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Taxonomy of consumption
patterns
Concept of market
segments
Introduction
The purpose of market segmentation is to identify the taxonomy of
consumption patterns by dividing a market into several homogeneous submarkets. Marketers can formulate product strategies, or product positions,
tailored specifically to the demands of these homogeneous sub-markets.
Homogeneous sub-markets are defined by predetermined segmentation
variables. Traditional demographic variables, such as gender, age, income,
and education, can be used to explain the characteristics of the sub-markets
and classify the key factors of a market segment. Traditional demographic
variables, however, cannot identify the complete characteristics of the submarkets because consumers in the same demographic group have very
different psychographic makeups (Kotler and Armstrong, 1999). Based on
the differentiation of consumer's brand preference, this study divides
consumers into homogeneous groups using psychographic variables through
the classification in VALS2 (values and lifestyles) and LOV (list of values)
systems and demographic variables and then compares the relative
usefulness these two different segmentation variables to marketers.
Literature review
Smith (1956) first introduced the concept of market segments, which has
become an integral part of modern marketing. A market segment is a group
within a market that is clearly identifiable based on certain criteria.
Consumers within such a sub-market are assumed to be quite similar in their
needs, characteristics and behaviors.
Pride and Ferrell (1983) devised the market segmentation process of dividing
a market into several market groups. Consumers in each market segment
have similar product needs. Each segment requires a different mix of
marketing strategies to satisfy its special consumer needs. McCarthy (1981)
explained that the purpose of dividing a market into several homogeneous
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JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 11 NO. 4 2002, pp. 249-268, # MCB UP LIMITED, 1061-0421, DOI 10.1108/10610420210435443
249
markets is so that marketers can aim to satisfy the specific needs of any
target market. The idea of designing marketing strategies for market
segments is based on consumers' wants and interests. The purpose of market
segmentation is two-fold: to divide a market into several homogeneous submarkets and to formulate a proper marketing-mix strategy for the sub-market
(McCarthy, 1981).
Effective segmentation
techniques
Statistical analysis
250
Associated pattern
technique
Self-orientation and
resources
self-respect;
security;
sense of accomplishment;
self-fulfillment;
fulfilled;
believers;
achievers;
strivers;
experiencers;
makers;
actualizers; and
strugglers.
251
Personal values
(3) Marketers need to identify segmentation variables based on demographics, lifestyles, and values. Personal values can be an important
basis for segmentation because values differ due to age, income,
education, gender and social class (Rokeach, 1973). A popular
methodology, Rokeach Value Survey (RVS), consists of 18 terminal
values and 18 instrumental values. Prakash's (1986) discussion on
women's segmentation by value structure is mainly based on the RVS
system (Bartos, 1977, 1978; Rokeach, 1973; Coleman, 1983).
Research method
Research variables
VALS2 and LOV are used as the theoretical bases in this study. The
psychographic description variables in the questionnaire were derived from
VALS2 and LOV inventories. The researcher focused on nine product
categories and collected 67 well-known brands in the market.
Three categories of
questions
The questions in the questionnaire fell into three categories. The first
category concerned respondents' degree of agreement (scale: 1-5 on the
Likert scale). Tables I and II list partial questionnaire variables. A total of 35
and 32 items were selected from VALS2 and LOV measurements,
respectively. The second category concerned gender, age, education and
monthly family income of the respondents. The third category concerned
Groups
Actualizers
Fulfilleds
Believers
Achievers
Psychographic
categories of VALS2
Category
Personality
Consumption
Consumption
Consumption
Consumption
Personal value
Life style
Personality
Personality
Personal value
Personality
Descriptive sentences
I am enthusiastic about
seeking growth
I often seek to develop
and explore in my life
I am concerned about
national events
I spend a constant
amount of money every
month
I will consider product
value when I buy it
I usually buy wellknown brands
I will think things over
before I buy a product
I am a frugal person
I like a routine life
I do not like to take
risks
I live a conventional life
I respect authority
I usually accept the
status quo
Groups
Security
Psychographic
categories of LOV
Warm
relationship
with other
Experiences nightmares
but has good social
support networks and
families
Has a lot of friends and
is friendly
Cares about others
Sense of
Does not like to watch
accomplishment TV
Likes conspicuous
consumption
Self-fulfillment
Category
Life style
Descriptive sentences
I feel secure because of
my current economic
situation
My work-emotion will
not affect my family
Personality
Personality
Life style
Consumption
Personality
Personality
Personality
Personality
I am fulfilled
economically
I am emotional
For example, Jif and Attack (laundry powder) are well-known brands in
Taiwan so consumer preference rate is higher than that of the others (see
Table III). Scott (toilet paper) and Darling (toothpaste) are two leading
brands, so the consumer preference rates are naturally higher than the others.
