
use occasions.
6-7. Industrial segmentation and product segmentation are briefly discussed
for the sake of completeness.
MARKET SEGME>rrATION 307
I. Gcogra^dc segmmtatioD
Geographic segmentation was jserhaps the first type of segmentation to
exist, historically speaking (Lunn 1978). This is because many companies
operate along geographic lines. "Small manufacturers who wished to limit
their investments, or whose distribution channels were not large enough to
cover the entire country, segmented the US market in effect by selling their
products only in certain areas" (Haley J968, p. 30). These comments apply
to many countries other than the United States of America.
Markets can be analysed nationally, regionally or locally. When assessing
market oppiortunities in different countries a useful categorisation is based
upon gross national product per capita. This generates three main segments;
those of the industrialized countries, the developing countries and the less
developed countries. Weber (1974) has noted the piotential ofthe developing
countries which account for only 19% of the world's population but 32% of
the world's income. Areas can be studied for differences in buying
behaviour attributed to locale. Food habits, for instance, tend to have
regional variations. In Scotland, the consumption of both vegetables and
beverages recorded by the National Food Survey is considerably lower than
that of England and Wales (Household Food Consumption and Expen-
diture 1981 (1983), pp. 45-52}.
One major development in the field of geographic based segmentation is
Richard Webber's ACORN (A Classification Of Residential Neighbour-
hoods). The system was developed from sociological research into urban
deprivation in Liverpool and it classifies people and households according to
the typie of neighbourhoods in which they live. After joining Consolidated
Analysis Centre Inc. (CACI), Webber extended his original classification.
Presently ACORN recognises 38 neighbourhood types, identified by a
combination of 40 variables from census data. These 40 variables include
age and household comjjosition, housing type, social and employment
status. This division into 38 different types of household offered more detail
than was necessary and so the 11 Family Group Classification shown below
was devised (Chisnall 1986).
ACORN is a powerful segmentation tool which offers a detailed profile
of particular segments together with their precise location. "It clearly has
particular relevance to direct marketing, leaOet distribution and local media
selection" (Chisnall 1986, p. 280).
In 1983 the Consumer L,ocation System (CLS) was launched. This system
has combined BMRB's Target Group Index (TGI) and ACORN. TGI
examines the purchasing habits of approximately 24,000 consumers across
more than 500 product fields. The TGI results are correlated with ACORN
neighbourhood types to identify the concentrations of potential purchasers
for a specific product. Actual names and addresses of people in relevant
target groups can be generated as the electoral register has been com-
puterised by CNN systems. This is clearly a much tighter specification of a
mass consumer market than is currently available through any other
medium (Rines 1983).
308 A. CAROLINE TYNAN AND JENNIFER DRAYTON
A
B
C
D
E
F
G
H
I
J
K
U
ACORN groups
Agricultural areas
Modem family housing,
higher incomes
Older housing of
intermediate status
Poor quality older
terraced housing
Better-off council estates
Less well-off council estates
Poorest council estates
Multiracial areas
High-status non-family areas
Affluent suburban housing
Better-off retirement are2is
Unclassified
1981 population
(OOOs)
1 81 1
86 6 7
9 4 20
2320
6 9 7 6
5 032
4 04 8
2086
224 8
85 1 4
204 1
388
%
3.4
16.2
17.6
4.3
53.0
9.4
7.6
3.9
4.2
15.9
3.8
0.7
Households
(%)
3.3
14.8
18.7
4.6
12.2
10.4
6.8
3.5
4.9
18.9
4.8
0.1
Source: CACI Imernationai.
FIGURE 1 ACORN'S 11 family group classification.
2. Demographic segmentatioai
This consists of dividing the market into groups on the basis of demo-
graphic variables such as age, sex, socio-economic group, family size, life
cycle, income, occupation and education. Kotler (1984, p. 255) states that
"demographic variables are the most piopular bases for distinguishing
customer groups", pxjssibly because of the ease with which this kind of data
can be collected. These characteristics have become the basic terms in
which many marketers consider the consumer. This is reasonable in as
much as demographic variables describe impiortant aspects of the consumer
which give rise to purchasing requirements. Additionally demographic data
has been collected over such a long period of time that relationships with
other marketing variables e.g. media use have become well-known (Lunn
1978, p. 349). Thus many marketers collect demographic data on the
characteristics of their consumers routinely, even when they intend to use
some other bjise for segmentation.
In recent years demographic segmentation has been subject to consi-
derable criticism. Stan ton (1978) has commented that "Looking at the
demographic variables... rarely is a useful market segment identified by a
single market factor". McCarthy (1978) takes a similar stance commenting
that product choice is only weakly related to demographics. A number of
studies have revealed that demographic variables such as age, sex, income
and occupation are pKXjr predictors of behaviour, and as such are of limited
value in the formulation of market segmentation studies. Haley (1968, p.
31) has noted that they rely on descriptive rather than causal factors and as
such are "not efficient predictors of future buying behaviour, and it is future
buying behaviour that is of central interest to marketers". Perhaps the most
MARKET SEGMENTATION 309
widely cited study quoted in this context is the study of 57 grocery products
by Frank et al. (1967, p. 189). These authors concluded "socioeconomic and
demographic characteristics are poor predictors of consumption for a wide
range of specific grocery products". Support for their conclusions have come
from other researchers (Koponen 1960, HUdegaard and Krueger 1964;
Frank 1967, Massy et al. 1968}. The only researchers to take exception to
this conclusion are Bass et al. (1968) and more recently Wheatley et al.
(1980). Both these research teams have taken the approach of examining
group rather than individual behaviour which may account for their success
in using demographic segmentation variables where approaches based on
the individual consumer failed. However demographic bases for segmen-
tation of both individual and group behaviour are still avidly defended by
many marketing research practitioners (e.g. Ckjrnish 1981).
Age has frequently been used as a base for segmentation on the basis that
consumer wants and capacities change with age. 'A notable state of the art
review of this variable was conducted by Phillips and Stemthal (1977).
They examined the differences made by age in information processing with
a view to designing more appropriate advertising communications for
different age segments. The study addressed two issues:
(a) Whether elderly individuals show a differential sensitivity in processing
information in relation to younger people.
