Usage Segmentation

Another segmentation approach often used by marketers is based on product or brand usage by consumers. Usage segmentation can take a number of directions. For example, the marketer may want to identify various segments of users for a particular product category or users of the company’s brand. In other cases, one may want to segment users into those who buy frequently versus those who only buy occasionally (either product or brand), or into those users who usually purchase just one brand versus those who switch from brand to brand. It may also be useful for the marketer to understand how segments how segments arise based on different product usage situations. Ay usage segmentation approach needs to specify the relevant dimensions of interest.

Volume Segmentation:

Volume segmentation attempts to identify frequent users of s product category or brand. Marketers often refer to the 20–80 thesis, that is, that 20 percent of the market accounts for 80 percent of sales of their product. Although the exact proportions may vary and the rule may not universally apply, it does indicate the importance of a relatively small group of consumers to the health of a firm’s product.

The technique of Volume Segmentation:

Research has shown that purchase concentration is not always a simple function of obvious demographic factors such as income and household size. Thus, the marketer must measure consumption and identify the characteristics that re useful in distinguishing the various purchase intensities.

Frequently, this is accomplished by dividing the market into heavy users, light users, and nonusers of the product and then examining their distinguishing characteristics. At one time was an extremely difficult process for most companies, but today several marketing research organizations are able to provide such data. For example, Simmons Market Research Bureau (SMRB) conducts periodic national studies of product usage, personal characteristics and media habits of a large sample of adults in order to assist the marketer in identifying potential audiences.

Based upon SMRB data illustrates the importance of heavy users for three product categories and indicates several demographic characteristics useful in targeting such prospects. For example, potential heavy users for a new canned soup might be reached by aiming at parents aged 35 to 44 with five or more household members in the east central region of the United States.

Application of Volume segmentation:

Marketers of a broad range of goods and services utilize volume as a fundamental segmentation criterion. This was the case with Quaker Oats Company when it segmented the market for its breakfast cereal Life. The firm determined that large size families where house wives were under 40 were the two characteristics that distinguished intensity of product use. As a result, Quaker aimed its strongest efforts at this group.

Research on packaged consumer goods indicates that the best way to increase sales of a product is to persuade present users to use more of that product, rather than to attract new users. This suggests that marketing efforts should generally be aimed at light to heavy users rather than at nonusers.

One of the real attractions of the usage approach to market segmentation is the ease with which the technique can be employed by so many firms. Most companies are able to segment consumers by usage rates because of access to marketing research services and data processing systems that can quickly categorize and analyze consumers by purchase activity. Thus, department stores are able to analyze change account customers’ purchase with regularity; banks can assess their customers’ banking usage; and as mentioned previously many packaged consumer goods firms can subscribe to syndicated services that provide usage information. Many forms have established programs to reward high frequency customers for their loyalty. For instance, airlines and hotels offer perks for customers who are program participants and meet certain minimum usage conditions. —