Lux (soap) uses the penetrative strategy to obtain higher preference. For
shampoo and shower gel, brand preference is not a significant factor because
of the high number of brands available. Clearly, the preference rate was
affected by brand image and brand volume. Therefore, to enhance the
253
Percent of usage
A. Shampoo (699)
1. Sassoon
2. Lux
3. Pert
4. Pantene
5. Sifone
6. Johnson's
7. Organics
8. Others
33.19
42.20
31.47
31.23
14.02
11.87
14.74
32.81
15.69
19.95
14.88
14.76
6.63
5.61
6.97
15.51
63.60
65.47
16.47
26.76
23.34
32.51
33.46
8.42
13.68
11.93
50.43
41.83
36.86
10.19
22.06
5.89
26.72
26.00
21.56
19.00
5.25
11.37
3.04
13.77
76.98
56.63
39.42
33.38
3.31
5.93
10.39
34.06
25.05
17.44
14.77
1.46
2.62
4.60
73.25
41.77
36.71
32.90
15.45
11.40
11.16
32.90
18.76
16.49
14.78
6.94
5.12
5.01
14.91
13.62
39.47
9.50
23.10
9.06
22.22
45.16
8.42
7.69
22.29
5.37
13.05
5.12
12.55
25.51
42.31
39.14
14.24
23.13
21.39
7.78
(continued)
Percent of usage
16.47
11.54
16.86
6.95
35.45
9.00
6.31
9.22
3.80
19.38
H. Toothpaste (701)
1. Darline
2. Whiteman
3. Colgate
4. Cleardent
5. Aquafresh
6. Smiling
7. Kolynos
8. Others
81.17
25.71
47.43
16.86
7.43
10.27
13.73
12.70
37.70
11.94
22.03
7.83
3.45
4.77
6.38
5.90
I. Soap (702)
1. Lux
2. Majestic
3. G.reen
4. Palmolive
5. Dove
6. Wanwan
7. Kao
8. Others
71.23
17.52
15.53
34.66
14.00
21.11
7.41
26.92
34.18
8.41
7.45
16.63
6.72
10.13
3.56
12.92
4.
5.
6.
7.
8.
Johnson's
Lu la la
Pink lady
Kao
Others
Notes: ``Percent of usage'' indicated the ratio that respondents had used the given
product; ``Preference ratio'' represents relative percentage of usage on each product
category; The figures in parentheses represent the valid sample size of each product
category
Table III.
Factor-cluster relationships
255
256
0.09
0.31
0.22
0.10
6. Comfort
7. Free-living
8. Conservatism
9. Pessimism
0.67
0.48
0.53
0.08
0.13
0.48
0.67
0.55
0.59
0.82
0.26
0.79
0.52
0.38
0.02
0.58
0.77
0.79
0.47
0.43
0.21
0.27
0.45
0.72
0.11
0.20
0.39
0.72
0.43
0.21
1.18
0.71
0.39
0.42
0.01
0.90
Cluster5
(47)
Table IV. Each cluster classification based on VALS2 and LOV system
0.67
5. Independence
0.65
3. Home-life
0.24
0.05
2. Solipsism
0.26
1. Enthusiasm
Factor
0.09
0.64
0.15
0.41
0.76
0.27
0.18
0.42
0.05
Cluster6
(108)
0.32
0.41
0.65
0.13
0.28
0.74
0.59
0.03
0.56
Cluster7
(88)
0.49
0.20
0.76
0.59
0.47
0.20
0.60
0.01
0.94
Cluster8
(112)
24.075
18.569
29.611
25.980
33.876
23.691
28.767
9.947
50.553
1>3. 4>1. 4>2. 4>3. 4>5. 4>6. 6>2. 6>3. 6>5. 7>2.
7>3. 7>5. 8>1. 8>2. 8>3. 8>5. 8>6
(continued)
1>2. 1>4. 1>5. 6>2. 6>3. 6>4. 6>5. 6>8. 7>2. 7>4.
