MMR Strategy Group » Market Segmentation https://mmrstrategy.com Thu, 02 Jun 2016 04:34:40 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.1 Three Types of Market Segmentation and the 2012 Presidential Election https://mmrstrategy.com/three-types-of-market-segmentation-and-the-2012-presidential-election https://mmrstrategy.com/three-types-of-market-segmentation-and-the-2012-presidential-election#comments Fri, 26 Oct 2012 08:55:20 +0000 https://mmrstrategy.com/?p=864 As I’ve discussed in prior posts, market segmentation can mean different things to different people. This is in part because there is more than one way to conduct market segmentation, such as using demographic variables, behavioral variables, or attitudinal variables.   The 2012 presidential election provides an excellent demonstration of the different types of market … Read More Three Types of Market Segmentation and the 2012 Presidential Election

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As I’ve discussed in prior posts, market segmentation can mean different things to different people. This is in part because there is more than one way to conduct market segmentation, such as using demographic variables, behavioral variables, or attitudinal variables.

 
The 2012 presidential election provides an excellent demonstration of the different types of market segmentation. We’ve all seen news anchors and pundits analyzing an election and discussing types of voters. We’ve also seen presidential campaigns – in many different elections – identify groups of potential voters, and then target messaging and communication to those groups.

 
The election is similar to business because candidates must compete for voters in many of the same ways that marketers compete for customers. In fact, I believe that business has a lot to learn from the ways that election campaigns have used market segmentation and database-driven, targeted marketing to attract segments of interest.

 
Let’s look at some types of market segmentation that matter in presidential politics.

 

Demographic Segmentation in the Presidential Election

Demographic segmentation is conducted using demographic variables. In market segmentation, this often means variables such as age, income, or gender. Some of the key types of demographic segmentation in the 2012 presidential election include the following:

  • Geographic Segmentation: Geographic segmentation focuses on specific regions. For example, one of the easiest ways to analyze an election is to look at how voters in each state plan to vote. How many times have you heard the term “swing states”, particularly in reference to states such as Ohio, Florida, Colorado, Iowa, and Wisconsin? There are, of course, plenty of ways to analyze geography. We could talk about red states versus blue states, urban versus rural voters, and other geographic differences.
  • Age-Based Segmentation: Age-based segmentation focuses on customers or voters of a particular age. For example, young voters generally favored Barack Obama in 2008, and many wonder whether they will vote Democratic in 2012. On the other hand, older voters appear to favor Mitt Romney in 2012.
  • Segmentation based on Ethnicity or Culture: Demographic segmentation may also be based on race, ethnicity, or culture. One example, a recent poll shows that Hispanics may favor Obama in this election. In an overlap with another demographic segment, support among Hispanics is particularly important in swing states with large Hispanic populations, such as Florida and Colorado.

 

Behavioral Segmentation in the Presidential Election

Behavioral segmentation relies on consumer behavior to segment and analyze markets. For example, marketers might use behavioral segmentation to target consumers who eat a particular type of food, drive a particular type of car, or go to movie theatres more or less often.

 
Behavioral segmentation has also been frequently seen in analysis of presidential elections. Here are a few examples:

  • Segmentation based on political party: The easiest of any segmentation may be based on party affiliation. Some voters tend to vote Republican, while others tend to vote Democratic. Some people may argue that this segmentation is really based on attitude rather than party, but if a segmentation is based on how people vote, it is a behavior. (See the next section for segmentations based on what people believe.)
  • Segmentation based on voting habits: Segmentation can also be based on a variety of different types of voting habits. For example, Gallup conducts a survey of likely voters, while other polling organizations survey the overall population of the United States.
  • Segmentation based on membership: Segmentation can also be based on membership or affiliation, such as veterans groups or the AARP.

 

Attitudinal Segmentation and the Presidential Election

A third type of segmentation is based on attitudes, which refers to beliefs, feelings and needs. For marketers, attitudinal segmentation may be based on consumer attitudes towards products, brands, or even a product category or type of service.

 
For politicians and pundits, attitudinal segmentation can be conducted along a wide range of issues. Here are some examples:

  • Undecided Voters: How many times have we heard about both candidates trying to position their messaging for undecided voters?
  • Single-Issue Voters: We’ve often heard about hot-button issues in this election, and how they motivate voters, such as voters who are in favor of or opposed to abortion rights, voters who are against any taxation or in favor of certain types of taxes, or voters who are in favor of more energy production or more energy conservation.
  • Segmentation based on religious attitudes: Segmentation can also be based on religious affiliation, such as appeals to Evangelical Christians, or to observant Jewish voters. How many times in the 2012 presidential election have we heard about the candidate’s attitudes towards Israel and Iran?

 

Which Type of Market Segmentation Should You Use?

As I have shown in this post, presidential politics provides vivid examples of different types of market segmentation. The table below summarizes some of the differences between demographic, behavioral, and attitudinal segmentation:

Differences Between the Types of Market Segmentation

As you can see above, demographic segmentation is easiest to explain, and easiest to target actions based on the segmentation. For example, it is easy to target voters who live in a particular state. However, demographic segmentation tends to be less powerful than other methods of market segmentation. Just because two voters or two consumers live in the same state does not mean they share beliefs or are moved by the same type of messaging.