(b) At what age these differences are manifested.
They concluded that age differences result in a complex set of changes in
individuals' sources of information, ability to learn and susceptibility to
social influence. These changes do not necessarily occur at 65 yeare but they
are related to the social, psychological and physical changes that accom-
pany ageing.
In many product areas the sex of a consumer determines the product he
or she will buy. For instance, sex segmentation has long been applied to
clothing, magazines, cosmetics and toiletries (Kotler 1984). More recent
work has indicated sex differences in a product area not normally consi-
dered to have a sex link, that of food (Dickens and Chappell 1977).
In some cases the life cycle concept has proved a more useful segmen-
tation variable than age (Lansing and Kish 1957). These authors made a
comparison between life cycle and age on six aspects of the family's
consumption pattern and concluded that life cycle discriminated better than
age in all six cases, and that life cycle analysis provided some useful
information that analysis by age tended to conceal. life cycle is a composite
variable, made up of factors which include age, number of years married,
age of children and working status. The concept was postulati in the 1930s
but only developed in a marketing sense in the 1950s and 1960s. It is
applicable to the conventional nuclear family. Berkman and Gilson (1981,
p. 179) consider that it may "not reflect current trends such as the two
income family". Derrick and Lehfeld (1980, p. 214) give a detailed analysis
of the litnitations of the traditional life cycle which they consider "fall under
310 A. CAROLINE TYNAN AND JENNIFER DRAYTON
two main headingsoperationalising the stages and interpreting the
results".
An important conference, entitled "The Life Cycle and Consumer
Behaviour" was held in Michigan in 1954 (Clark 1955) where several key
papers were presented. Other important contributions came from Lansing
and Kish (1957), Wells and Gubar (1966) and more recently StampQ
(1978). A detailed and extensive analysis of the relationship betwen life
cycle and consumption behaviour is presented by Reynolds and Wells in
their book Consumer Behaviour (1977). Their model is presented below in
Figure 2.
Age Development level Stage in ihe family life-cycle
18-34 Early adulthood
35-54 Middle adulthood
55+ Later adulthood
1 The bachelor stage: young,
single people
2 Newly married couples:
young, no children
3 The full nest I: young
married couples with
dependent children:
(a) Youngest child under
six
(b) Youngest child over
six
4 The full nest II: older
married couples with
dependent children
5 The empty nest: older
married couples with no
children living with them:
(a) Head in labour force
(b) Head retired
6 The solitary survivors: the
older single people
(a) In labour force
(b) Retired
Source: Reynolds, F. D. and Wells, W. D. (1977), Consumer Behaviour, New
York, McGraw-Hill, p. 41.
FIGURE 2 Family life-cycles
The basic assumption underlying the family life cycle approach is that
most households pass through an orderly progression of stages each with its
own characteristic purchasing pattems. In spite of the difficulties of
classifying some respondents who do not fit neatly into any of the usual
stages, e.g. older single pieople, or the widow who has young children, life
cycle remains a useful segmentation base at a general level.
Income is another important segmentation base, and one which has been
reasonably well researched. There are difficulties in establishing household
MARKET SEGMENTATION 311
income from all sources after deductions, some of which can be attributed to
peoples' reluctance to divulge this type of information, and some to the
complications of having more than one wage earner in the family. Several
authors have concluded that income is the best of the demographic bases for
segmenting markets (Allt 1975, Stanton and Haug 1971, Slocum and
Mathews 1970).
Socio-economic classification has the advantages of being both widely
understood and used as the basis for media classification for many years
(Chisnall 1985). To some extent it also subsumes the other segmentation
variables, income, occupation and education. In Britain the classification
system most popular with market researchers for socio-economic group is
the A to E grading used in readership surveys and advocated by the Market
Research Society (Wolfe 1973). This classification is shown below in Figure 3.
Social
grade
A
B
C,
c.
D
E
Social status
Upper middle class
Middle class
Lower middle class
Skilled working class
Working class
Those at lowest
levels of subsistence
Head of hmtsehoid's occupation
Higher managerial, administrative
or professional
Intermediate managerial,
administrative or professional
Supervisory or clerical and
junior managerial, administrative
or professional
Skilled manual workers
Semi and unskilled manual workers
State pensioners or widows
(no other earner), casual or
lowest-grade workers
Approximate
percentage
of families
3
10
24
30
25
8
Source: Monk, D. (1970, "Social grading on the national readership survey", London,
Research Services, Joint Industry Committee for National Readership Surveys.
FIGURE 3 Socio-economic classification
Social class, by whatever definition, is popular as a segmentation variable
in spite of its doubtful ability as a predictor of consumer behaviour. It has
been cited as a useful segmentation base by several authors. Martineau
(1958) found a close relationship between store choice, patterns of spending
and social class. Packard (1969) also noted the "pride, pleasure and
prestige" which many women feel in patronising a high-class store. Accord-
ing to Rich and Jain (1968) the higher the social class of a consumer the
more quickly she wished to complete her shopping. However since this early
research, the market place and the consumer have both changed consider-
ably with the result that many authors consider social class is now a poor
discriminator in many product fields, particularly for fast moving consumer
goods. The social mobility of many individuals in our affluent society has
312 A. CAROLINE TYNAN AND JENNIFER DRAYTON
undoubtedly contributed to this change. The sharp divisions between
different social classes are blurring as consumption and earning habits
change. It is unlikely that social class will ever regain its prominence as a
segmentation variable.
In an attempt to improve the j>oor predictive ability of segmentation
based on single demographic variables Research Services Limited developied
SAGACITY, a classification based upon a combination of life cycle, income
and socio-economic group. SAGACITY is founded on the premise that
consumers have different aspirations and behaviour at different stages of the
life cycle. Four life cycle stages are subdivided by income, either better or
woKe off and by occupation, either manual (blue-collar) or non-manual
(white-collar). The SAGACITY model is shown below with a brief
description of the twelve groups and an indication of their size when
compared to the total adult population (Market Research Society 1984).
