What’s it: Behavior segmentation divides the market into small, homogeneous groups based on consumers’ habit patterns spending their time and money. Consumers in a segment should be similar in terms of their wants, resources, buying attitudes, and buying habits. However, the characteristics are heterogeneous among consumers in different segments.
Marketers can use several variables to segment the market, including the loyalty, use, or benefits a product seeks.
Why is behavioral segmentation important
Behavioral segmentation is about understanding customers not only about who they are but also about what they do. Marketers divide the market into several homogeneous groups according to consumer buying behavior, such as frequency of use. It is essential to promote and market the product in an effective manner.
Through behavioral segmentation, marketers can identify who is likely to buy, how often and how much, and when they buy. After understanding the needs and habits of consumers, marketers develop more targeted marketing mixes and promotional strategies.
Types of behavioral segmentation
The basis for segmenting the market is characteristic of consumer buying behavior. Examples of variables are the frequency of purchases, loyalty, or benefits sought. Here are four types of behavioral segmentation.
Marketers classify consumers based on the volume and frequency of purchases. Also another consideration is the time consumers spend with the products and features they use.
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Marketers usually divide consumers into categories: heavy users, medium users, and light users.
Heavy users frequently purchase large volumes and spend a lot of time interacting with the product.
Meanwhile, light users buy a little with a rare frequency, even only once. They also usually only take the basic benefits of the product to meet their needs. And they don’t spend more time on, for example, providing reviews or recommending products on their social media accounts.
A consideration for segmenting the market is the consumer retention rate, which shows the percentage of users who still use the same brand for some time after purchasing. It is an indicator of brand loyalty. In this case, marketers can divide the market into two groups: high loyalty and low loyalty.
Consumers with high levels of loyalty have very high retention rates. They tend to choose the same brand consistently over their competitors and are willing to pay a premium. In this case, marketers focus on maintaining their loyalty, for example, through loyalty programs, such as discounts, gifts, and a points system.
Meanwhile, for the consumer segment with low loyalty, the company continuously recruits new customers to reach the target.
The primary consideration in this segmentation is the difference in benefits felt by consumers. Marketers segment markets based on attributes such as performance, quality, customer service, special features, or other benefits.
When consumers place a higher value on certain benefits (e.g., quality) over others, it is key to why consumers are willing to buy. Hence, the marketing strategy should focus on it without overriding other attributes.
Occasion or event
Consumers buy products possible only during certain events. These events can be repeated in a year, such as birthdays. Or they are seasonal events or even once in a lifetime such as weddings.
Advantages and disadvantages of behavioral segmentation
The main benefits of grouping customers into different segments based on their behavior are:
- Marketers are easier to understand how different customer groups should be targeted with different offerings. Marketers can also choose the most appropriate time to effectively influence purchases.
- Information from segmentation allows marketers to analyze historical behavior patterns. They can then use it to predict and influence future behavior and purchases.
- Behavioral segmentation drives smarter decisions about how to best allocate time, budget, and resources. Marketers can identify and map the most profitable segments based on the consideration of these variables.
Meanwhile, some of the disadvantages of behavioral segmentation are:
- Consumer behavior changes over time and cannot always be accurately predicted. Marketers must continually update the parameters to predict buying behavior to be relevant.
- This segmentation relies more on qualitative rather than quantitative information. That, of course, contains a lot more subjectivity. Hence, the success of the sales strategy will largely depend on the accuracy of the assumptions used.