What is Behavioral Segmentation?
Behavioral segmentation is a market segmentation strategy that groups customers based on behaviors customers show while buying and using products. The consumers buying patterns may include usage, brand loyalty, benefits sought, occasion-based, etc.
Here, behavioral does not refer to a behavior of a person, instead, it refers to the consumer’s interactions and actions with the brands and marketers that are measurable in nature.
Consumers show different behavior while interacting with products – they are likely to interact positively when a product seems attractive to them. If this happens, what additional you can do is appropriately explain the product to them and offer a discount. This likely increases the chance of making a sale.
Understanding what behavior customers show and why they show, will let you design better marketing strategies that appeal to the specific needs and wants of consumers.
Objectives of Behavioral Segmentation
Its main objectives include.
- Identify customer types based on the behavior they show.
- Understand what and why behind consumers’ behaviors.
- Design the products and strategies to meet their needs.
- Let companies be more adaptable to consumers’ behaviors.
Variables of Behavioral Segmentation
Behavioral segmentation is one of the four types of market segmentation – others include demographic, geographic, and psychographic. The followings are some main variables/factors considering which behavioral segments are identified and targeted.
Benefit probably is the most common behavioral segment among all. It is a fact that consumers use any product or service because they desire to gain some benefit from it.
As a marketer, you should consider what benefits or unique characteristics the consumers are looking for in your products. And, you should add a unique feature to the product in order to attract those customers.
Add benefits to your product like good taste, good flavor, health benefits, attractive packaging, low cost, adequate information on how to use the product, etc.
The market can also be segmented based on the behaviors consumers show while making purchase decisions. This helps you to understand that in what stage the customer is now when intreating with you and what behavior he is showing.
Generally, consumers buying behaviors are categorized into four categories.
- Complex Buying – Under it, there is high involvement of consumers in purchasing decisions and there is a significant difference between brands.
- Dissonance-Reducing Buying – In this type, there is no significant difference between brands, and often consumers are on confusion whether or not they make the right purchase decision.
- Variety-Seeking Buying – As the name suggests, variety-seeking, under it, consumers wish to compare different brands before making a buying decision.
- Habitual Buying – Low involvement of consumers and they buy the products they usually used to buy.
Whenever customers visit your store they show one of the behaviors mentioned above. Understand the behaviors they show and respond accordingly.
You can also segment consumers based on their usage rates. This refers to the number of products consumers use in a certain period. The rate can be moderate, huge, or low.
- Heavy Users – Consumers with a huge volume of product usage.
- Medium Users – Consumers with a moderate volume of product usage.
- Low Users – Consumers with a low volume of product usage.
Based on these usage rates, if you have a large amount of product and the capacity to deliver as the customer wants you can opt for heavy users, and so on.
Consumers can also purchase products depending on different occasions or set time zones. The occasions may include holidays, weekends, birthdays, vacations, weddings, etc.
Let’s take the example of set time zones – in companies, there is a defined time for rest or launch, and at that time most employees regularly purchase products i.e. foods. You can also target such employees, understand what they need, and serve them the best launch of their life.
You can also segment the market based on the customer’s loyalty to the product. There may be customers who have no brand loyalty, others may shift brands frequently, and some may buy products from the same brand all the time.
Try to understand who is your loyal customer and who is not. Appropriately work on consumers’ expectations, often, introducing loyalty programs. Because loyal customers are key to securing a company’s future.
There is no need to invest in promotional activities for loyal customers, they give return purchases and are often likely to give positive feedback, do word-of-mouth marketing, and recommend your product to others.
Advantages and Disadvantages of Behavioral Segmentation
The followings are some pros and cons of behavioral segmentation for organizations.
- Personalization – Behavioral segmentation allows companies to understand the customer’s behavior appropriately and provide personalized messages that further increase the likelihood of repeat business.
- Predict Behavior – Under this segmentation, you can predict the behavior of customers based on their past data and behaviors.
- Customer Satisfaction – With the right understanding of consumers’ needs and wants you can best satisfy your target market with appropriate offerings.
- Customer Loyalty – The right yet effective way of serving does not make customers satisfied only, in addition, it also makes customers loyal to your brand.
- Changeable Behavior – Consumers’ behavior is changeable and you will not be able to predict appropriately always.
- Ignores Unmeasurable Behaviors – Behavioral segmentation only includes the measurable behaviors in its process, it has ignored the covert behaviors of people which also has a significant influence on people buying decisions.
Examples of Behavioral Segmentation
Let’s talk about some examples of behavioral market segmentation.
Let’s take the example of Youtube – although it does not sell a product to you it is a perfect example of personalized services. Whenever we regularly view videos on youtube it recommends similar other videos that we mostly like also. This is part of its personalized service.
Similarly, all e-commerce companies track the activities i.e. behaviors of visitors and their registered customers, and present them the identical products that they have interacted with or purchased. Companies with it aim to increase sales -in fact, consumers are most likely to do repeat purchases when they see such products.