Descriptors Specific to Consumer Markets

Customer needs are expressed in terms of the benefits sought from a specific product or service. Consumers vary on what benefits they want as well as on the importance of each. In an effort to locate the product that best meets their needs, consumers develop a set of choice criteria that indicates the wanted product characteristics. The result is often referred to as the ideal brand.

Lifestyle: This descriptor classifies individuals on the basis of their activities, interests, and opinions. It provides information about a consumer’s behavior by identifying types of lifestyle that are representative of different consumer groups. From such information it is possible to infer on a generalized basis what products and benefits would appeal to a particular group. For example, one psychographic study of men had the following to say about the purchasing behavior of a group titled “self admirers”. This type is one of the more confident types of men, and he knows exactly what he wants. He is body aware (checks his weight regularly, pays attention to what he eats) and is the most frequent user of toiletries and most keen on running and jogging. He sees himself as gregarious and optimistic for the future. Success is very important to him, and he does not see himself as a tolerant individual. This type of man is self conscious and wants success. He responds to brands that exude self confidence and success. (Martini) The Right One, You get more than a card (with American Express).

Socio-Demographics: These are the most commonly used descriptors in the segmentation of consumer markets. They are used primarily to identify consumer who have been clustered using other description. Further, they can sometimes be used to infer purchasing behavior as, for example, with products used exclusively by children, men, women, and some professionals.

The more frequently used socio-demographic variables include sex, age, family, life cycle, and occupation. Sex and age are often used to identify the size and growth of segments. Each family life cycle stage has a different purchasing base. Thus, newly weds are heavy buyers of small appliances, furniture and linens. Upon the arrival of children the unit purchases insurance, baby foods, medical services, washers, and dryers. Occupation can relate to the needs for certain products as, for example, work clothes books and magazines, and tools.

Descriptors specific to Industrial Markets:

Purchasing Structure:
The degree to which the purchasing structure is centralized impacts buying activities strongly since it affects the level of authority, knowledge, geographic dispersion and the relationship between buyers and sellers. Thus, in a centralized situation, the buyer is more likely to consider all suppliers, regardless of their geographic location, to emphasize cost savings and to minimize risks. In a decentralized situation, the user’s needs are given greater attention; product quality and prompt delivery are emphasized and there is less concern with cost.

Buying Situation: Some market segments can be identified on the basis of three commonly encountered buying situations. A “new buy” situation is one that not arisen before and, therefore may require that a considerable amount of data be gathered and evaluated. A “modified re-buy” occurs when something has changed in an existing client supplier relationship such as price, credit terms, or delivery schedules. A “straight re-buy” is one handled routinely where there is little motivation to change suppliers.

Industrial Sector: This widely used approach groups customers according to the industrial sector in which they operate. It is typically based on the Standard Industrial Classification (SIC) system used by the US government to organize data collected from its various business surveys.