Market Segmentation: Deepen your knowledge of the market
Market segmentation serves to divide a market into subgroups. It’s possible to break the market down into products, product features or certain consumer types. A segmentation according to products frequently also includes a segmentation of price groups, so that a client can make a targeted adaptation of products in order to meet the specific demand for quality, appeal and price.
The overall objective of a market segmentation is to divide the market into subgroups (or segments) of homogenous structure that are distinguishable (heterogeneous) from other subgroups in order to facilitate a sophisticated or optimized management of product development, marketing and sales.
At MWResearch we specialize in segmentations in the form of buyer typologies based on the degree of consent to personality describing items and demographic criteria such as age, sex, income and social status. Buyers of a certain category (e. g. beer drinkers) are asked for their purchase intention of various beer brands. Furthermore, respondents need to scale their consent to personality describing items such as:
- Self-perception (self-acceptance, personal motivations, experience of life, character, values, ideals, desires and, potentially, self-criticism)
- Life style (activities, interests, consumer attitude, leisure time, optimism/ pessimism etc.)
- Attitude towards product groups (e.g. organic products)
- Behavior (consumption, reading behavior, opinion leader in certain product groups like beauty and care)
The describing items are presented to the respondents in the form of statements such as, “I am rather sober and matter-of-fact,” or: “Particularly, I look for quality when shopping”, or: “I only buy what I need.”
The statement batteries can be compacted into specific attitude types with the help of a factor analysis (e.g. thriftiness, joyousness, willingness to innovate etc.). It’s beneficial to concentrate on a few important types instead of a multitude of given statements.
A cluster analysis helps to identify specific target group segments (e.g. “undemanding buyer”, “trend-oriented”, “young family”, and “down-to-earth”) that can be mapped graphically with a multi-dimensional scaling (MDS). Combined with the evaluations of images and purchase intention for different brands (see Image Analysis) specific types can be described in their affinity towards certain brands (persons with similar brand affinity form a cluster).
These typologies, especially when related to specific markets, offer a sound basis for a target group analysis that facilitates addressing different segments for product choice, pricing policy and communication strategy.