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What Is Behavior Segmentation?

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  • Written By: K.C. Bruning
  • Edited By: John Allen
  • Last Modified Date: 04 November 2016
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Behavior segmentation is a marketing method by which consumers are categorized based on buying habits. The purpose of this practice is to identify groups for targeted marketing such as promotions, special packages, and other incentive programs. It is one of five different phases of marketing segmentation, the others being demographic, psychographic, natural segment, and customization. Behavior segmentation is one of the early steps in the marketing process, where researchers determine the existing consumer base and which products it desires before moving into the production cyle.

Several patterns of consumer activity are examined in the process of performing behavior segmentation. A researcher may study sales figures to determine what a certain group buys and when, where, and how often they make purchases. The goal is to gather data solely based on the consumer’s actual relationship with the product.

As it is based on observation of activity, behavior segmentation can be one of the most straightforward methods of marketing analysis. Its purpose is to develop an understanding of a customer segment based on how it acts and reacts to a variety of factors involving the product to be sold. This is opposed to methods where consumer behavior is a starting point for determining beliefs, motives, and other factors that inspire a purchase.

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Though the data collected from behavior segmentation can be useful on its own, it is more commonly used as the third phase of the five different types of marketing segmentation. A ranking scale arranges them between reactive and predictive behavior. The early phases are the most reactive and the phase further along the scale become more predictive. All together, the phases can give researchers both a big-picture and detailed view of a certain type of customer based on different kinds of observation and information gathering. Behavior segmentation tends to be the category that is the least likely to be affected by opinion or hearsay as it is based on actual data.

The five types of marketing segmentation have their own focuses: observation of groups forms the core of the demographic phase. The psychographic phase consists of data collected from consumers via surveys and interviews. Behavioral segmentation falls in the middle of the reactive to predictive scale. Then there is the natural segment phase, which relies on the customer to give input as to what is desirable in a particular product and how it applies to them. The final phase is customization, where a product is made to specific customer specifications.

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indemnifyme
Post 7

@ceilingcat - This doesn't surprise me. I mean, if all the stores wanted to do was offer savings, they would just price the item as a sale and let everyone get the deal.

I can definitely see how behavior segmentation information would be very useful for marketers. Obviously if you are selling something, knowing the buying habits of your customers is going to be helpful.

ceilingcat
Post 6

I remember reading somewhere that a lot of stores track buying habits with their stores cards. This is a pretty ingenious tactic in my opinion.

Most of us don't think twice about signing up for a store rewards card. It seems like a no-brainer! Just sign up, let the cashier scan the card, and get bonus points and money off of your purchase.

So while the consumer is happily getting bonus points, the store is tracking their buying habits. I feel certain all the big chain stores probably use this information in their marketing, and no one is the wiser.

NathanG
Post 5

@miriam98 - I wonder about the validity of the psychographic segmentation phase. More specifically, I wonder about the validity of the methods used to build these profiles.

For example, the article mentions surveys. The effectiveness of the surveys would depend on how they are conducted, in my opinion. For example, in one on one surveys, I believe the participant would be more likely to give meaningful answers.

However, online I see advertisements for “paid survey” sites. Supposedly, marketers will pay in points or even cash for answers to survey questions.

I question how useful such surveys would be. People taking the surveys are just interested in winning points or prizes; there’s no real incentive to be truthful, and there’s no way to check if a participant is lying. You can't read their body language like you would with a one on one survey.

miriam98
Post 4

@MrMoody - I agree that this would be a treasure trove of information. I doubt that the credit card companies would sell it however. I think there would be some potential breaches of privacy involved.

However, I think there is another approach to behavioral profiling that is quite legal. It’s call social media. The founder of the most popular social media site out there bragged that his site would enable marketers to target the website’s users with laser like precision.

He pretty much admitted that they were selling that information to marketers. That’s the way that behavioral targeting will take place in the Internet age, in my opinion.

MrMoody
Post 3

The question becomes what is the best source of data that marketers can have access to in order to conduct behavioral targeting.

In my opinion, anyone who has access to your credit card transactions has the most complete profile of your buying habits, short of conducting a complete background check to boot.

The vast majority of consumers pay nearly everything with their credit cards, if for nothing more than the convenience that it affords. If marketers can access this information, they know more about you than they ever could through any other method imaginable, in my opinion.

They know where you shop, what kinds of things you buy, when you buy them and even a fair idea of what kind of car you drive based on your gasoline receipts.

irontoenail
Post 2

@pleonasm - There have been cases where someone has realized that the market segment they are reaching out to was more likely to respond well to a free product. I know there are authors who have given electronic copies of their books away for free, and still managed to sell plenty of copies it in paperback. Generally, they know from this kind of research that people want to own a hard copy.

But, that is just one example of market segments. I think in most cases, pirating should be prosecuted. It is stealing, not buying something and it is disrespectful to the person who created the work.

pleonasm
Post 1

I think it is behavior segmentation that people often refer to when they are talking about illegal downloads.

I've heard some people have the opinion that illegal downloads aren't really a big deal most of the time because the people who do them weren't likely to buy the item (whether it is software, music, or whatever) anyway and those who are willing to buy will download to try it first.

This I think, tends to hold up with things where buying adds value, like with a DVD collection that includes special features, but maybe not so much with music singles and things like that.

In any case, studying behavior segmentation without getting emotional about it is probably the best way of figuring out how to go about selling your items.

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