Segmentation

Consumer segmentation utilizes the process of classifying people into groups that have some set of similar characteristics. As compared to the methods of market segmentation, the most common variables in this type of segment are: Geographic (Region of the country, Urban or rural); Demographic (Age, sex, family size, Income, occupation, education, Religion, race, nationality); Psychographic (Social class, Lifestyle type, Personality type); Behavioral( Product usage – e. . light, medium ,heavy users, Brand loyalty: none, medium, high, Type of user -e. g. with meals, special occasions).

The goal is to identify relatively homogeneous groups with similar behavior that will assist in customizing the message and/or offer for each segment. Organizational market segmentation, on the other hand utilizes the process of dividing a total market into market groups consisting of people who have relatively similar product needs.

The variables used includes: Geographical location; Company Type; and Behavioral Characteristics which may include usage rate, buying status (potential, first-time, regular, etc. ,) and purchase procedure (sealed bids, negotiations, etc. ). Both of these type of segmentation uses geographic and behavioral characteristics as variables. The 80/20 rule, known as Pareto’s rule, states that in many aspects of business and life, 80% of the potential value can be achieved from just 20% of the effort.

In these types of market, the 80/20 rule could be applied to both. Through segmentation, by applying the 80/20 rule, it will be helpful to figure out what 20% of the tasks contribute to 80% of the results that is desired, and then put in maximum concentration (means working hard) to those 20% tasks. The principle is extremely helpful in bringing swift and easy clarity to complex situations and problems, especially when deciding where to focus effort and resources (20%) in order to gain the 80% output.

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