Behavioral Segmentation
Behavioral Segmentation creates different consumer groups according to their behavior and decision-making patterns. It can help you understand why some consumers use your product or services while other consumers do not. Knowledge gained from consumers that do not use your products or services can expose areas for new product development or for better product positioning. The behaviors and patters in question can relate to usage rates, purchase occasion, loyalty status, or benefits sought.
Usage rate segmentation is concerned with the amount of the product or service bought or consumed and is used to segment consumers into nonusers, first-time users, light users, medium users, and heavy users. Conventional wisdom is to convert nonusers, first-time users, and light users into medium or heavy users while convincing medium and heavy users to continue using the product at their current rate. Similarly, you could try and convert heavy users of a competitor’s product or service to heavy users of your product or service. This is a method used by companies in the mobile phone industry.
Purchase occasion segmentation is used to segment the market based on the occasions when consumer get the idea to buy, when they make their purchase, or when they use the purchased item. It helps you to understand the distinct occasions in which consumers purchase and interact with your products or services. These purchase situations can be classified as universal, regular, or rare.
Universal purchase occasions are those that most consumers engage in on a recurring bases such as holidays and other seasonal events. This type of segmentation would be used by a candy manufacturer to sell candy canes during the Christmas season.
Regular purchase occasions represent instances when customers repeat their purchase pattern over a period of time such as birthdays or anniversaries. Companies that sell birthday or anniversary cards use this type of segmentation because the purchase pattern is easy to predict.
Rare purchase occasions represent instances where the purchase behavior is one-time, unpredictable, or spontaneous. These occasions are difficult to predict in terms of timing but happen enough within the market to justify segmenting based on their occurrence. Companies that sell engagement rings use this type of segmentation.
Benefits segmentation focuses on the attributes consumers look for and/or the benefits they expect to receive from a product or service. It centers on determining what the consumer specifically wants the product or service to do for them. The benefit could be directly related to the products attributes and how it functions (e.g., high heel shoes for women to make them taller), or it could be related to the overall image and prestige associated with owning the product or using the service (e.g., owning a Darby Scott handbag or gaining access to the VIP Rooms Star Alliance Lounge).
Benefits segmentation can lead to many different segments because consumers may buy the product or service for many different reasons. If you ask consumers why they buy a particular brand of coffee, they may tell you they like the fact that it is dark roasted, and they only buy dark roasted coffee. They may tell you they like the aroma and how the smell perks them up in the morning. They may tell you that it has a smooth bold taste that they love, or they may tell you that they love the ‘kick’ it gives them. They may also simply say that it was the one on sale. All of these are valid reasons for purchasing the coffee and all could be seen as segmenting criteria. That is, these consumers are all buying the same product, but some are buying the dark roasted visual attribute, some are buying the taste and smell attributes, some are buying the stimulant benefit, and some are attracted to the price attribute.
Loyalty status segmentation is concerned with grouping consumers based on the strength of the brand loyalty they have towards the product or service. The most loyal customers are your most valuable assets because they spend the most time connected with your brand and/or product. They represent the segment of consumers that enjoy the benefits that your products or services provide and/or are satisfied with how your products and services fulfill their needs and wants. However, having a loyal customer does not mean that you are the decisive winner on the competitive battlefield because not all loyal consumers are the same. Using loyalty status segmentation, you can define customer groups as hard-core loyals, split loyals, shifting loyals, and switchers.
Hard-core loyals are consumers that stick to one brand. These consumers have had great experience with your brand and are satisfied with your products and/or services. When asked about your products and services they only have positive things to say and when given a choice, they will only buy and use your products and services. These consumers are not likely to change their preferences based on competitive efforts.
Split loyals are customers who use your products and service and those of two or three other brands interchangeably. Just as with hard-core loyals, they may speak highly of your brand, products, and/or services but they will also have praise for some of your competitors. They tend to view top brands as similar in terms of attributes and benefits and are equally satisfied with products and services from you or your competitors. They can be temporarily swayed to your brand with targeted marketing efforts but can easily change loyalty if your competition makes a better offer.
Shifting loyals are customers who shift from your products and/or services to the products and services of your competitors. In some respects, they are a mixture of hard core loyal and split loyal customers. They will be loyal to your brand and its products and services over a period of time, but then shift loyalty to another brand and its products and/or services, while still retaining some level of loyalty to you. They then remain loyal to the competitors’ products and/or services for a period of time and then again shift to another brand. When they shift, they may shift back to your brand, or they may shift to another brands products and/or services. There is a fine line between split loyals and shifting loyal customers, but the main difference is that shifters remain loyal to a specific brand over a period of time.
Switchers are customers who show no loyalty to any brand. These customers are unlikely to be loyal to your products and/or services over any period of time. They are more likely to keep switching to other products and services even when they liked and were satisfied with your products and services. They may switch due to marketing and promotion efforts by your competitors, or they may simply like the experience of trying new things. Nonetheless, due to their finicky nature, switchers are a good group to target if you are new to the market because they have a higher likelihood of trying your products and/or services.