1 Life Cycle I Dependent Pie-Family
2 Income
3 Occupation Wiitt Blue
Family
Su
ll
Better Off
JL
White
JL
aiua
Worsi
JL
White
9 Off
}L
Blue
f l
Better Off
JL JL^
31 ue
ll
Worse Off
JL
FIGURE 4 The Sagacity model and twelve SAGACITY segments
Dependent, White (DW) 6%
Mainly under 24s, Uving at home or full time student, where head of household is in an
ABC, occupation group.
Dependent, Blue (DB) 10%
MaitUy under 24s, living at home or full time student, where head of household is in a C^DE
occupation group.
Pre-family, White (PFW) 4%
Under 35s who have established their own household but have no children and where the
head of household is in an ABCj occupation group.
Pre-family, Blue (PDB) 4%
Under 35s who have estabUshed their own household but have no children and where the
head of household is in a CjDE occupation group.
Family, Better off. White (FW +) 6%
Housewives and heads of household, under 65, with one or more children in the household,
in the "better off" income group and where the head of household is in an ABC, occupation
group. {63% are AB).
Family, Better off. Blue (FB + ) 8%
Housewives and heads of household, under 65, with one or more children in the household,
in the "better off" income group and where die head of household is in a CjDE occupation
group. (80% ar eCj ) .
MARKET SEGMENTATION 313
Family, Worse off. White ( FW- ) 8%
Housewives and heads of household, under 65 with one or more children in the household,
in the "worse off" income group and where the head of household is in an ABCj occupation
group. (70% are C, ).
Fanuly, Worse off, Blue ( FB- ) 14%
Housewives and heads of household, under 65, with one or more children in the household,
in the "worse off" income group and where the head of household is in a CjDE occupation
group. (53% are DE).
Late, Better off. White (LW +} 5%
Includes all adults whose children have left home or who are over 35 and childless, are in
the "better off" income group and where the head of household is in an ABC, occupation
group. (61% are AB).
Late, Better off. Blue (LB + ) 6%
Includes all aduits whose children have left home or who are over 35 and childless, are in
the "better off" income group and where the head of household is in a C^DE occupation
group. (72% are DE).
Late, Worse off, White (LW - ) 9%
Includes all adults whose children have left home or who are over 35 and childless, are in
the "worse off" income group and where the head of household is in an ABC, occupation
group. (67% ar eC, ) .
Late, Worse off. Blue ( LB- ) 20%
Includes all adults whose children have left home or who are over 35 and childless, are in
the "worse off" income group and where the head of household is in a C^DE occupation
group (72% are DE).
Source: Research Services Ltd., 1981.
Combining severat demographic variables offers an improvement in
discrimination over using them alone but this method is still liable to the
criticisms levelled at income and socio-economic classifications mentioned
above.
3. Psychological segmentatioii
General dissatisfaction with geographic and demographic characteristics as
segmentation bases led to the use of psychological variables as a basis for
predicting consumer behaviour. It was anticipated that procedures developed
and tested by anthropologists, sociologists and psychologists could be
applied to the segmentation of consumer markets. The work has centred on
the use of variables such as personality, risk, reference groups and attitudes.
The use of personality as a segmentation variable has not met with any
significant success. Kassarjian (1971) calls the results "equivocal", Van
Vetdhoven (1973) calls them "disappointing", although a great deal of
work has been conducted in this area. The idea of classifying people by
personality tyjje is not new, one famiUar personality segfmentation is that of
Hippocrates who used the four humours, choleric, melancholic, sanguine
and phlegmatic. Another example is provided in Spranger's book. Types of
314 A. CAROLINE TYNAN AND JENNIFER DRAYTON
Men., published in 1928 and reported much later by E)^enck (1954). He
identified six types:
Theoretical dominant interest in discovering the truth, a cognitive
attitude towards life.
Economic dominant interest in what is useful, a practical approach to
life.
Aesthetic dominant interest in form and harmony, an artistic
approach to life.
Social dominant interest is in peoplelove is his main approach
to life.
Political dominant interest is in social relations but with a basic life
approach of power.
Religious dominant interest in doctrines and philosophy, with a
mystical approach to life.
According to Kassarjian (1971) there is no accepted defmition of the term
"personality". However Jahoda and Warren (1969, p. 9) have defined it as
"the total organisation of internal psychological functioning". One under-
lying basic assumption of personality theories is that "personality reflects
enduring needs of the individual; that is needs that are 'common denomi-
nator?' of the person's behaviour regardless of the nature of the problem
situation with which he is faced" (Mostyn 1977, p. 27). This implies that an
individual has an enduring set of tendencies to behave in a given way to
given classes of stimuli.
One of the earliest papers linking psychological factors with consumer
behaviour was that of Mason Haire (1950). Resp)ondents were asked to
describe the personality and character of the women whose shopping list
they examined. They were given two lists which only differed in respect of
the coffee listed, one was Nescafe Instant, the other Maxwell House Drip
grind (a type of finely ground coffee bean). The respondents were able to
characterise these two women with the result that they saw the Nescafe
shopf>er as lazy and a poor household planner and the Maxwell House
shopper as thrifty and a good wife. Since this work psychological segmen-
tation has proliferated. A useful examination of the topic has been published
by Mostyn (1977). Firstly, some of the important pajiers which have
indicated a significant correlation {in the author's opinion) between person-
ality and consumer behaviour will be examined. This will be followed by
those studies which found a weak correlation.
Koponen (1960) used the Edwards Personal Preference Schedule in a
study of smoking and found that sex dominance, aggression and achieve-
ment needs were positively related to cigarette smoking in men. A signifi-
cant correlation between extroversion, as measured by Eysenck's scales, and
smoking was established by Eysenck et al. (1960). Tucker and Painter
(1961) found significant correlations between pereonality traits and the use
of headache remedies, vitamins, mouthwash, alcoholic drinks, motor cars
MARKET SEGMENTATION 315
and chewing gum using the Gordon Personal Profile. Westfall (1%2)
established significant differences between convertible, compact and stan-
dard car owners using Thurstone's Temperament Schedule. Claychamp
(1965) used the Edwards Personal Preference Schedule and found that
personality variables predicted better than demographic variables whether
a resfKindent was a customer of a bank or savings and loan association. A
study in 1970 by Lehmann, found that mothere who were both anxiotis and
high on self-esteem were less likely to be persuaded to try new ideas for
their babies, whereas mothers who were low on these traits were easier to
persuade. Fry (1971) used a variety of personality tests, including a special
self-confidence scale, and established a significant correlation between sex,
class and brand choice for cigarettes. Using the Rokeach dogmatism scale in
a study conceming fashion and cosmetic products, Jacoby (1971) found the
low-dogmatic women signiGcantly more likely to make innovative choices.
