Maximizing Market Segmentation: The Art of Crafting Effective Questions
Market segmentation is a very popular tool used in marketing research to the consumer base. Essentially, market segmentation seeks to combine individuals into groups based on their similarities with regards to specific variables. Distinct segments are formed that are different from each other but cohesive within a group.
The distinctiveness of the segments depends on the types of questions used in the segmentation analysis. Needs-based segmentations use only needs-based questions in the analysis. The resulting segments differ based on their needs. However, market segmentation typically uses 5 question types in the analysis so that segments differ on many facets (needs, behaviors, psychographics, personality characteristics, and demographics), not just needs. Analyzing the data using a variety of these 5 question types gives a holistic view of the consumer market. Each of the 5 types of questions are described in detail below.
1. Needs
Needs-based questions seek to understand consumers’ product needs, shopping experience needs, general life needs, pain points, or product benefits. Questions involving product attribute importance or feature importance investigate product needs. Questions regarding the importance of delivery, shopping online, payment method options, and so forth help to understand the shopping experience. Asking respondents about major life changes pinpoints consumer needs during certain times in their life. Pain points with current products uncover areas of opportunity to meet consumers’ current needs. Current product benefits reveal needs that are being met.
2. Behaviors
There are many types of questions to quantify behavior. These questions help researchers discover “what,” “when,” “where,” “why,” and “how.”
- Usage is one type of behavior important to segmentation analysis. Some of the ways researchers can investigate usage is to ask respondents how the product is used, how often it is used, what it is used for, why they bought it, and during which occasions (if any) it is used.
- Spend is another behavior to look at. What are consumers’ past 12 months spend? What is their perceived future spend in the category? What is their average category spend per shopping trip? What is their monthly subscription spend?
- Purchasing behavior is important to know as well. What are the types of products purchased in the category on the last shopping trip? How many of the product(s) did the consumer purchase? How often is the product purchased?
- Shopping channels are more influential now than ever before. Are consumers purchasing the product in person at brick-and-mortar stores, or are they buying online? Are consumers purchasing at mass merchants or local stores?
- Payment method is an additional behavior to consider. How are consumers paying for the product? Do they use cash, credit card, debit card, rent-to-own, lease-to-own, or layaway?
3. Psychographics
Psychographics consist of questions regarding interests, hobbies, beliefs, attitudes, and feelings. This type of question dives deeper into the psychology of the segment; it assists researchers in understanding the why behind the why. Survey questions may ask respondents to select the activities they are interested in or the hobbies they currently have. Beliefs and attitudes can be assessed on a wide range of topics. Feelings about current events, using the product, and the political atmosphere, among other topics, are good questions to illuminate segment motivations.
4. Personality
Questions that ask about personality characteristics uncover “who” the segments are. Are they adventurous, shy, trendy, peacemakers, or assertive? Where do respondents fall on tech adoption? Are they technologically advanced or late adopters? Asking about spending habits (e.g. tends to spend money even when they don’t have it or tends to save money) can reveal segments that are more spend-thrift oriented or frugal. Political leaning also aids in revealing who the segments are.
5. Demographics
Lastly, demographics add more information as to “who” the segments are. Gender, age, ethnicity/race, household income, and religion are just a few of the demographics that can be used in segmentation analysis to further delineate the segments.
To get a holistic view of the consumer market, best practice uses a variety of questions from each of the 5 categories listed above. The questions used in the segmentation analysis will depend on both the category and researcher expertise. For example, while tech adoption is an important variable to include in automotive, lawn equipment, HVAC, wireless service, and computer software categories, it may not be useful in a CPG meat category. Similarly, researchers must ask the questions in a way that fits the category. It may not be as helpful to ask past 12 months spend in an automotive segmentation as it would be to ask for the amount spent on their last automotive purchase.
Knowing that not all questions listed here fit each category, researchers must use their best judgement to come up with suitable questions. Likewise, not all questions listed here need to be used as inputs into the segmentation. The inputs chosen for analysis should be determined by category and researcher expertise. Does it make sense to include the question in the analysis? Is it likely that groups of people will answer differently with regards to the question? These are some of the questions researchers may ask themselves to determine whether to include the question in the analysis.
Adding a variety of questions to the segmentation analysis from the 5 types listed above results in a holistic view of the consumer market. This results in rich segments that differ with respect to their needs, behaviors, interests, beliefs, attitudes, feelings, personality, and demographics.
Date: July 13, 2023
Author: Audrey Guinn
Source: Decision Analyst