E/M/44. Evaluate 'psychographic' segmentation as a basis for effective marketing in UK holiday industry

Segmentation is to divide a market into several groups by a strategy directed at gaining a major portion of sales to a subgroup in a category, rather than a more limited share of purchases by all categories. The company uses the segmentation research to decide which subgroup they are to target. It has several advantages, such as it helps the company to match the customer needs, as customer needs are differ, it is very important to create separate offers for each segment and provides the customer a better solution; it enhances profit for business, customers are all in different income level, and certainly the income has significant affect on the price they are willing to pay, therefore the company can produce different level of products to attract the customers from different level; it offers a better opportunities for growth, as customers become more wealthy, then they will want some new experiences, a high value product. If the company can spot the gap in the current market, and develop a new product to fulfil the needs, they can gain more profit from the sales and have a growth for their products; it helps to retain more customers, for different subgroups, the firm needs to produce a different level of goods to meet the needs from all the subgroups; it benefits target marketing communications, the firm needs to deliver their market strategy message to their customers. If their target market is too board, they will have the risk of missing customer and losing the money on communicating with customers; it offers the smaller firms to compete with the bigger firms. As the smaller firms suffer from a lack of economic scale in production and marketing, the pressure form distributor and limited space on the shelves, through carefully segmentation selection and targeting, the smaller firms can often achieves the competitive production and marketing costs and become preferred by the customers. There are three groups of customer segmentation criteria: behavioural, psychographic and profile variables. In this paper, we will evaluate the psychographic segmentation as basis.