Segmenting customer brand preference: demographic or psychographic
| Published date | 01 July 2002 |
| DOI | https://doi.org/10.1108/10610420210435443 |
| Date | 01 July 2002 |
| Pages | 249-268 |
| Author | Chin‐Feng Lin |
| Subject Matter | Marketing |
Segmenting customer brand
preference: demographic or
psychographic
Chin-Feng Lin
Associate Professor, Department of Business Administration, National
Chin-Yi Institute of Technology, Taiwan
Keywords Brands, Market segmentation, Demographics, Psychographics
Abstract A multi-segmenting methodology is proposed for comparing the segmenting
capabilities of segmentation variables and providing complete market segmentation
information. Demographic and psychographic variables based on the differentiation of
consumer brand preference were used to elicit the characteristics of market segments. In
a comparative evaluation, the multi-combination variables of demographic segmentation
exhibited market-segmenting capabilities equivalent to those of psychographic
segmentation. The purpose of this research is utilizing multiple segmentation variables to
identify smaller, better-defined target sub-markets for enhancing business competitive
advantages.
Introduction
The purpose of market segmentation is to identify the taxonomy of
consumption patterns by dividing a market into several homogeneous sub-
markets. Marketers can formulate product strategies, or product positions,
tailored specifically to the demands of these homogeneous sub-markets.
Homogeneous sub-markets are defined by predetermined segmentation
variables. Traditional demographic variables, such as gender, age, income,
and education, can be used to explain the characteristics of the sub-markets
and classify the key factors of a market segment. Traditional demographic
variables, however, cannot identify the complete characteristics of the sub-
markets because consumers in the same demographic group have very
different psychographic makeups (Kotler and Armstrong, 1999). Based on
the differentiation of consumer's brand preference, this study divides
consumers into homogeneous groups using psychographic variables through
the classification in VALS2 (values and lifestyles) and LOV (list of values)
systems and demographic variables and then compares the relative
usefulness these two different segmentation variables to marketers.
Literature review
Smith (1956) first introduced the concept of market segments, which has
become an integral part of modern marketing. A market segment is a group
within a market that is clearly identifiable based on certain criteria.
Consumers within such a sub-market are assumed to be quite similar in their
needs, characteristics and behaviors.
Pride and Ferrell (1983) devised the market segmentation process of dividing
a market into several market groups. Consumers in each market segment
have similar product needs. Each segment requires a different mix of
marketing strategies to satisfy its special consumer needs. McCarthy (1981)
explained that the purpose of dividing a market into several homogeneous
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Taxonomy of consumption
patterns
Concept of market
segments
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 11 NO. 4 2002, pp. 249-268, #MCB UP LIMITED, 1061-0421, DOI 10.1108/10610420210435443 249
An executive summary for
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markets is so that marketers can aim to satisfy the specific needs of any
target market. The idea of designing marketing strategies for market
segments is based on consumers' wants and interests. The purpose of market
segmentation is two-fold: to divide a market into several homogeneous sub-
markets and to formulate a proper marketing-mix strategy for the sub-market
(McCarthy, 1981).
Market segmentation variables
In a multi-dimensional market, companies can increase profitability by
utilizing market segmentation. An effective market segmentation technique
depends on selecting the relevant segmenting bases and descriptors (Wind,
1978). Segmentation variables must be considered in light of their
measurability, availability, reliability and ability to uncover the
characteristics of each market segment. Researchers (Becker et al., 1985;
Becker and Conner, 1981) have tried to divide consumer markets by looking
at a consumer's ``personality''. Jain (1993) analyzed markets through social,
economic, and special segmentation variables such as brand loyalty and
consumer attitude. Kotler (1997) has proposed that consumer markets should
be divided according to geographic, demographic, psychographic, and
behavioral variables.
In psychographic segmentation, consumers are divided into different groups
on the basis of lifestyle and personality (Kotler, 1997). Customers within the
same demographic group can exhibit very different psychographic profiles.
Therefore, enterprises making different consumer goods can seek marketing
opportunities in lifestyle/personality segmentation (Kim, 1993; Lee and
Ferber, 1977).
Products are the building blocks of lifestyles (Solomon, 1999). Customers
define their lifestyles by the consumption choices they make in a variety of
product categories. Lifestyle can therefore be defined quantitatively and used
as a group identity for market segmentation. In addition, the brand
characteristics with which marketers endow their products correspond to
consumer personalities. These inferences about a product's characteristics
are an important part of brand equity, which refers to the extent to which a
consumer holds strong, favorable, and unique associations with a brand in
memory (Keller, 1993). Thus, lifestyle and personality variables are effective
segmentation variables for identifying sub-market profiles and targeting
consumers.
Brand preference and segmentation
Markets may be effectively segmented through statistical analysis of brand
preference and selection (Henderson et al., 1998). Single brand preference
can be regarded as a measure of loyalty, which also provides valuable
information for customer management and market segmentation (Gralpois,
1998). Market classification can be obtained by using the Logit regression
(Guadagni and Little, 1983). Several researchers (Bucklin et al., 1998), using
the decision variables of consumers' brand preference, utilized a joint
estimation approach to identifying sub-markets. Consumer values give
marketers a direction on how best to satisfy their customer needs and
increase brand preference (Chudy and Sant, 1993).
Personal value system
Personal value or characteristic classifications in LOV, VALS2 and RVS are
often used to develop effective marketing strategies. Below are descriptions
of the three taxonomic models.
Effective segmentation
techniques
Lifestyle and persoanlity
Statistical analysis
250 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 11 NO. 4 2002
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