(Figure)<\/a><\/strong>.<\/p>\nIncome is another popular way to segment markets. Income level influences consumers\u2019 wants and determines their buying power. Housing, clothing, automobiles, and alcoholic beverages are among the many markets segmented by income. Budget Gourmet frozen dinners are targeted to lower-income groups, whereas the Stouffer\u2019s<\/span> line and California Pizza Kitchen<\/span> frozen pizzas are aimed at higher-income consumers.<\/p>\n<\/div>\n\n
Geographic Segmentation<\/h3>\n
Geographic segmentation means segmenting markets by region of the country, city or county size, market density, or climate. Market density<\/em> is the number of people or businesses within a certain area. Many companies segment their markets geographically to meet regional preferences and buying habits. Pizza Hut<\/span>, for instance, gives easterners extra cheese, westerners more ingredients, and midwesterners both. Both Ford<\/span> and Chevrolet sell more pickup trucks and truck parts in the middle of the country than on either coast. The well-defined \u201cpickup truck belt\u201d runs from the upper Midwest south through Texas and the Gulf states. Ford<\/span> \u201cowns\u201d the northern half of this truck belt and Chevrolet the southern half.<\/p>\n<\/div>\n\n
Psychographic Segmentation<\/h3>\n
Race, income, occupation, and other demographic variables help in developing strategies but often do not paint the entire picture of consumer needs. Demographics provide basic data that can be observed about individuals, but psychographics provide vital information that is often much more useful in crafting the marketing message. Demographics provide the skeleton, but psychographics add meat to the bones. Psychographic segmentation is market segmentation by personality or lifestyle. People with common activities, interests, and opinions are grouped together and given a \u201clifestyle name.\u201d For example, Harley-Davidson<\/span> divides its customers into seven lifestyle segments, from \u201ccocky misfits\u201d who are most likely to be arrogant troublemakers, to \u201claid-back camper types\u201d committed to cycling and nature, to \u201cclassy capitalists\u201d who have wealth and privilege. Two different managers could be described by demographics as male, managers, 35 years old, with $80,000 per year income. A marketer who just saw the demographics might create one advertisement to reach both of them. However, if the marketer knew that one of the managers was president of his homeowner\u2019s association and captain of a rugby league team and the other manager was a holder of opera season tickets and president of the Friends of the Public Library, the messages might be designed very differently in order to be more successful.<\/p>\n<\/div>\n\n
Benefit Segmentation<\/h3>\n
Benefit segmentation is based on what a product will do rather than on consumer characteristics. For years Crest<\/span> toothpaste was targeted toward consumers concerned with preventing cavities. Recently, Crest<\/span> subdivided its market. It now offers regular Crest, Crest Tartar Control for people who want to prevent cavities and tartar buildup, Crest for kids with sparkles that taste like bubble gum, and another Crest that prevents gum disease. Another toothpaste, Topol, targets people who want whiter teeth\u2014teeth without coffee, tea, or tobacco stains. Sensodyne toothpaste is aimed at people with highly sensitive teeth.<\/p>\n<\/div>\n\n
Volume Segmentation<\/h3>\n
The fifth main type of segmentation is volume segmentation, which is based on the amount of the product purchased. Just about every product has heavy, moderate, and light users, as well as nonusers. Heavy users often account for a very large portion of a product\u2019s sales. Thus, a firm might want to target its marketing mix to the heavy-user segment. For example, in the fast-food industry, the heavy user (a young, single male) accounts for only one in five fast-food patrons. Yet this heavy user makes over 60 percent of all visits to fast-food restaurants.<\/p>\n
Retailers are aware that heavy shoppers not only spend more, but also visit each outlet more frequently than other shoppers. Heavy shoppers visit the grocery store 122 times per year, compared with 93 annual visits for the medium shopper. They visit discount stores more than twice as often as medium shoppers, and they visit convenience\/gas stores more than five times as often. On each trip, they consistently spend more than their medium-shopping counterparts.<\/p>\n<\/div>\n
\n
Business Market Segmentation<\/h3>\n
Business markets are segmented differently than consumer markets. Business markets may segment based on geography, volume, and benefits, just as consumer markets are. However, organizations might also segment based on use of the product (such as a petrochemical company having one market segment for purchasers who use polyethylene for instrumentation panels and one for purchasers who use polyethylene for car seats), characteristics of purchasing function (such as purchasing committees, purchasing managers, or purchasing departments), size of the client (one segment for large customers who have different needs than smaller customers), or industry (such as segmenting food systems into restaurants or government agencies such as schools or military bases), as well as other considerations related to characteristics of business customers.<\/p>\n<\/div>\n
\n
Using Marketing Research to Serve Existing Customers and Find New Customers<\/h3>\n
How do successful companies learn what their customers value? Through marketing research, companies can be sure they are listening to the voice of the customer. Marketing research is the process of planning, collecting, and analyzing data relevant to a marketing decision. The results of this analysis are then communicated to management. The information collected through marketing research includes the preferences of customers, the perceived benefits of products, and consumer lifestyles. Research helps companies make better use of their marketing budgets. Marketing research has a range of uses, from fine-tuning existing products to discovering whole new marketing concepts.<\/p>\n
For example, everything at the Olive Garden<\/span> restaurant chain, from the d\u00e9cor to the wine list, is based on marketing research. Each new menu item is put through a series of consumer taste tests before being added to the menu. Hallmark<\/span> Cards uses marketing research to test messages, cover designs, and even the size of the cards. Hallmark<\/span>\u2019s experts know which kinds of cards will sell best in which places. Engagement cards, for instance, sell best in the Northeast, where engagement parties are popular. Birthday cards for \u201cDaddy\u201d sell best in the South because even adult southerners tend to call their fathers Daddy.<\/p>\nMarketing research can use either primary data (where the organization actually gets the data and analyzes it) or secondary data (where the organization uses data that has already been developed and published by another entity and the organization is able to utilize the data for its own purposes). There are three basic research methods used for gathering primary data: survey, observation, and experiment.<\/p>\n
With survey research, data is gathered from respondents\u2014in person, through the internet, by telephone, or by mail\u2014to obtain facts, opinions, and attitudes. A questionnaire is used to provide an orderly and structured approach to data-gathering. Face-to-face interviews may take place at the respondent\u2019s home, in a shopping mall, or at a place of business.<\/p>\n
Observation research is research that monitors respondents\u2019 actions without direct interaction. In the fastest-growing form of observation research, researchers use cash registers with scanners that read tags with bar codes to identify the item being purchased. Technological advances are rapidly expanding the future of observation research. Arbitron<\/span> research has developed a portable people meter (PPM) about the size of a cell phone that research participants clip to their belts or any article of clothing. They agree to wear it during all waking hours. Before the study participants go to sleep, they put the PPM in a cradle that automatically sends data back to Arbitron (now Nielsen Audio). The PPM will tell the marketing research company exactly which television programs the person watched and for how long. It also records radio programs listened to, any web streaming, supermarket piped-in music, or any other electronic media that the research participant encountered during the day.