The cleavage of the market helps sellers to place clients who share the same demands and wants (Kotler & Keller, 2012). There are various degrees of market cleavage, such as geographic, demographic, psychographic, and behavioral cleavage (Kotler & Keller, 2012). Geographic cleavage is used when sellers segment the market by focusing on a specific geographic area (Thomas, 2007). Demographic cleavage focuses on factors such as gender, age, residency type, income, and educational level (Thomas, 2007). Psychographic cleavage analyses clients’ behaviors, emotions, beliefs, and lifestyle (Thomas, 2007). Behavioral cleavage divides consumers into a specific group based on how they respond, use, and perceive the product (Riley, 2012). According to Kotler & Keller (2012), not all cleavage strategies are useful, and for a strategy to be effective, the segments must be measurable, profitable, accessible, differentiable, and actionable. Market targeting is the second step after market cleavage and before market positioning.
According to Kotler & Keller (2012), the geographic cleavage divides the market into countries, states, regions, counties, and cities. For example, a company could target a specific state or region to market their brands. Many Chinese restaurants focus on a specific geographic area to increase their customer base (Thomas, 2007).
Factors such as age, gender, income, education, religion, race, generation, nationality, family size, social class, and occupation are crucial information for sellers to understand their clients’ demands and wants (Kotler & Keller, 2012). Race and religion are important indicators of consumer trends and needs, and they can often be determined by first and last names (Webber, 2006). Different cultures have distinct names, and every culture has unique common names. For example, Asian names are different from Muslim names and Hispanic names are different from both (Webber, 2006). Figure 1 illustrates how names can be used to identify a consumer’s culture or race. As names reflect an individual’s culture, beliefs, and race, this information would be useful for companies to understand their clients’ tendencies and demands (Webber, 2006).
The psychographic (lifestyle) cleavage focuses on clients’ values, behaviors, beliefs, emotions, and interests (Thomas, 2007). According to Kotler & Keller (2012), psychographic is the science that combines psychology and demographics to understand clients. Strategic Business Insight (SBI) is one commercial categorization system that measures and studies psychographic data. SBI helps its clients to identify new opportunities based on market penetration (SBI, 2015).
Behavioral cleavage divides the population based on their behavior in relation to the product, such as how they respond to it, how they use it, and what they know about it. Behavioral segments can group clients based on factors such as occasions, user status, usage rate, buying stage, and loyalty status (Kotler & Keller, 2012). Occasions, according to Kotler & Keller (2012), determine temporary aspects of a customer’s life. Sellers can target customers based on occasions, such as business, holiday, or family, all of which require transportation such as air travel (Kotler & Keller, 2012). Products generally have users, non-users, potential users, first-time users, and regular users (Kotler & Keller, 2012). To attract non-users or potential users, it’s important to understand why they’re not purchasing the product. Is it because they lack knowledge of the product’s benefits? Is the clients’ culture or belief restricting?
The market is divided into visible, medium, and heavy merchandise users. Heavy users account for a high percentage of total consumption. The problem with heavy users is that they are very loyal to a specific brand and not loyal to another.
During the buying process, the seller can use the marketing funnel to identify consumers who are aware or unaware, informed, interested, and those who desire the product and intend to purchase. The seller should focus on building awareness during the advertisement by providing a simple message that is easy for clients to understand (Kotler & Keller, 2012). For example, Amazon provides a simple message with their logo by having an arrow starting from the letter “A” and pointing to the letter “Z,” which signifies that Amazon has all types of products.
According to Kotler & Keller (2012), a consumer who consistently purchases one brand is a hard-core loyal customer, and such a customer can help the company understand the product’s strength. A consumer who purchases two or three brands is a split-loyal customer, and this type of customer helps the company identify the most competitive brand and what brand does not attract the consumer, in other words, identify the strengths and weaknesses of the marketing plan. A consumer who switches loyalty from one brand to another is a switching loyal customer, and a whipper is a customer who has no loyalty to any brand (Kotler & Keller, 2012).
The second step of target marketing is targeting, where specific strategies must be established for target markets. There are three general strategies for choosing target markets (Small Business):
- Undifferentiated targeting – This strategy views the market as one group with no consumer segments, and it is useful for products with low competition (Small Business).
- Concentrated targeting – This strategy focuses on a specific market, with the company focusing on one segment to understand the market’s needs and wants. This strategy can benefit small businesses by focusing on one segment and making them compete against larger companies (Small Business).
- Multi-segment targeting – Multi-segment targeting offers many benefits, but at the same time, it has a high cost due to the increased effort from management, increased marketing research, and promotional strategies (Small Business).
Market positioning is the third activity in target marketing (Kotler & Keller, 2014). Positioning is improving the brand or product image in the customer’s mind (Small Business). Enhancing the customer’s perception of the product is another aspect of market positioning. Effective positioning requires full knowledge of the competitive products that are targeting the same market (Small Business).
There are three activities in target marketing: market segmentation, which includes geographic segmentation and its concentration in the geographic area, demographic segmentation that segments individuals based on age, gender, belief, and social class, psychographic segmentation that gathers psychology and demographic information to understand consumers, and behavioral segmentation that focuses on customer responses. The last two activities of target marketing are market targeting and market positioning.