 
By contrast, behavioral segmentation can tap into factors that really matter to candidates or marketers, such as who votes or who buys certain products or who consumes the most in a particular category. However, behaviors can change over time, even among a specific demographic group. Also, behaviors tell what is happening but they do not explain why.

 
The last type of market segmentation is attitudinal. This type of segmentation is powerful, because it identifies needs, beliefs and hopes. However, it can be more difficult to explain and more difficult to act upon. To take our example from presidential campaigns, it is easier to locate and target a group of voters in a specific state than to locate and target a group such as undecided voters, who perhaps are spread across many states.

 
Which variable should you use? It depends on what data you have available and who is going to use your market segmentation. As you can see from this post, political campaigns and analysts use all three. In many cases, market segmentation ends up using more than one type of variable and the most sophisticated segmentations often rely upon all three types of variables.

 
No matter which way this election comes out, it provides lessons for your next market segmentation study.

 


Bruce Isaacson, President
Dr. Bruce Isaacson
President
MMR Strategy Group

© Copyright MMR Strategy Group, May, 2015. All rights reserved.

 

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[White Paper] Using Choice-Based Market Segmentation to Improve Your Marketing Strategy https://mmrstrategy.com/white-paper-using-choice-based-market-segmentation-to-improve-your-marketing-strategy https://mmrstrategy.com/white-paper-using-choice-based-market-segmentation-to-improve-your-marketing-strategy#comments Mon, 15 Oct 2012 07:32:38 +0000 https://mmrstrategy.com/?p=857 Want your segmentation studies to guide the strategic development of brands and businesses?   With this white paper, you’ll have a guide which will explain:   Concrete steps you can undertake, before starting a segmentation study, to increase your odds of actionable results   The principles behind all segmentation studies–and why they matter   How … Read More [White Paper] Using Choice-Based Market Segmentation to Improve Your Marketing Strategy

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Download white paper

Want your segmentation studies to guide the strategic development of brands and businesses?

 
With this white paper, you’ll have a guide which will explain:

 

  • Concrete steps you can undertake, before starting a segmentation study, to increase your odds of actionable results
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  • The principles behind all segmentation studies–and why they matter
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  • How to use choice-based segmentation to guide resource allocation
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  • The five-step process to guide your segmentation projects
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  • The output that you should expect from your segmentation

 

 
Click here to download white paper.

 

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How Do You Define Market Segmentation? https://mmrstrategy.com/how-do-you-define-market-segmentation-2 https://mmrstrategy.com/how-do-you-define-market-segmentation-2#comments Fri, 15 Jun 2012 06:19:52 +0000 https://mmrstrategy.com/?p=838 What exactly do we mean when we say market segmentation? Market segmentation is a term that has different meanings to different functions, departments, and people. Your definition of market segmentation will depend on your own perspective.   This article explains what, in our experience, people mean when they say “market segmentation.”   How is market … Read More How Do You Define Market Segmentation?

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How Do You Define Market Segmentation?

What exactly do we mean when we say market segmentation? Market segmentation is a term that has different meanings to different functions, departments, and people. Your definition of market segmentation will depend on your own perspective.

 

This article explains what, in our experience, people mean when they say “market segmentation.”

 

How is market segmentation measured?

As I’ve described in other posts (see “Using Choice-Based Market Segmentation to Improve Your Marketing Strategy”, market segmentation is typically based on three different types of variables:

 

  1. Demographic variables, such as age, income, or gender. I have worked on many market segmentations that involved demographic variables, such as those that identified a target consumer in a particular age range. In business to business settings, demographic segmentations have targeted companies of a particular revenue size.
  2. Behavioral variables, such as the frequency or volume of purchases. I conducted a market segmentation based on behavioral variables that identified a target segment of consumers who were the frequent users in a particular category.
  3. Attitudinal variables, such as product needs or interest in a particular category. I have worked on a market segmentation for an insurance company that identified a target consumer group composed, in part, of consumers who were willing to pay to make sure they were well-covered.

 

Of the three different types of variables for market segmentation, demographic variables tend to be the easiest to understand, easiest to use, and easiest to evaluate. They are relatively inexpensive to evaluate in a market segmentation exercise. They work well with sales forces, because they are relatively easy to evaluate out in the field or over the phone.

 

By contrast, attitudinal variables tend to be more powerful in their ability to distinguish one segment from another. For example, it may be that two consumers live in similar houses and have similar incomes, yet they may have very different eating habits, risk profiles, or attitudes toward a particular product category.

 

However, compared with the other types of segmentation variables, market segmentation based on attitudinal variables tends to be more expensive, and yields segmentation frames that are more complex to understand, both in terms of how they were developed and what the segments represent.

 

Behavioral variables tend to be somewhere in the middle between the two. They tend to be easier to understand than attitudinal variables, but can be more complex to measure than demographic variables.

 

Which variable is best?

There is no “one-size-fits-all” solution to segmentation. The type of segmentation that is best for your organization depends on a variety of factors, including your budget, the use that the market segmentation will meet, the organizational clients for the market segmentation, and other factors as well.

  Bruce Isaacson, President
Dr. Bruce Isaacson
President
MMR Strategy Group

© Copyright MMR Strategy Group, May, 2015. All rights reserved.

 

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