7>5. 7>8
2>1. 2>3. 2>4. 2>5. 2>7. 6>3. 6>7. 8>1. 8>3. 8>4.
8>5. 8>6. 8>7
1>8. 3>6. 3>8. 4>6. 4>8. 5>1. 5>2. 5>4. 5>6. 5>7.
5>8. 7>6. 7>8
2>6. 4>1. 4>2. 4>3. 4>6. 5>1. 5>2. 5>3. 5>6. 7>1.
7>3. 7>6. 8>1. 8>2. 8>3. 8>6
2>1. 2>5. 2>7. 2>8. 3>7. 4>1. 4>3. 4>5. 4>7. 4>8.
6>5. 6>7. 6>8. 8>7
1>2. 1>6. 1>8. 3>2. 3>4. 3>6. 3>8. 4>2. 4>8. 5>2.
5>6. 5>8. 7>2. 7>4. 7>6. 7>8
1>7. 1>8. 2>6. 2>7. 2>8. 3>6. 3>7. 3>8. 4>6. 4>7.
4>8. 5>1. 5>6. 5>7. 5>8. 6>7. 6>8
257
0.85
0.15
0.64
0.08
1.04
0.22
0.30
11. Individualism
12. Anti-authority
13. Traditionalism
14. TV-dislike
15. Hedonism
16. Subjectivity
17. Self-confidence
Table IV.
0.29
0.31
0.42
0.10
0.28
0.48
0.28
0.21
0.17
1.20
0.13
0.70
1.26
0.29
0.24
1.16
0.08
0.10
0.01
0.35
0.17
0.01
0.86
0.12
0.04
10. Saving
Factor
0.81
0.81
0.07
0.40
0.39
0.69
0.06
0.81
Cluster5
(47)
0.44
0.59
0.04
0.35
0.63
0.32
0.22
0.11
Cluster6
(108)
0.03
0.36
0.92
0.19
0.38
0.26
0.22
0.23
Cluster7
(88)
0.71
0.35
0.00
0.36
0.27
0.51
0.332
0.83
Cluster8
(112)
34.698
18.762
34.956
17.799
20.213
25.563
21.940
21.595
1>3. 2>3. 4>3. 4>5. 6>1. 6>2. 6>3. 6>4. 6>5. 7>3.
7>5. 8>1. 8>2. 8>3. 8>4. 8>5. 8>7
4>6. 5>1. 5>2. 5>3. 5>4. 5>6. 7>1. 7>2. 7>6. 8>1.
8>2. 8>6
1>2. 1>3. 1>4. 1>5. 1>6. 1>7. 1>8. 2>3. 2>7. 4>3.
4>7. 5>7. 6>7. 8>3. 8>7
1>3. 2>3. 2>6. 4>3. 5>3. 5>6. 6>3. 7>3. 7>6. 8>3.
8>4. 8>6
1>4. 1>5. 1>6. 1>8. 2>5. 2>6. 2>8. 3>6. 4>6. 7>5.
7>6. 7>8
1>4. 2>4. 2>6. 5>1. 5>3. 5>4. 5>6. 6>4. 7>4. 7>6.
8>1. 8>3. 8>4. 8>6
2>1. 2>3. 4>1. 4>3. 5>1. 5>3. 6>1. 6>3. 7>1. 7>3.
8>1. 8>3
1>8. 2>8. 3>8. 4>8. 5>3. 5>4. 5>6. 5>8. 6>8. 7>8
variables such as gender and age (ga) and gender and education (gd). A total
of 15 demographic variables were used to compare the difference of
consumer brand preference with the psychographic variable. The
psychographic variable was based on the eight clusters derived from using
factor analysis to classify VALS2 and LOV inventories. Utilizing ANOVA
analysis to analyze nine product categories (67 brands) produced the results
shown in Appendix 3.
Significant brand
preference differentiation
Through ANOVA analysis, the results showed that ten brands (see the sum
row of Appendix 3) exhibited significant brand preference differentiation in
the demographic combination of gender, age and monthly family income
(gai) variables, same as the combination variable of gender and age (ga).
Thus, the demographic combination variables exhibit better brand preference
differentiation than the single variable of traditional demographic
segmentations. In the psychographic segmentation, nine brands had
significant preference differentiation, which can be considered a proper
measurement of consumers' brand preference differentiations.