Coney (1972) replicated and extended this study by including men and
additional product categories. He confirmed that low-dogmatics were
significantly more likely to be innovators. Blake et al. (1973) established that
dogmatism was significantly related to the acceptance of new products, but
not the acceptance of novel products.
The foiiowing pajiers all found poor correlation between personality and
consumer behaviour. In a study reported by Britt (1966, p. 182) and
sponsored by the Advertising Research Foundation, it was found that "in
predicting toilet tissue purchase behaviour, information on the demographic
and personality traits was little better than no information at ali". Myers
(1967) reported little correlation between pereonality and attitudes towards
private brands. He used the Cattell Personality Factor Inventory and could
explain only 5% of the variance in the purchase data. In a similar study of
own label (store brands) versus branded goods, Massy et ai. (1968) used the
Edwards Personal Preference Schedule. They concluded that in only 26% of
cases did personality variables add a significant increment to the prediction
that could be made with socio-economic data alone. Robertson and Myers
(1969) used the California Personality Inventory plus measures for inno-
vativeness and opinion leadership in a study of new appliances, food and
clothing products. They found only a minimal relationship between pierson-
ality variables and behaviour towards new products. Levonian (1969) stated
that of eight studies claiming to associate personality and opinion change
foiiowing a mass communication, 40% actually yielded results in the
opposite direction. Personality was not a useful discriminator variable in
differentiating between "new season's" and "last year's model" car buyers
(Wiseman 1971). Pizam (1972) found that only 16 of the 37 personality
traits he tested had a significant association with innovativeness. Finally,
Villani (1975) found that demographic variables "outperformed" person-
ality variables in his study of television programme viewing.
In the research cited above both significant and not significant results
have been obtained using the same personality tests and frequently with
reference to the same subject, innovativeness for example. Clearly some of
316 A. CAROLINE TYNAN AND JENNIFER DRAYTON
the studies suffer from problems of reliability and validity. An additional
problem has best been summed up by Kassarjian (1965, p, 146) "The
consumer researcher too often expects more from an instrument than it was
originally intended to furnish". As Kotler (1984) has jrointed out, even
where evidence has been found of the influence of personality on consumer
behaviour, the implications for marketing strategy have remained unclear.
Another of the psychological areas that has been used by marketen to
predict consumer behaviour is risk, Bauer first proposed the concept of
"perceived risk" in buying decisions in 1960. He intimated that risk is
assessed differently according to the perceptions of individual buyere. Since
then many empirical studies have been conducted on various aspects of risk
in consumer decision making, Taylor (1974) has hypothesised that the
element of choice in consumer behaviour involves risk because the outcome
of the choice is uncertain, and that this risk is seen in terms of a possible
financial, social, performance, psychological, physical or convenience loss.
The individuals reaction to these "piotential losses would depend on that
individual's amount of perceived risk", Peter and Ryan (1976) have defined
perceived risk as the expectation of losses associated with a purchase which
acts as an inhibitor to purchase behaviour. On the assumption that
individuals would behave in such a way as to reduce the amount of risk in
a purchase situation, Cunningham (1967) has shown that brand loyalty is
determined to a great extent by perceived risk, Arndt (1968) showed a
similar relationship between the use of word of mouth communication about
a product and perceived risk, as did Bearden and Mason (1978) in
prescribed drug purchases. Another risk related theory is Festinger's (1957)
Theory of Cognitive Dissonance, In essence this theory states that an
individual wil! seek to try to reduce dissonance or disharmony within his
cognitive structure and attempt to reach a state of harmony. This is
achieved by resolving the conflict between the various factors which are not
psychologically consistent with one another. The individual is motivated to
change his opinion, attitude or behaviour in order to reach a state of
harmony. In two studies of automobile purchase, Ehrlich et al. (1957)
indicated that as automobile buyers seek information on model and make
already bought they are dissonant consumers, Engel (1963) however
suggested that as automobiles are no longer a status symbol there should be
little dissonance after purchase.
The psychological concept of reference groujjs has also been used to
explain consumer behaviour and segment markets. The concept of reference
group was first propiosed by Hyman (1942) to describe the kind of group
used by an individual as a pwint of reference for his own judgement, beliefs
and behaviour, Venkatesan (1966), Friedman and Fireworker (1977) have
confirmed that much consumer decision-making is influenced by the
pressure to conform to group norms. Bourne (1957) indicated that the more
conspicuous a product, the more likely its purchase is susceptible to
reference group behaviour. Reference group influence is more likely to be
effective in the case of products which reflect {>ersonal taste (Chisnall 1985),
MARKET SEGMENTATION 317
There is also the unproved implication in many of these studies that an
individual's susceptibility to reference group influence is related in some way
to his personality.
The final psychological variable to be considered separately in this study
is attitude. This concept is frequently considered for use as both a
segmentation base and a possible predictor of consumer behaviour. In
segmenting a market the users of a product are frequently identified by
means of their attitude towards that brand or product. This assumes that
there is some causal link between the attitude and the purchase behaviour,
a link which while frequently hypothesised has not been proved.
McGuinness et al. (1977), Crespi (1977), Howitt and McCabe (1978) all
consider that attitude does predict behaviour. Fishbein (1967), Ajzen and
Fishbein (1973), Pinson and Roberto (1973) however deny the causai link
between attitude and behaviour. Work still continues to determine the true
link between attitudes and behaviour.
