Marketing Segmenting

INTRODUCTION

Marketing literature has long been occupied with segmenting consumer to help them boost sales by tailoring marketing campaigns that specifically designed to target each segment. Pride et al. (2007) suggested that market segmentation is a process of dividing a market into groups with relatively similar product needs to design a marketing mix that matches those needs. Market segmentation is used to predict how consumers will respond to a particular marketing campaign. To do that, marketers need to understand their behaviors towards marketing activities, what affects their purchase decision, and how they value their products. Past studies have distinguished characteristics that play an important role to segment the market, such as gender, education, and age (Nicholls et al., 2002 as cited in Gilboa and Vilnai-Yavets, 2010). Among these charateristics, age has received a special attention to predict consumer behavior (Holbrook and Schindler, 1996 as cited in Gilboa and Vilnai-Yavets, 2010).

The term “generation” is popularly used to differentiate people based on age, namely generation baby boomers, generation X, and generation Y. Despite the popularity of these terms, there are only a few marketing literature where age has served as a meaningful predictor of consumer behavior (Pentecost and Andrews, 2010; Kumar Lim, 2008; Parment, 2013; Loroz and Helgeson, 2013). Also most studies only focus on one or two specific generations rather than all of the three generations (Noble et al., 2009). This means that further research is needed to help examine and explain the popular concept of generation cohort to predict consumer behavior.

Generation cohort theory suggests that those who were born in the same period share similar values and behaviors, therefore they can be segmented and targeted according to the similar buying behaviors that they potray as a group (Jackson et al., 2011 as cited in Rahulan et al., 2013). Each generation is defined by its years of birth, typically around 25 years in length Each of them has different characteristics that made them unique among each other. Lyons et al. (2005) as cited in Gilboa and Vilnai-Yavetz (2010) suggested that a generation cohort is a group of individuals that were born and raised within the same social and historical circumtances, bound by significant historical events or social changes, for example Vietnam War, that lead to different life experiences compared to those who were born after such event took place. As a result, they have different values, attitudes, preferences, and buying behavior that remain with them for their entire lifetime (Parment, 2013 and Jackson et al., 2011). Their different life experiences make them differ in their views, lifestyle, expectations, values, and attitudes (McElroy & Morrow, 2010), and, therefore, their consumption patterns will differ significantly (Sudbury and Simcock, 2009). This means that today’s 50-year-old consumers are guided by the same motivations, values, and behavior patters as when they were at age 20 and today’s 20-year old will have similar values and patterns 30 years from now than they do today.

LITERATURE REVIEW

1. Generation Baby Boomers

Baby boomers are those who were born between 1946 and 1964, aged between 49 and 67 in 2013. ‘They are characterized by a revolutionary outlook, ignited by the 1968 student revolt in Paris, France, and by the war in Vietnam’ (Parment, 2013). About 80 million members, Boomers represent the largest generational cohort, comprise roughly one-third of the U.S. Most of them are in their prime earning and spending years, thus they are an extremely attractive cunsomer group. Boomer spending is estimated about $2 trillion in total per year; about half of consumer spending in the U.S. (Ferguson and Brohaugh, 2010). Many of them are now heading towards retirement age; therefore, they find themselves with extra time and money (Kumar et al., 2008). Baby boomers have lived through and participated in social and political transformations such as the civil right movements. They have been described as individualistic with strong interest in self-fulfillment through personal growth and demonstrated a strong work ethic and high job involment which has led them to be successful in career and gain economic security. This group travel more than other generation cohort, they have seen more and have aspirations for the future. Moon landing is one of the most historical events in human history that happened in this generation. This can be seen that Boomers have that “anything is possible” attitude. Large movements and intergration of immigrants that occurred across European countries somehow make cultural diversity natural for this cohort, something that can be depicted in marketing campaigns (Parment, 2013). This cohort also finds the Beatles to be their iconic heroes who will resonate well with this group as marketing symbols.

In regards to marketing to the baby boomer segment, focus on building value because they will be less price sensitive if they believe they are getting a superior product with great value. Boomers are aging generation; hence health is a major concern for this generation. Although they may be aging, they do not like to be reminded of the fact that they are. Marketers should avoid using words such as retiree, aging, mature, senior citizen (Wong, 2010). They like things that appropriate for their life stage, not their age. Family values are especially important for this generation. Marketers should let them know that they are the one who are in charge of their own decisions. Having sense of fun and understanding changing values are important to this generation. Important products for this generation are health products, vitamins, healthy foods, health club and spas, cosmetics, bald treatments, travel, etc. They are very attracted to new products and technologies that would make their life easier and save them time. As boomer retires, they seem to be moving from city to suburb area for lower cost of living, less stress, and more living. In terms of communicating to this group, television and newspaper are the best way to reach them. In addition, although their uptake on mobile phone technology is quite high, they have a limited use and understanding of functions beyond simple voice call and SMS (McLeod, 2009). The main thing marketers need to note is they are very price conscious and least prestige sensitive; they value location, service, and everyday low prices (William and Page, 2011).

2. Generation X

People in this generation were born between 1965 and 1976, aged between 37 and 47. They were the first to be raised in dual-career household due to an increasing number of women working and increases in divorce rate. With