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Examples of Market Segmentation for Retailers: Geographic, Demographic, and Behavioral Approaches
Market segmentation is a crucial marketing tool that helps retailers understand and target distinct consumer groups based on their unique needs, preferences, and behaviors. By dividing the market into smaller, more manageable segments, businesses can craft tailored strategies that resonate with specific audiences, enhancing customer satisfaction and driving sales.
This article explores three key segmentation examples for retailers: geographic segmentation, which focuses on the role of location in shaping shopping habits; demographic segmentation, which categorizes shoppers by measurable traits such as age, income, and family size; and behavioral segmentation, which considers how consumers interact and are motivated in shopping environments.
Behavioral Segmentation Example for Retailing and Shopping
Here is a behavioral market segmentation example for retailers, with a focus on large supermarkets.
As you probably know, supermarkets are classified as service firms. As a result, their marketing mix extends to the 7P’s. Although almost all consumers will visit supermarkets, there are a range of different market segments all with different needs, as shown in the following diagram.
Market Segments for Retailers
The challenge for developing the marketing strategy and marketing mix for larger supermarkets is how they can meet the needs of multiple segments within the same physical facilities.
The marketing challenge for smaller supermarkets is to determine the most appropriate consumer segment to choose as their target market, which in turn will determine the best marketing mix design.
In this market segmentation example for supermarkets, seven possible market segments have been identified. A brief segment profile, along with suggestions for key elements to consider in structuring a suitable marketing mix is included in the table below.
Segment Name | Description of Segment | What are their needs | Marketing Mix Design |
Fast and Furious | These consumers want to complete their shopping as quickly as possible. They are habitual buyers and are loyal to the supermarket and brands due to their need to make their supermarket experience highly time-efficient. They tend to be busy people, such as those with family or career responsibilities, making them mostly in the 30-50 years age range. | This segment wants to find items quickly and be able to get in and out of the supermarket as fast as possible. Their prime need is convenience. They are more likely than other segments to frequent convenience stores. |
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Budget Conscious | Budget-conscious consumers are limited to a fixed budget for their shopping purchases and tend to seek out lower-priced or discounted items. They are somewhat loyal to lower-priced brands, including private labels, but are happy to switch for discounted brands during sales promotions. This segment is more likely to include low-income families or retirees. | This segment is highly price-sensitive and seeks out discounters or retailers with everyday low pricing (EDLP). They are significant users of coupons and loyalty programs and value savings over time. |
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A Day Out | These consumers enjoy shopping and are happy to spend large amounts of their time browsing. They particularly enjoy finding bargains and new, unusual merchandise. They vary by demographic profile but are more likely to be female and shop in social groups. | This group values stores with interesting layouts and designs. They want a broad and varied product mix and prefer refreshment facilities, such as cafes, to complement their longer shopping trips. |
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Gourmet Focus | This segment seeks higher-quality products and is willing to pay a premium. They often equate value with quality and may derive social status from their purchases. Typically, they are middle to upper social class, with higher education and employment status. | These consumers prefer niche and high-status brands, enjoy experimenting with purchases, and are generally not price-sensitive. They are less interested in loyalty programs. |
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Smart Shoppers | Smart shoppers take pride in their ability to find bargains and determine value. They focus on getting the best deal, which could mean discounted major brands, two-for-one offers, or larger packaging sizes. | This segment thrives on variety in pricing and promotions, allowing them to seek out the best value. They dislike consistent pricing and often shop online to compare deals. |
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Variety Seekers | These consumers are innovators and early adopters. They enjoy trying new products, flavors, and experiences. They respond well to in-store demonstrations and free samples. | Variety seekers need a broad range of products and enjoy new offerings. Unlike the “Gourmet Focus” segment, they buy across the price spectrum. |
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After analyzing these segments, retailers can tailor their strategies to meet the specific needs of each group. By understanding the motivations and behaviors of grocery shoppers, businesses can create targeted offerings that enhance customer satisfaction and drive loyalty.
Demographic Segmentation Example for Retailing and Shopping
Demographic segmentation is one of the simplest and most widely used methods for dividing retail consumers into distinct groups based on measurable characteristics such as age, gender, income, education, and family size. Retailers use this approach to create targeted marketing strategies and product offerings tailored to the needs of specific demographic groups. Here’s an example:
1. Young Adults (18–25)
Overview: This group includes college students and young professionals who prioritize affordability, trends, and convenience.
