Customer Needs: Segments are defined on the basis of the presence or absence of different choice criteria and the relative importance of each. For example, the dentifrice market can be divided into four benefit segments – decay prevention, breath freshness, brightness of teeth, and, more recently, tartar removal. Firms have a choice about which benefits they will build into the product and to what extent. Such brands as Crest, Ultra-Brite, and Aqua fresh have clearly targeted different benefit segments.
The important benefits considered by customers in the industrial market center around product features required under different use conditions as well as on-time delivery, post-purchase service, and training. One study of the specialized chemicals (called “tactifiers”) bought by manufacturers of adhesives identified six product features affecting consumer choice (color stability, viscosity, tact, price, starting color, and softening point) and four company variables (supplier’s product range, service support, reliability and geographical coverage) affecting supplier choice. These factors, when coupled with account size, were used to set up 12 segments of potential customers. The 12 segments served as the basis for selecting which markets to target and which products to develop.
Product Usage: In most markets a small proportion of customers accounts for substantial part of total purchases. For example, about half of all US beer drinkers (representing some 20 percent of the total population) account for 90 percent of all beer consumed. Special studies are required to identify the characteristics of heavy users (e.g. heavy beer drinkers are males between 25 and 50 years of age without a college education). An example of the use of product usage as a descriptor is afforded by Coors, the number five US brewer, who has developed an advertising campaign aimed solely at women – a first in the industry. While women consume only about 17 percent of all beer sold in the United States, this amounts to $6.5 billion in sales and increased to $9 billion by 1994. In the case of industrial markets, customers are better known and heavy users are easier to identify.
Brand Loyalty: Users of a product vary as to their loyalty to a specific brand or supplier. The task of management is to increase the loyalty of present customers and to add new ones. For consumer products it is usually necessary to use marketing research to measure loyalty, while for industrial products can often be directly observed.
Purchase Influence: Often several individuals influence the purchase of a product. There are three types of buying influentials those who prescribe (recommend); those who actually make the purchase; and those who use the product. These roles can be assumed by the same or different individuals. For many consumer products (e.g. gifts, children’s products, and prescription drugs) several buying influentials are involved. For industrial products the participation of several individuals in a purchasing decision is common.
Innovativeness: Potential customers can be divided into five groups relating to the speed with which they adopt new products innovators, early adaptors, early majority, late majority, and laggards. For consumers products innovators and early adaptors tend to be younger and have higher incomes and education. For industrial products the more innovative customers can often be identified based on their past purchases.
Geographical Location: It is often useful to segment markets based on different geographic regions, such as ZIP codes, counties, standard metropolitan statistical areas, and states. Geographical segmentation is almost always important as a physical descriptor because different locations have varying sales, growth rates, competitive structures, and servicing costs. Research has shown that national marketers are learning what traveling salesmen have always known where people live is one of the best clues to what they want to buy. South-westerners love pick up trucks; folks in the northeast want vans.