A Priori Segmentation Methods

Examples of a priori methods, where the type and number of segments are determined in advance, include the following:

  • Segments where customers are segregated according to observable or pre-existing characteristics such as demographics, geodemographics, psychographics, socialgraphics or personas. Demographic segmentation bases include gender, age, income, race, occupation, marital status, household size, life stage, etc.
  • Usage segments that classify customers based on heavy/medium /light use in terms of either quantity or frequency of buying.
  • Segments based on behavioural loyalty — solus (100% loyal), core and non-core.
  • Segments based on customers’ attitudinal loyalty.

A Priori Segmentation - skew analysis reveals target segment

Exhibit 3.2   Skew analysis depicting demographic profile of shoppers at four different supermarket banners.

A priori segments are easy to define, and easy to reach through advertising in targeted media. Exhibit 3.2, which depicts the demographic profile of some retail banners, reveals that the chain Inulas is targeting high income homes and white-collar workers, whereas ZerMart is targeting middle/low income homes and blue collar workers.

Segmentation based on usage and behavioural loyalty is useful in directing marketing efforts to segments on the basis of value to the business. Customer transaction databases in business markets can be used for usage segmentation. In consumer markets usage segments may be crafted from retailers’ loyalty panel data, or from consumer panels, or even from data obtained from usage and attitude studies.

A Priori Segmentation - Usage segmentation example

Exhibit 3.3   Usage segmentation of the Tea and Coffee category.

Exhibit 3.3 provides an example of usage based segmentation for the “hot beverage” market comprising tea and coffee. The heavy and light hot beverage segments tend to consume more tea, whereas the medium segment comprises mainly coffee drinkers. A manufacturer that dominates the tea category in this market may consider targeting light consumers to induce them to consume more “hot beverage”. Targeting the medium segment would be more challenging because converting coffee drinkers to drink tea is unlikely to be an easy task.

Data from customer satisfaction or brand equity studies Customer Satisfaction and Customer Value, and Chapter Brand Equity) may be used for crafting segments based on the customers’ loyalty. Another approach to segmentation, the loyalty matrix (described in the Brand Equity chapter), combines behavioural loyalty and brand equity. These approaches are useful in tailoring marketing efforts and strategies to cater to the distinct requirements of each loyalty segment.

A limitation with a priori methods is that they do not directly reflect the needs of the customers. For some brands and categories, pre-existing characteristics might not yield useful segments.

An important consideration is the feasibility of targeting and tracking consumer segments. For instance, in hot beverage, how does a tea manufacturer engage with light consumers? If light consumers have distinctly different media consumption habits or if they patronize different retail outlets, it becomes feasible to target them. What is likely is that they purchase smaller pack sizes. The tea company may consider directing marketing efforts to motivate small pack consumers to consume more tea.

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