Market segmentation

Market segmentation

To segment consumer markets, we use market information based on certain key customer-,product-,or situation-related criteria. These are classified as geographic,demographic,psychographic and behavioral.

Geographic segmentation

Definition: The market is segmented according to geographic criteria—nations, states, regions, countries, cities, neighborhoods, or zip codes.

Map of Saudi Arabia:

Source: History of Saudi Arabia,

            Cities of Saudi Arabia

City	Characteristics
Abha	Largest city in Asir Province
Al-Khobar	Commercial center adjacent to Dhahran
Buraydah	Largest city in Qasim Province
Dammam	Port city and commercial center
Dhahran	Oil industry center and metropolitan area
Hafr Al Batin	Home of King Khalid Military City
Hail	Important trading center in northwest
Jeddah	Port city and entry point for pilgrims
Jubayl	New industrial city on east coast
Madinah	Holy city and burial place of the Prophet Muhammad
Makkah	Holiest city of Islam, toward which Muslims pray
Riyadh	Capital of Kingdom of Saudi Arabia
Tabuk	Large city near Jordan border
Taif	Summer capital and mountain resort
Yanbu	New oil shipping terminal and industrial city

                Source: History of Saudi Arabia,

Population of major cities:

RIYADH (capital) 4.725 million; Jeddah 3.234 million; Mecca 1.484 million; Medina 1.104 million; Ad Dammam 902,000 (2009)

Population distribution

         Source: CIA World Factbook

Population density (people per sq. km) in Saudi Arabia

      Source: The World Bank

Geographic Variables	Possible Market Segments
Location	The Western Region, with the commercial center of Jeddah; the Central Region, where the capital city of Riyadh is located; and the Eastern Province, where the oil and gas industry is heavily concentrated. Dammam is the capital city of the Eastern Province.
City Size	The first-tier cities: Riyadh, Jeddah, Mecca, Medina and Dammam. And the second- and third-tier cities.
Population Density	Urban, Suburban, or Rural

Table 1: Geographic segmentation

Demographic segmentation:

Definition: Demographic segmentation consists of dividing the market into groups based on variables such as age, gender, family size, income, occupation, education, religion, race and nationality. As one might expect, demographic segmentation variables are amongst the most popular bases for segmenting customer groups. This is partly because customer wants are closely linked to variables such as income and age. Also, for practical reasons, there is often much more data available to help with the demographic segmentation process .

Age	Male	Female	Percentage
0-14 years	3,913,775	3,727,767	28.8%
15-64 years	10,185,658	7,905,890	68.2%
65 years and over	416,673	384,741	3%
Total	14,516,106	12,018,398	100.00%

Table 2: Age structure

Saudi Arabia Salary

Source:http://www.payscale.com/research/SA/Country=Saudi_Arabia/Salary#by_City

	2009	2010	2011	2012
Real GDP Growth (% growth)	0.1	5.1	7.1	5.8
Inflation (% growth)	5.1	5.3	5.0	4.7
GDP Measured at Purchasing Power Parity (international $ million)	590,305.1	621,953.6	664,339.7	720,118.8
Consumer Expenditure (US$ million)	134,736.0	148,977.1	162,136.4	173,338.7
Annual Gross Income (US$ million)	163,560.3	182,520.6	201,155.0	215,376.0
Annual Disposable Income (US$ million)	156,132.3	174,016.1	191,931.7	205,285.4

Table 3:Economic indicators

Source: Euromonitor.com

Demographic Variables	Possible Market Segments
Age	0-14 years, 14-64 years,and 65 years and over. People between 14-64 years are majority.
Gender	Male and Female
Income	Lower income-necessities,middle income,and higher income-recreation and luxury
Family size	A fourth of all households being small (family size up to 3 members), a third being medium (family size of 4 to 5) and 40% being large households (family size of 6 or more).
Ethnic groups	Saudi Arab 74%, Expatriates 26% (of which Indian 5%, Bangladeshi 3.5%, Pakistani 3.5%, Filipino 3%, Egyptian 3%, Palestinian 1%, other 7%)(2005)

Table 4: Demographic segmentation:

Psychographic Segmentation:

Definition:  Psychographic is the science of using psychology and demographics to better understand consumers.  Psychographic segmentation: consumer are divided according to their lifestyle, personality, values and social class. Aliens within the same demographic group can exhibit very different psychographic profiles.

Psychographic Variables	Possible Market Segments
Social class	The upper class includes royalty, influential families, and wealthy people, depending on family background.  The middle class is composed of government employees, military officers, and moderately prosperous private businessmen. Farmers and the poor make up the lower class[1].
social customs	The kinship principle is pervasive in Saudi society, and the extended family is a strong social unit. Nomads, villagers, and townspeople

Table 5: Psychographic Segmentation

Behavioral Segmentation:

Definition: In behavioral segmentation, consumers are divided into groups according to their knowledge of, attitude towards, use of or response to a product. It is actually based on the behavior of the consumer [1].

Behavioral Variables	Possible Market Segments
Product usage rate	high, medium, and low users
Purchase behaviour	purchase patterns (two bottles per week), usage situations (parties, picnics, or as an alcohol substitute), or purchase location (supermarket, convenience store, or wine merchant).
Propensity to switch suppliers	definitely will not switch, probably will not switch,might switch, and definitely will switch (Payne and Frow, 1999).

Table 6: Behavioral Segmentation

Reference:

[1] Arab Social Structure, Available from:

http://echodepiction.wordpress.com/2010/03/03/arab-social-structure/