Monday, January 21, 2008

Market Segmentation: Age, Gender, Education and Occupation, & Ethnic Background

Market segmentation is the process of dividing the market into segments or groups according to the customers needs and characteristics. Market segmentation helps marketers identify understand the various groups of possible customers. This allows marketers to tailor their offerings to meet the exact needs of one or all of the segmented markets. For example, the automobile industry has grown to its present size and diversity because auto manufacturers recognize and try to meet the needs of the many different segments within the total auto market.

Market segmentation is just as important to retailers and wholesalers as it is to manufacturers. For example, a department store and a discount store may offer the same television set. However, their ways of pricing, promotion, and distributing the television set may be very different because they are tailoring their marketing efforts to two distinct segments of the consumer market. The department store is targeting people in middle income bracket while the discount store is targeting those in the low income bracket. A market may be segmented according to several variables. These variables may be classified according to four categories: Demographic, geographic, psychographic, and behavioristic variable. Demographics involves statistics about population patterns such as age, gender, education and occupation, and ethnic background. Marketers study demographics to determine common needs and spending patterns.

People within a certain age group have many buying needs in common. For example, babies need diapers and formula, special care and clothing. People over the age of 65 tend to need medicine and other health care products. As you can see this specific market demand allows marketers to segment a market. Some manufacturers concentrate their entire production on a single age group. Marketers generally divide the consumer market into five age groups. These groups are children, teenagers, young adults, the middle aged, and the over 65s.

The Children's Market is made up of youngsters to the age of 10 year s old. This market includes about 15 percent of the total population. This market segment ends at age 10, because many 10 to 12 year olds model their behavior and attitudes to those of teenagers. Even before children enter school, they begin to form their own tastes and preferences. Their independences are reflected in the amount their parents spend on them and in the amount they spend themselves.

The Teenage Market is composed of young people ages 10 to 19. It accounts for some 18 percent of the population. Typical teenagers have special tastes, attitudes and outlooks. They are interested in the new, (new fashions, new music, new cars, new foods, new hairstyles, and new ideas. They want to play new video games, buy new tapes and compact discs, see a movie and go out clubbing. The teenagers disposable income is growing and brand loyalties are lasting. About 45 percent of all teenagers work and/or receive a weekly allowance. About sixty percent of teens have a hand in making out the family grocery list, and about 40 percent select the brands that are bought. Many of the sophisticated marketing techniques are aimed at young women and teenage girls. More than 6.5 million teenage girls have charge accounts and about 16 percent have credit cards.

The Young adult market consists of young adults ages 20 to 34. It contains about 24 percent of the population and is important because of both size and purchasing power. People in this age group get their first major career positions, get married, establish homes, and start families. They are the vital market segment for marketers of automobiles, auto accessories, clothing, housing, home furnishing, and children's products. Marketers know that this group has major needs and wants, has the money to satisfy them, and is willing to spend. For example, a furniture manufacturer may place ads for a dining room set in magazines read by young adults. An automobile dealer may put a commercial right before a television program popular with this age group. An airline may mail brochures to a list of young adults to promote vacations for couples.

The middle aged market is made up of ages 35 to 64. It includes the baby boomer generation. This group has the most buying power and buys the largest number of consumer goods and services. Many middle aged people, particularly the older ones, are at the peak of their earing power. Thus, this market segment receives much attention from the makers of high priced, top quality goods and services. These include cars,insurance, vacation homes, escorted tours, and expensive recreational goods such as airplanes, boats and swimming pools.

The over 65 market makes up about 14 percent of our population and is growing. People in this age group are, of course, consumers of the basic necessities. Most have discretionary income or expendable income, which is, the money left over after paying for the basic cost of living. Many people over the age of 65 have leisure time they want to fill. Some of them also have physical problems that require special goods and services. The marketers in retirement areas market the products to older residents in several ways.

Gender
Segmentation by gender is an obvious way of identifying possible markets. Women and men sometimes look for different benefits in products. In the past some goods, such as power tools and sporting goods, were bought mainly by men. Others such as groceries and health care products, were purchased mainly by women. These patterns are not staying constant over time. Women today have an increasing amount of personal buying power due to increased income levels. More women are buying such things as power drills and more men are shopping for groceries and grooming aids. Marketers are aware of and are addressing these changes in buying patters.

Education and Occupation
Today, more people are going to school at all levels that even before. They are also attending school for longer periods. In fact, education has become a lifelong process. School and businesses offer courses not only to improve job skills but also for self-improvement. The increased interest in education may lead many people to higher paying job positions. This means they will have more discretionary income to spend on goods and services. People in certain occupation form ideal segments for related goods and services. the marketers of career related goods and services target possible customers according to their occupations.

Ethnic Background
Markets for goods and services can be segmented according to ethnic groups. An ethnic group is all the people who have such characteristics in common such as racial background, language, social customs, or physical traits. Everyone is a member of at least one ethnic group. In fact, because of our diverse population in the United States, many people can trace their origins to several ethnic groups. There are numerous ethnic groups in our country. When members of these groups first arrived in the United States, they settled near friends and relatives and formed ethnic neighborhoods. These various ethnic groups established grocery stores, bakeries, and restaurants in their neighborhoods. These and other marketing outlets all them to help preserve their cultural conditions. Each ethnic group makes up a market segment allowing the marketer to meet the specific needs and wants of the customer.

No comments: