Segmentation

Segmentation Techniques

Summary of Results

VALS segmentation methodology identifies the psychographic characteristic of a person and matches them with the market segments that are applicable for businesses. It determines the attitudes and perceptions of individuals and proposes the course of actions in targeting and marketing. The survey is based on questions related to behavioral decisions, emotional preferences, and self-perceptions. Each respondent receives the results that allocate him or her to the primary and secondary segment groups. While the primary one is the critical behavioral patterns that define decision-making, the secondary characteristics influence the attitudes only in some circumstances. The survey results show that my primary group is Strivers, and the secondary group is Survivors. Strivers are the young achievers, who aim for better lives and work hard to achieve the goals in the future. They love modern culture and street style, as well as use technology for exploring creativity. Strivers invest in their clothing and try to create fun around them. They are the young dreamers, who have issues with achieving the tangible goals due to inability to plan correctly. On the contrary, Survivors find comfort in their routine and sustain long-term relationship with familiar people. They possess brand loyalty, become used to same products, and appreciate absence of risk. The group shows no dependency on opinion of others because they appreciate current state of affairs and take time to love the day. Finally, they enjoy the comfort of their lives, and they typically represent older group of customer. Therefore, VALS categorized my results into two categories that contradict each other. While my primary group includes mostly young active enthusiasts, the secondary category consists of older traditionalists. Moreover, Strivers represent the trendy fashionistas, Survivors are traditional conservatives.

Nielsen segmentation methodology has a demographic, geographic, and partially psychographic approach to market segmentation. The project identifies the geographical area and divides the citizens into major segments by demographics. Based on the income status, age, race, and education level, Nielsen determines consumer preferences, such as ownership of cars, houses, and hobbies. In my geographical area PRIZM proposes five consumer segments. I would identify with Young influential. They are the representatives of young and middle age people with midscale income. They try to balance work and leisure, try to pursue active lifestyle and outdoorsy activities. The demographic characteristics include variety of ethnicities and age groups, but the group does not have kids and own house. Thus, I am one of Young influential due to my middle income, active lifestyle, attempt to balance fun and work, as well as love for sitcoms and modern technology.

 
 

The Accuracy of Results

Based on the results presented in the previous section, Nielsen methodology seems to be more accurate. The methodology offers a selection of market segments that a person can identify with based on measurable factors. For example, age, ethnicity and income are tangible and visible elements that are no negotiable. Nielsen derives the conclusion about behavioral choices and psychographic preferences based on measurable individual characteristic. On the contrary, VALS classifies a person into a segment based on Likert scale preference survey. The description related to demographic features is limited to four questions, which significantly hinders the accuracy of definition. Moreover, the segmentation is further complicated by a large number of different psychographic segments. The methodology seems to have lower validity due to limited assessment of preferences, which are critical for segmentation. Thus, VALS grouped me with Survivors as a secondary market that represents the oldest customers. They are traditionalists, while I am open to experiments and new emotions. Also, I love technology and new media, and I rarely watch TV. Consequently, VALS secondary segmentation is completely inaccurate and faulty. Probably the reason for the inconsistency is explained by the complex nature of psychographic factors of segmentation. The small survey is not sufficient for clearly establishing the individual behavioral patterns.

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The Analysis of Two Methodologies

Nielsen segmentation methodology is a comprehensive approach to defining the consumer segment in geographical area. The division by region is a strategic factor that is helpful for businesses and individuals. It starts from measurable dimensions and extends the segmentation approach to non-measurable elements. The advantages of Nielsen segmentation are numerous. It is worth mentioning that the technique has the efficient practical application due to marketing-savvy definition of segments. First, the geographic aspect narrows down the market size and simplifies further assessment. Second, it offers brief analysis of interrelated aspects, such as purchasing power and hobby preferences. Third, Nielsen methodology is based on measurable and fixed demographic characteristics. Therefore, the segments are non-flexible; it makes the application of methodology in segmentation reliable and valid. Fourth, it suggests some changeable descriptions of segments in order to define the market segments that share quantifiable characteristics. Consequently, the multi-dimensional, qualitative and quantitate approach to segmentation makes Nielsen a reliable and practical technique.

On the other hand, VALS methodology explains the psychographic characteristics, lifestyle choices, and purchasing preferences of individuals. Despite its few advantages in clarifying the behavioral patterns of consumer groups, the technique is prone to mistakes. The benefit of VALS is in clear provision of customers values and preferences. Therefore, it is applicable in strategizing the positioning rather than selecting target market. There are no demographic characteristics and geographical location, which significantly hinders its applicability on the local level. The technique seems to be person-specific rather than business-oriented. Moreover, the large number of different segments as presented by VALS further challenges its practicality. In business environment, the detailed segmentation hinders the ability to target a large consumer pool to become profitable. Therefore, the method seems to be excellent learning methodology and self-assessment task rather than actual business segmentation technique. It identifies personal preferences and assesses attitudes based on the small-scale behavioral test.

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Consumer Behavior and Organizational Behavior

The consumer behavior is a single persons decision to act, experience, show attitudes, and have beliefs. Only one person chooses preferences and decides upon acting and reacting to the marketing effort. Thus, consumer behavior is a response to the individuals needs and personal preferences. Individual consumers make unrestricted decisions regarding their purchases. They make and spend money on oneself and their families. They make mistakes and responsibility for incorrect actions. Most of the time, the faults have direct outcome on individuals only. Therefore, if consumer chooses the course of actions, the results influence the decision maker.

In an organization, many stakeholders shape the entitys behavior and define its reactions. It becomes a blend of different perceptions, ideas, and values. An organization stands on its mission and vision statement, and behaves in response to collective behavior. Organizations make purchasing decisions for the good of an entire company and its employees. In simple terms, many people make the money that is spent on many people as well. The organizations have to budget their resources and make collective decisions that correspond to everyones needs. In other words, one person shapes consumer behavior, while many people define organizational behavior.

Dimensions of Segmentation

In contemporary business environment, consumers are defined through the prism of variety of characteristic. A person has number features (age, income, address), and a list of abstract descriptions (perception, values, attitudes). On the contrary, segmentation of organizations requires application of quantifiable characteristics, such as industry, sales, and number of employees. However, consumer segmentation required individual assessment of preferences, likings, reactions, and perceptions.

Organizational segmentation needs to include revenues, consumer type, shareholder analysis, and geographic coverage. The division of organizations into a segment requires analysis of annual reports, and business approaches. Moreover, it has the aim of creating business cooperation rather than making sales. The decision to divide the consumers into segments involves assessment and definition of individual dimensions that can change from time to time. The psychographic characteristics are combined by similarity factor to create measurable segments. The dimensions are tangible and intangible. For example, geographic and demographic factors hardly change in historical perspective. Nevertheless, psychographic and behavioral characteristics are the flexible concepts that allow a person to switch segments eventually. Attitudes and perceptions have the tendency to evolve with age and life experiences. Thus, consumer segmentation requires a more complex approach that first defines measurable characteristics of demographics and geography. Upon having the tangible elements in place, the strategy should include psychographic and behavioral traits for the purposes of learning the consumer soft spots. Therefore, the measurable elements define segmentation, and non-measurable factors suggest segmentation and positioning strategies.

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