In conclusion it should be noted that much of the published work on
psychological bases of segmentation is in conflict. Although these variables
do influence buying behaviour there is no reason to believe there exists a
generalised pattern of influence. According to Chisnall (1985, p. 268)
"individual products should be carefully analysed for the potential or actual
personality factors influencing their sales".
4. Psychographic segmentation
During the 1960s, a blend of personality and motivation research began to
take shape (Wells 1975). It has been referred to "as the marriage between
the richness of motivational research with its emphasis on qualitative
methods and projective techniques and the statistical sophistication of the
factor and trait theorists who made psychological segmentation studies
possible" (Mostyn 1977, p. 31). This new area has been variously cjdled
lifestyle (Plummer 1971, 1971-2), psychographics (Nelson 1969, 1971a,
1971b, Demby !971, Pernica 1974), activity and attitude research (Hustad
and Pessemier 1971, 1974, Wells and Tigert 1971) and "activities, interest
and opinions" research (Engel et al. 1978). Therefore psychographic researchers
have moved beyond demographics and considered activities, interests,
opinions, needs, values, attitudes and personality traits. There is as yet no
generally agreed definition. In his excellent review article. Wells (1975, p.
197) has proposed an operational defmition of psychographic research as
"quantitative research designed to place consumers on psychological as
distinguished from demographic dimensions". The technique divides the
market into segments on the bauis of interest, values, opinion, personality
characteristics, attitudes and demographic variables using techniques of
factor analysis, cluster analysis and canonical correlation (Kassarjian 1971).
It is assumed that products which fit into the lifestyle will have value for the
consumer. Wells (1968) named this approach "backward segmentation"
because it groups people by their behavioural characteristics before seeking
318 A. CAROLINE TYNAN AND JENNIFER DRAYTON
correlates. In this approach the analysis of buyer behaviour starts with the
behaviour itself. Complex statistical techniques such as factor analysis and
cluster analysis are applied to purchasing data across a wide variety of
products to seek for pattems of complementary and substitutable products
(Bass et al. 1969). The three main applications of backwards segmentation
are to
(a) Stimulate ideas and guide future research.
(b) Simplify marketing strategies.
(c) Increase understanding by stimulating researchers to question why
sets of products group together as they do.
Nelson (1971b} has noted some of the reasons for the growing ptopularity
and importance of psychographics.
(a) The general acceptance of the need for the application of behavioural
science information to advertising and marketing problem solving.
(b) The availability of computer programmes that can perform multi-
variate analysis on large numbers of pieople.
(c) Acceptance of the concept of market segmentation.
(d) Decreasing relevancy of certain demographic characteristics.
(e) Change taking place in our social structure.
Psychographics emphasises the importance of general environmental,
cultural and social factors, e.g. socialisation and group pressure and as such
takes up where psychological segmentation leaves off (Mostyn 1977).
Psychographic surveys usually employ Likert Scales and self-administered
questionnaires which are largely precoded to facilitate analysis. The samples
tend to be large and the analysis ranges from the use of simple cross-
tabulations to the more complex factor analysis, cluster analysis or canonical
correlation.
Wells (1974) has discussed the uses of psychographics in detail. He has
summarised the techniques used in market segmentation the following way.
"Life style and psychographic research can assist market segmentation
in a variety of ways. It can provide useful descriptions of existing
segments of present markets. It can help the analyst understand the
results of multidimensional scaling or prciduct benefit segmentation. It
can contribute new and useful dimensions along which consumers may
be segmented. It can create new segments based upon product and/or
brand related interests, needs and values. And it can create new
segments based ufjon more general aspects of life style".
Tipton (1972) has noted the general uses to which psychographic
segmentation has been put, apart from market segmentation they are;
(a) New product development in which a "gap" of unfulfilled needs or
wants is identified in the market and a new product designed to fill
that gap.
MARKET SEGMENTATION 319
(b) Media selectionthe knowledge of the psychographic profile enables
the selection of the most effective and economical media mix to reach
the segment,
(c) Creative applicationknowledge of how consumers live and think is
helpful to a researcher in designing an advertising campaign or
making a new product appealing.
Wells (1975) divided segmentation studies into those where the segmen-
tation was based on general life style dimensions and those in which the
psychographic items were product si>ecific. An example of the "general"
approach has been drawn from Wells (1975, p, 201), In this example
approximately 4000 respondents, answered psychographic, product use and
media exposure questions. Using factor analysis the eight homogeneous
groups described in Figure 5 were derived.
The product and media use of these eight psychographic groups were
then calculated.
In Britain, Attwood Statistics characterise the housewives on their
consumer panel by their psychographic groups and behaviour into the
following types (Crimp 1985, p. 115),
1, Conscientiousness related to housework,
2, Economy consciousness,
3, Conservatism in brand (tending to better known brands rather than
experimenting with a new brand or product),
4, Traditionalism in housework (related to the use of labour-saving or
convenience products),
5, Willingness to experiment in shopping.
Many general life style profiles have appeared in the literature. They
include the following papers. Ziff (!971, 1973) used psychographics to show
that both products and product classes can be differentiated by attitudes,
needs and values. Both Plummer (1971-2) and Tigert (1974) researched
psychographic profiles for magazine readers, Tigert also investigated televi-
sion viewers. Scales representing fashion interest, fashion venturesomeness,
cognitive style, information seeking, relative popularity and relative
confidence have been used to predict fkshion opinion leadership by Darden
and Reynolds (1972), Other general profiles have investigated carry-out
foods (Tigert el al. !97I), beer (Tigert 1971), and bank charge cards
(Plummer 1971). An interesting study of shopper types, recently published
by Lesser and Hughes (1986), examined psychographic segmentation
solutions from different locations. The authors concluded that psychographic
segments developed for markets in one geographic location are generalizable
to markets in other geographic locations.
The second group of studies involves those in which product specific
variables have been employed. Pernica (1974) has reported on a psycho-
graphic segmentation for stomach remedies. He focused on product related
320 A. CAROLINE TYNAN AND JENNIFER DRAYTON
Group I. "The Quiet Family Man" (8% of total males).