- Shopping Habits: Frequent purchases of fast fashion, tech gadgets, and lifestyle items; prefer retailers offering trendy, budget-friendly options; active online shoppers engaging with brands on social media.
- Marketing Strategies: Focus on social media advertising and influencer collaborations; offer student discounts or loyalty programs; promote convenience features like click-and-collect or express shipping.
2. Families with Children
Overview: This segment includes parents or caregivers managing household needs, often prioritizing value and practicality.
- Shopping Habits: Purchase groceries, home essentials, and children’s products; shop in bulk or seek out deals for cost savings; prefer stores offering a wide range of products under one roof.
- Marketing Strategies: Run promotions on bulk purchases and family-focused items; offer convenient features like curbside pickup or in-store childcare; advertise through family-friendly channels like parenting blogs or school newsletters.
3. High-Income Professionals (35–50)
Overview: This group values quality, convenience, and premium experiences, often seeking high-end or branded products.
- Shopping Habits: Spend on luxury fashion, gourmet food, and tech innovations; prefer curated, personalized shopping experiences; shop both online and in premium physical retail locations.
- Marketing Strategies: Offer personalized services, such as stylists or exclusive shopping events; highlight quality, craftsmanship, and exclusivity in marketing materials; use email campaigns to deliver tailored offers based on purchase history.
4. Retirees (60+)
Overview: This demographic focuses on comfort, practicality, and health-conscious products.
- Shopping Habits: Spend more on health and wellness products, travel, and hobbies; prefer stores with accessible layouts and clear signage; loyal to brands and retailers that cater to their needs.
- Marketing Strategies: Advertise through traditional media channels, such as newspapers or local radio; ensure stores are senior-friendly, with amenities like seating and wide aisles; promote loyalty programs that reward frequent purchases.
Geographic Segmentation Example for Retailing and Shopping
Geographic segmentation divides the market based on location, considering factors such as climate, urbanization, population density, and regional culture. This approach allows retailers to adapt their offerings and strategies to meet the specific needs of consumers in different areas. Here’s an example:
1. Urban Shoppers
Overview: Urban shoppers live in densely populated areas with access to numerous retail options and prioritize convenience and speed.
- Shopping Habits: Frequently shop at smaller, local stores or convenience outlets; rely heavily on delivery services and online shopping; show interest in trendy, compact, and lifestyle-oriented products.
- Marketing Strategies: Focus on digital marketing, highlighting delivery and online services; stock space-saving products suited for smaller living spaces; partner with ride-share or last-mile delivery services for faster order fulfillment.
2. Suburban Families
Overview: Suburban shoppers are often families seeking value, variety, and convenience in larger stores or shopping centers.
- Shopping Habits: Prefer big-box retailers or supermarkets with wide product ranges; shop weekly or bi-weekly for household staples and family needs; look for kid-friendly stores with amenities such as play areas or family parking.
- Marketing Strategies: Run promotions on family-sized products and bulk purchases; offer loyalty programs tailored to household shopping patterns; host community events or family days to engage suburban customers.
3. Rural Shoppers
Overview: Rural shoppers often have limited access to retail options and focus on practicality and durability in their purchases.
- Shopping Habits: Shop less frequently, stocking up on essentials during visits to larger towns or online; value products with longer shelf lives or multi-functional uses; less brand-sensitive, often prioritizing availability over choice.
- Marketing Strategies: Highlight durable and practical product options; invest in reliable delivery options to reach remote areas; promote general stores and online platforms as one-stop shopping solutions.
4. Regional Shoppers
Overview: This segment considers cultural or regional preferences, often influenced by local traditions or climates.
- Shopping Habits: Select products tied to regional tastes or seasonal needs (e.g., winter clothing in colder regions); prioritize locally sourced products or those that align with regional values; exhibit loyalty to retailers who cater to regional identities.
- Marketing Strategies: Stock products that reflect regional preferences, such as ethnic foods or seasonal items; use region-specific advertising with localized messages; partner with local businesses or artisans to build community trust.