1. Demographic

This is all about people in general. Segments in this classification include:

• Age
• Gender
• Family size
• Income levels
• Ethnic background
• Occupation
• Education
• Religion
• Sexual orientation
• Socio-economic background

Some of these will be further sub-divided. For example, the socio-economic background might identify managerial occupations, supervisory roles, skilled or un-skilled and so on. (See Social class classification(http://www.bized.co.uk/educators/level2/competition/activity/sup_customers14.htm) for more information.)

Other examples are in the age classification. Those in the 60+ age group are often referred to as the 'grey pound'. This group are increasing in importance because there are a rising number of people in this age group in the population. They tend to have more money to spend than many elderly people in the past.

Compare this to the so-called 'pink pound'. This group would come under the heading 'sexual orientation' and this refers to the gay community. People in this group may have certain spending habits and a lifestyle that a business can identify and target.

For some firms, an understanding of the 'demographics' of their customers is very important. When advertising products, for example, a business might have to be very careful not to offend potential customers. Certain religions, for example, have particular beliefs about certain types of product that other faiths may not. The Jewish and Muslim faith does not encourage the eating of pork, for example. Hinduism places a sacred status on the cow. Traditional Roman Catholics may refrain from eating meat on Friday. Being sensitive to your customers' beliefs and feelings, therefore, might be vital.

2. Geographic

Geographic refers to where people live. Different regions of the country have different cultures and the type of area it is might influence the way people spend their money.

This could be something simple like the so-called 'north-south divide' to more localised classifications. People in Wales, for example, have different traditions to those living in parts of the south-east of England.

Your average teenager living in Cornwall might have different spending habits than teenagers living in cities like Birmingham and Manchester. Businesses can use this information to target customers more effectively.

Image: If you are going to set up a business selling surfing equipment, going to the middle of a city like Birmingham might not be the best idea! Think why not. Copyright: Cheryl Empey

3. Psychographic

This refers to people's lifestyle, their attitudes, personality and values. We see lots of examples of how people are classified in this way - white van man, goths, hippies, wrinklies, yuppies, Essex man/woman, chav, boy racer, geek and so on.

Think about each of these terms and you are likely to have an image of what the typical person in this group might look like and how they are likely to live their lives.

In most cases, these are what are called 'stereotypes'. The way we look at these groups might be simplified and exaggerated but they do serve to identify certain characteristics. These might be useful to a business looking to target particular markets.

Task

'Chavs' have been in the news quite a bit recently. Draw a cartoon of what you would consider to be a typical 'chav'. Then make a list of five things you think the typical 'chav' might spend their money on.

Image: See one of these on the road and you are likely to have some 'stereotype' of the sort of person who owns it and what their lifestyle is like. This is what psychographics is all about! Copyright: Neilw44

4. Behavioural

Image: Heinz - a company who finds brand loyalty very useful in the face of competition. Copyright: Daniel West

Humans are quite often creatures of habit and again, businesses can make use of this to get to know who their customers are and how they behave.

Behavioural characteristics might refer to how many times you buy a particular product or service during a period of time. For example, some local hairdressers rely on what are referred to as the 'blue rinse brigade'. These tend to be elderly women who go to 'have their hair done' once a week at a hairdressers. They have a habit or behaviour that is identifiable to such a business.

Another characteristic could be 'brand loyalty'. If you go into a shop to buy a chocolate bar, what do you tend to buy? Do you always buy something different or do you have a particular favourite that you tend to purchase more than others? If you tend to go for a Mars bar, for example, you are exhibiting some brand loyalty. Some firms find this very important.

A few years ago, for example, supermarkets offered their own brand label tins of baked beans at very low prices - 5p a tin in some cases. Heinz might have feared that their sales would drop quite a lot as a result but, interestingly, they did not. It seems that people believed that Heinz beans were good quality and they would rather spend 30p for a tin of Heinz beans rather than 5p for a product they thought might not be so good.

Who is going to use the end product? Think about this. Who buys Smarties and Chocolate Buttons? Adults do. Who consumes them? Young children. Who, therefore, do you target your market at? The adults or the end user? This is what 'product end use' is all about.