He is a self-sufficient man who wants to be left alone and is basically shy. Tends to be as
little involved with community life as possible. His life revolves around the family, simple
work and television viewing. Has a marked fantasy life. As a shopper he is practical, less
drawn to consumer goods and pleasures than other men.
Low education and low economic status, he tends to be older than average.
Group II. "The Tradiuonalist" (16% of total maies).
The man who feels secure, has self-esteem, follows conventiotial rules. He is proper and
respectable, regards himself as altruistic and interested in the welfare of others. As a shopper
he is conservative, Ukes popular brands and well known manufacturers.
Low education and low or middle socio-economic status; the oldest age group.
Group III. "The Discontented Man" (13% of total males).
He is a man who is likely to be dissatisfied with his work. He feels by passed by life, dreams
of better jobs, more money and more security. He tends to be distrustful and socially aloof.
As a buyer, be is quite price conscious.
Lowest education and lowest socio-economic group, mostly older than average.
Group IV. "The Ethical Highbrow" (14% of total maies).
This is a very concerned man, sensitive to people's needs. Basically a puritan, content with
family life, friends, and work. Interest in culture, religion and social reform. As a consumer
he is interested in quality, which may at times justify greater expenditure.
Well educated, middle or upper socio-economic status, mainly middle aged or older.
Group V. "The Pleasure Oriented Man" (9% of total males).
He tends to emphasise his masculinity and rejects whatever appears to be soft or feminine.
He views himself a leader among men. Self-centred, dislikes his work or job. Seeks immediate
gratification for his needs. He is an impulsive buyer, Ukely to buy products with a masculine
image.
Low education, lower socio-economic class, middle aged or younger.
Group VI. "The Achiever" (11 % of total males).
This is likely to be a hardworking man, dedicated to success and all that it implies, social
prestige, power and money. Is in favour of diversity, is adventurous about leisure time
pursuits. Is stylish, likes good food, music, etc. As a consumer he is status conscious, a
thoughtful and discritninating buyer.
Good education, high socio-economic status, young.
Group VII. "The He-Man" (19% of total males).
He is gregarious, likes action, seeks an exciting and dramatic life. Thinks of himself as
capable and dominant. Tends to be more of a bachelor than a family man, even after
marriage. Products he buys and brands preferred are likely to have "self-expressive value",
especially a "Man of Action" dimension.
Well educated, mainly middle socio-economic status, the youngest of the male groups.
Group VIIl . "The Sophisticated Man" (10% of total males).
He is hkely to be an intellectual, concerned abou! social usues, admires men with artistic and
intellectual achievements. Socially costnopolitan, broad interests. Wants to be dominant, and
a leader. As a consumer he is attracted to the unique and fashionable.
Best educated and highest status of all groups, younger than average.
FIGURE 5 Eight male psychographic segments
MARKET SEGMENTATION 32!
The Severe Sufferers
The Severe Sufferere are the extreme group on the potency side of the market. They tend to
he young, have children, and he well educated. They are irritable and anxious people, and
believe that they suffer more severely than others. They take the ailment seriously, fuss about
it, pamper themselves, and keep trying new and different products in search of greater
potency. A m<Kt advanced product with new ingredients best satisfies their need for potency
and fast relief, and ties in with their psychosomatic beliefs.
The Active Medicators
The Active Medicators are on the same side of the motivational spectrum. They are typically
modem suburbanites with average income and education. They are emotionally well
adjusted to the demands of their active lives. They have leamt to cope by adopting the
contemporary belief of seeking help for every ill, and use remedies to relieve even minor signs
of ailments and every ache and pain. In a modem product, they seek restoration of their
condition and energy, mental recovery, and a lift for their active lives. They are influenced
by a brand's reputation and by how well it is advertised. They tend to develop strong brand
loyalties.
The Hypochondriacs
The Hypochondriacs are tbe opposite side of the motivational spectrum. They tend to be
older, not as well educated, and women. They have conservative attitudes toward medication
and a deep concern over health. They see possible dangers in frequent use of remedies, are
concerned over side effects, and afraid of remedies with new ingredients and extra potency,
l o cope with these concerns, they are strongly oriented toward medical authority, seeking
guidance in treatment, and what products they should use. They hold rigid belief about the
ailment and are disciplined in the products they use, and how frequently. They want a
simple, single-purpose remedy, which is safe and free from side effects, and backed by doctors
or a reputable company.
TTie Practicaiists
The Practicaiists are in the extreme position on this side of the motivational spectrum. They
tend to be older, well educated, emotionally the most stable, and least concemed over their
ailment or the dangers of remedies. They accept the ailment and its discomforts as a part of
life, without fuss and pampering. They use a remedy as a last resort, and just to relieve the
particular symptom. They seek simple products whose efEcacy is well proven, and are
sceptical of complicated modern remedies with new ingredients and multiple functions.
FIGURE 6 Segmentation of stomach remedy users
factors and produced the four groups of users shown in Figure 6. This procedure
enabled him to discriminate among the major brands in this category.
Wells (1975) considers that the discrimination produced by the product-
specific approach is somewhat sharper than the discrimination produced by
the more general segmentation. Young (1971) has stressed the need for
psychographic variables to be product specific, "the only way to ensure that
measurements of personality and life style are relevant to the marketing
problem is to analyze them within the context ofa product category".
Many authors have adopted product specific variables in their psycho-
graphic research, ZifT (1971) investigated some specific product categories
322 A. CAROLINE TYNAN AND JENNIFER DRAYTON
including drugs, food and household products. Bernay (1971) also used
product specific variables in her study of magazine subscribers and non-
subscribers. They were also used to distinguish between light and heavy
beer drinkers by Kinnear and Taylor (1976). Other product specific
psychographic segmentation studies have been conducted by Heller (1968),
Donnelly (1970), Frank and Strain (1972) and Young (1972).