Demographic segmentation
variables
Figures 1 and 2 were derived from the ``sum'' row and ``total'' column of
Appendix 3, respectively. In Figure 1, the one demographic segmentation
variable identified seven brands that exhibited brand preference
differentiations. The average of 6.67 items of brands represents the
differentiations of brand preference obtained using the combination variable
of two demographic segmentations. Averages of six and three items showed
the differentiations in utilizing the combination of three and four
demographic variables, respectively. Using a total of 15 demographic
variables averaged 6.33 items of brand preference differentiations. From
these results, it is clear that the measurements of psychographic variables
through cluster analysis were useful in identifying differentiations in
customer brand preference.
Figure 2 showed that only one brand item could use ten segmenting variables
to measure its differentiations of brand preference. Two brand items could
create their sub-markets by using seven segmenting variables. In all, 10.5
percent of 67 brands can examine the differentiations of brand preference by
259
260
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Appendix 1
Cluster
Factor
VALS2/LOV variables
Cluster 1 Home-life
Cluster
Cluster
Cluster
Cluster
261
Cluster
Factor
VALS2/LOV variables
Independence
Table AI.
262
Appendix 2
Indicator
Cluster
Cluster1 Cluster2 Cluster3 Cluster4 Cluster5 Cluster6 Cluster7 Cluster8
Product ownership
Computer (%)
52.2
Imported car (%)
29.9
58.7
47.6
61.1
41.7
66.3
33.7
72.3
40.4
62.0
40.7
63.6
21.6
58.9
26.8
Demographic variable
Average age
36.0
34.2
41.5
33.0
35.0
30.4
39.4
34.8
Male sex (%)
55.2
49.2
56.8
61.6
55.3
34.3
34.1
45.9
College
education (%)
35.8
52.3
43.2
58.8
63.8
56.4
38.6
36.0
Married (%)
68.7
50.8
83.8
42.4
61.7
35.2
85.2
54.5
Personal
monthly
income
($USD)
978 1,019 1,363
932 1,175
681
871
708
Family monthly
income
($USD)
1,812 2,236 2,058 2,143 2,531 1,886 1,961 1,530
263
264
**
Gender
**
**
*?*
**
**
**
**
**
**
**
**
*
**
gi
**
gd
**
**
**
ga
**
Demographic variables
Age
Education Income
gdi
Table AIII. Comparison of demographic and psychographic segmentation: the differences of customers' brand preference
A1
A2
A3
A4
A5
A6
A7
A8
B1
B2
B3
B4
B5
C1
C2
C3
C4
C5
C6
C7
D1
D2
D3
Brands
Appendix 3
**
adi
gadi
**
**
Psychographic
Cluster
3
0
1
3
0
3
0
11
0
2
7
1
2
3
2
0
0
2
2
0
0
7
0
(continued)
Total
Total
265
**
*
**
**
Gender
Table AIII.
D4
D5
D6
D7
E1
E2
E3
E4
E5
E6
E7
E8
F1
F2
F3
F4
F5
F6
F7
F8
G1
G2
G3
G4
Brands
**
**
**
*
*
**
**
Demographic variables
Age
Education Income
**
**
**
ga
**
**
**
gd
gi
*
**
**
**
**
**
**
gdi
adi
gadi
**
**
Psychographic
Cluster
2
3
0
3
1
0
0
5
0
0
0
1
2
3
0
1
1
2
1
1
4
6
1
0
(continued)
Total
Total
266
3
6
9
**
**
Gender
3
5
8
4
3
7
2
2
4
Demographic variables
Age
Education Income
7
3
10
ga
4
4
8
**
gd
1
5
6
**
**
gi
3
4
7
**
3
2
5
2
2
4
*
3
3
6
**
*
4
6
10
**
2
1
3
gdi
4
1
5
adi
3
0
3
gadi
*
4
5
9
**
Psychographic
Cluster
0
0
1
0
0
0
1
1
3
1
4
3
0
0
0
0
1
0
2
1
48
53
101
Total
Total
Table AIII.
Notes: * p < 0.05; ** p < 0.01; g: gender; a: age; d: education; i: family income; A, B, C, D, E, F, G, H and I represent nine product categories (see Table III); A1, A2, . . . , I8
represent the brands in the ``A'' product category
G5
G6
G7
G8
H1
H2
H3
H4
H5
H6
H7
H8
I1
I2
I3
I4
I5
I6
I7
I8
*Total
**Total
Sum.
Brands
267
268