...understanding of older consumers revolves around their personal characteristics, in terms of socioeconomic, demographical and psychographical data. Marketers tend to use personal characteristics as independent variables for segmenting older consumers. For simplicity, marketers also tend to treat older consumers in a similar way to which they treat the rest of the consumer market and differentiate older consumers only in terms of their chronological age. In this article, the author discusses the potential application of benefit segmentation technique for segmenting and targeting older consumers in the UK.

Introduction

The number and proportion of older people in the United Kingdom is growing. The proportion of those who are 50 years old or over is expected to grow from 30% (20 million) in 2001 to 33% (22 million) by 2011 and to 37% (25 million) of the UK's total population by 2021 (Office for National Statistics 1999). The result of the 2001 census shows that older people (people aged 60 and over) outnumbered children (below the age of 16) by about half a million, with certain parts of the country--notably Scotland--actually experiencing a long-term negative growth in population (Office for National Statistics 2002a). But while the population of the UK and most economically developed countries may be ageing, older people are also consumers offering new market opportunities.

Current studies on older people have centred on healthcare service and delivery and on social policy, and researchers from those areas of research continue to dominate the debate (Harper 2000). But changes in the demographics of the population have encouraged other researchers to take a greater interest in studying older people, particularly from the marketing perspective.

Authors generally agree that the UK's older consumer market is attractive, in terms of numbers and spending power, and that it is heterogeneous (Long 1998; Ahmad 2002). However, they have not found classifications or segments of older consumers that may be generalised in the context of the UK's society. Clearly, for the purpose of marketing of consumer products, segmenting the UK's older consumer market into actionable segments that can be targeted with specific products and services and that allow effective positioning of selected products or services, is the basic step that marketers need to take.

This article reviews the traditional method of segmenting consumers, which emphasises the use of personal characteristics. It then discusses the theory of benefit market segmentation and examines its utility. Following that, the article illustrates how benefit segmentation technique may, in practice, be used for segmenting older consumers in shopping for groceries. Finally, it discusses the implications of this article for practice and further research. The objective of this article is to propose the use of benefit segmentation technique for segmenting and targeting the UK's older consumers.

Literature review

Market segmentation

Smith (1956, p.5) defined market segmentation as 'viewing a heterogeneous market as a number of smaller homogeneous markets, in response to differing preferences, attributable to the desires of consumers for more precise satisfaction of their varying wants'. Kotler et al. (1999, p.379) defined market segmentation as 'dividing a market into distinct groups of buyers with different needs, characteristics or behaviours, who might require separate products or marketing mixes', and Dibb et al. (2001, p.206) defined it as 'a process of grouping customers in markets with some heterogeneity into smaller, more similar or homogeneous segments; the identification of target customer groups in which customers are aggregated into groups with similar requirements and buying characteristics'. Tonks and Farr (2001) regarded it as 'a process of aggregating or disaggregating which seeks to identify groups of individuals such that within-group differences are minimised and between-group differences are maximised'.

The justification for segmenting consumers on the basis of similarity of their characteristics or segmentation variables is that consumers who share similar characteristics will share similar wants, needs and attitudes towards marketing stimuli. Consumers belonging to a particular segment can be expected to react in a similar and predictable manner to a particular stimulus, such as a price discount. In addition, Frank et al. (1972) argue that some parts of the market can be discriminated against in terms of the prices they can bear, and when this occurs it offers opportunities for profit maximisation. Some quality-conscious and hedonistic consumers, for example, do not mind paying higher prices for goods and services in return for complete personal satisfaction.

The objective of a business, however, is not merely to satisfy consumers' wants but also to provide returns to its shareholders. For a group of consumers to qualify as a market segment, it must satisfy basic qualifying criteria or measures of validity that include elements such as measurability, identifiability, accessibility, substantiality, actionability, stability, responsiveness and profitability (Frank et al. 1972; Kotler 1984, 1988; Loudon & Della Bitta 1984; Baker 1988; Webster 1991). In other words, a market segment should be identifiable, meaning that it can be targeted (with products, services or market offerings); measurable, in terms of size or attractiveness; it can be reached and served with various stimuli and/or marketing programmes, and be realistic, stable and sufficiently cost-effective...

NOTE: All illustrations and photos have been removed from this article.



More articles from International Journal of Market Research
The use of combined conjoint approaches to improve market share predic..., September 22, 2003
Understanding marketing: a European casebook. (Book Reviews)., September 22, 2003
Persuasive signs: the semiotics of advertising. (Book Reviews)., September 22, 2003

Looking for additional articles?
Search our database of over 3 million articles.

Looking for more in-depth information on this industry?
Search our complete database of Industry & Market reports by text, subject, publication name or publication date.

About Goliath
Whether you're looking for sales prospects, competitive information, company analysis or best practices in managing your organization, Goliath can help you meet your business needs.

Our extensive business information databases empower business professionals with both the breadth and depth of credible, authoritative information they need to support their business goals. Whether it be strategic planning, sales prospecting, company research or defining management best practices - Goliath is your leading source for accurate information.