Psychographics are open to question in four areas, those of reliability,
validity, applications to real world marketing problems, and contributions
to the study of consumer behaviour. On the issue of reliability. Wells (1975,
p. 203) has concluded "both homemade and standarized psychographic
measurements can have reliability high enough to support fairly strong
relationships". The validity of psychographic research varies from study to
study. The predictive validity of many studies is poor as measured by the
amount of variance of individual behaviour they can account for. However
psychographic variables are capable of showing substantial differences
between groups of consumers. Many studies have already contributed to the
understanding of real world marketing problems and solutions. Finally,
there is the problem of the lack of theory. Wind et al. (1973, p. 244) have
expressed their amazement that there is "so little explicit theory guiding the
compilation of statements". A criticism which is still valid. However for
many researchers and practitioners these disadvantages are outweighed by
the usefulness of the rich, descriptive typologies generated.
5. Behavionral bases
In this method of segmentation, the consumers are divided on the basis of
their use of, or response to, a product. Benefit segmentation, brand loyalty,
user rate, user status, usage situation and backward segmentation come into
this category. According to Kotler (1984, p. 259) "Many marketers believe
that behavioral variables are the best starting point for constructing market
segments".
Benefit segmentation was so named by Haley (1968, 1971), although he
maintained that it had been in use since 1961. "The belief underlying this
segmentation strategy is that the benefits which people are seeking in
consuming a given product are the basic reason for the existence of true
market segments" (Haley 1968, p. 31). This approach classifies buyers
according to the different benefits they seek from the product and thus
defines the segment by causal rather than descriptive factors. An early study
by Yankelovich (1964) used benefit segmentation to analyse the market for
watches. He found that
"I . approximately 23% of buyers bought for lowest price
2. another 46% bought for durability and general product quality
3. and 31% bought watches as symbols of some important occasion".
The majority of better known watch companies appiealed to the third
MARKET SEGMENTATION 323
segment concentrating their advertising in November and December. So the
Timex Company of America marketed a low price watch aimed at the first
two segments, and by advertising all year round got exclusive attention ten
months of the year.
Haley (1968), in what has become a classic example, produced a benefit
segmentation of the toothpaste market, which is shown below. He pioneered
the idea of the "principal benefit" sought fi-om a product and used this as
the criterion for segmentation.
The following simple three-step method for conducting a benefit segmen-
tation has been promulgated by Miller and Granzin (1979).
(a) delineation of the market
(b) determination of the benefits sought by the target market
(c) providing the benefits.
It is an approach which is particularly appropriate to market planning for
an existing brand. However it should be noted that respondents do not find
it particularly easy to define the benefits they seek.
Brand loyalty is a possibly useful criterion for segmentation but the results
of the research into this topic are somewhat confiicting. An early study by
Cunningham (1956) which utilised panel data obtained from the Chicago
Tribune showed conclusively that a significant amount of brand loyalty
does exist within individual product groups. However it does not generalise
over product fields. Bass et at. (1968) examined brand loyalty for one
category of food product. They reported that their findings did not suppwrt
the usefulness of brand loyalty as a guide for segmentation of markets. A
result which is questionable as only one product category was evaluated.
An interesting experiment by Tucker (1964) involving consumer brand
choices among four previously unknown food brands came to the following
conclusions. Firstly, the women shoppers displayed considerable variance on
their susceptibility to brand loyalty. Secondly, even when there is no
discernible difference between brands some consumers seem to exhibit brand
loyalty. Finally, it appeared that shoppers frequently select brands on a trial
basis, to explore the available alternative, so repeat purchases are
problematical.
More recently, Blattberg and Sen (1976) have produced a framework for
the definition of segments of a wide variety of frequently purchased
products, namely:
(a) high national brand loyal segment
(b) national brand loyal segment
(c) national brand switcher segment
(d) national/private switcher segment
(e) last purchase loyal segment
(f) private label loyal segment
(g) private label switcher segment
324
A. CAROLINE TYNAN AND JENNIFER DRAYTON
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MARKET SEGMENTATION 325
(h) national brand switcher (deal) segment
(i) deal-oriented segment.
A form of loyalty segmentation was devised by Starr and Rubinson
(1978). They derived empirical probabilities from consumers willingness to
swtich from a regular brand and used this data to segment consumers into
"loyalty groups".
There are certain difficulties in using loyalty segmentation; what appears
to be brand loyalty among consumers may in fact "reflect habit, indif-
ference, low price or nonavailability of other brands" (Kotler 1984, p. 263).
It is obviously an ambition of many marketers to build strong brand loyalty
for their products but as yet there are few guidelines available of any
practical value (Chisnall 1985).
Another straightforward way of classifying the consumer is in tenns of
their product usage. This is sometimes referred to as volume segmentation.
The "heavy half" theory popularised by Twedt (1964) argues that in many
product fields 30% of the customers account for 80% of the consumption,
and that these high volume customers should command maximum marketing
effort. However several authors have questioned Twedt's conclusions. Haley
(1968) has pointed out that people do not always buy products for the
same reasons, and therefore are not equally good prospects for a given
brand. Frank (1968) noted that the "heavy half" is already the "heavy
half" and may offer little scope for expansion. A study by Barker and Trost
(1973) has revealed that volume purchased |>er given time span should be
used in preference to purchase frequency as a measure of user rate. They
found that either purchase frequency, or size purchased together with
number of units purchased at one time can be deceptive when used alone.
An interesting paper by Dickson (1982) makes an excellent case for the
adoption of the usage situation in market segmentation. He redefines
markets and demand in terms of people and usage situations offering the
following "Sjjeculative Person Situation Segmentation Matrix for Suntan
Lotion" as an example of his segmentation framework. (See Figure 8)
Alternatively, many markets can be segmented into non-users, potential
users, first time users, regular usere, intermittent users or ex-users. A
different marketing approach will be required for each of these groups.
Little research has been conducted on this topic but at a pragmatic level
many companies with a high market share will attempt to convert potential
users into actual users, whereas smaller firms would be more likely to
encourage users to switch to their brand.
