Benefit segmentation: a potentially useful technique of segmenting and targeting older consumers

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Author: Rizal Ahmad
Date: Autumn 2003
Publisher: Sage Publications Ltd. (UK)
Document Type: Article
Length: 5,518 words

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The UK currently has about 20 million people who are 50 years old or over. This number is expected to grow to 25 million by 2021. Older people offer new market opportunities, and companies that choose to ignore them will do so at their own peril. Literature indicates that marketers' existing 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...

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Gale Document Number: GALE|A106025875