6. Industrial segmentatioii
As mentioned in the introduction to this section on Bases for Segmenting
Markets, the majority of segmentation approaches are equally applicable to
consumer and industrial markets (Webster and Wind 1972, Nicosia and
Wind 1977). Clearly some situational variables are specific to either the
326
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MARKET SEGMENTATION 327
consumer market or to the industrial market, but it should be noted that
the industrial market can be segmented by geograpfiic, demographic,
psychological, psychographic and behavioural variables in just the same
way as the consumer market,
A two stage approach to industrial market segmentation was developed
by Wind and Cardozo in 1974, The first sUge is macro-segmentation where
the market is segmented by bases including industry demographics, size,
indtistrial sector (i.e, commercial firm or public sector), SIC (Standard
Industrial ClassiOcation) code and product usage. The second stage called
micro-segmentation is based on the demographic and behavioural character-
istics of decision making units or buying centres. Subsequently ChofTray
and Lillien (1978) attempted to operationalize this second stage of Wind
and Cardozo's model.
Since this early work much of the academic research has "unfortunately
attempted to transpose literature on the industrial buying process to explain
industrial market segmentation" (Hlavacek and Reddy 1986, p, 13),
Segmentation based on industrial end use, buying power and industrial
concentration are recommended (Chisnall 1986), with insufficient emphasis
being placed on the development of an understanding of buyers needs.
6. Product segmentation
It should be mentioned for the sake of completeness that it is possible to
cluster products rather than consumers by using product segmentation,
Bamett (1969), an enthusiastic proponent of tfiis approach, has argued that
researchers should abandon consumer segmentation and concentrate instead
on deriving product field speciGc criteria by which consumers themselves
distinguish between brands and products. However "it is just as valuable to
cluster consumers in terms of their requirements from product field specific
variables as it is to cluster products in terms of the extent to which they are
perceived to satisfy these requirements" (Lunn 1978, p, 366-7),
A full description and critical appraisal of the different methodological
approaches to product segmentation can be found in Beazley (1973).
Product segmentation has proved especially useful in identifying gajK for
new product oppwrtunities, and in checking which brands or products are
competing with each other.
REQUIREMENTS FOR EFFECTIVE SEGMENTATION
There is general agreement in the literature on factors which affect the
feasibility of market segmentation, Kotler (1984) originally cited three
factors namely, measurability, accessibility and substantiality. In later
revisions he has added a fourth factor, i,e, actionability, A brief^ description
of these factors follows:
328 A. CAROLINE TYNAN AND JENNIFER DRAYTON
Measurability This refers to the effective size and purchasing power of a
submarket. It is dependent on the availability of suitable market research
data concerning the segmentation variable chosen.
Accessibility This is the degree to which a segment can be effectively
reached and served. It largely rests upon the ability of a firm to direct its
marketing effort at a particular segment. Media coverage, distribution and
the influence of behavioural factors, all need to be evaluated. It is
important to choose a media mix which will reach the target segment both
economically and efficiently. Likewise the distribution network chosen must
be effective in reaching the sub-segment. Chisnall {1985, p. 265) also
recommends that "reference should be made to group behaviour, opinion
leadership, family life styles" for the sub-segment under consideration.
Substantialitj The segment must be sufficiently large and profitable to be
economically viable for the firm. Kotler (1984, p. 265) maintains "a
segment should be the largest jKJSsible homogeneous group worth going
after with a tailored program".
Actionability The degree to which a firm can develop and manage effective
programmes for attracting and serving segments. This factor relates to the
requirements and capabilities of particular firms.
To these four factors Thomas (1980) adds another, that of "stability" i.e.
can you predict the segment's behaviour in the future.
Clearly there are many ways to segment a market, although they are not
all equally effective. In order to select an appropriate method of segmenting
a particular market, the segment (s) identified must exhibit the four
characteristics explained above. If the segment chosen is measurable,
accessible, substantial and actionable then in Kotler's words it should be
"maximally useful".
CRinCSSMS OF THE THEORY OF MARKET SEGMENTATION
The concept of market segmentation, and most market segmentation
studies, is "based on the premise that the given market is heterogeneous and
can be segmented" (Wind 1978, p. 327). Chisnall {1985, p. 262) goes
further, he maintains that "practically every market is capable of refine-
ment into significant sub-markets". Young et al. (1978) disagree, they have
suggested three occasions in which market segmentation is not useful.
(a) where the market is so small that marketing to a small pwrtion of it
may not be profitable.
(b) where heavy users constitute such a high proportion of the sales
volume that they comprise the only relevant targets.
MARKET SEGMENTATION 329
(c) where a brand is the dominant brand in the market. (However, even
here, segmentation provides information about the consumers who
constitute the target market which will enable the marketing man-
ager to "taiior" tbe marketing mix to their needs).
Collins (1971) has argued that the traditional assumption of all marketing
studies that a product can be placed in a market segment is an over-
simplification. He considers not all consumers can be placed in a segment
and that most brands of products do not operate within a definable
segment. His hypothesis is that a brand's sales depends on its penetration
and buying rate rather than on the segment size. Collins accepts the
concept of market segmentation in the case of what he calls the "segment
brands", which he defines as appealing to some relatively restricted section
of the market and having more heavy than normal buyers. Resruk et al.
(1979) have drawn attention to their belief that segmentation has gone too
far. They have identified markets which are hyper-segmented, a condition
they define in cases where increasingly smaller market segments are
identified and targeted, thus causing corresponding increases in production
and marketing costs. These authors have postulated the strategy of "counter
segmentation" as an appropriate response to hyper-segmentation. In counter
segmentation market segments are aggregated or clustered so that a simpler
product is offered, with lower production and marketing costs, and some of
the savings are passed on to the consumer through lower prices. In spite of
the interest this paper initially generated the strategy of counter segmentation
does not appear to have been widely adopted.
While all these criticisms are valid in a small number of cases they are
not universally applicable and thus do not seriously limit the theory or
practice of market segmentation.
CONCLUSION
Market segmentation is clearly a crucial marketing strategy. It enables the
marketing manager to divide total demand into relatively homogeneous
segments identified by geographic, demographic, psychological or
behavioural variables. These characteristics are relevant in explaining and
in predicting the response of consumers, in a given segment, to marketing
stimuli. Once a segment has been identified which fulfils the requirements of
measurability, accessibility, substantiality and actionability it is possible to
develop a product or service to meet the needs of the segment. A marketing
mix can then be devised to reach the segment identified efficiently and
economically.
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