Question

Ahmad Wazir is 34 years old, married with a three-year-old child and another on the way. He lives in a town of about 100,000 people outside Kuala Lumpur, Malaysia. After graduating with a BBA in marketing and later with an MBA in Islamic Finance, he joined one of the biggest Takaful operators, Takaful Ehsan (TE) where he built a sizeable business marketing in general and family Takaful products. But with changes in the organization and having no control over client services made him realize that his prospects for growth at TE is limited. With some savings accumulated over the years to carry him through, Wazir left his position as a senior marketing manager to become an independent Takaful advisor. Instead of targeting everyone, Wazir realized that he needed to focus on specific client segments. Hence, he decided to put his limited resources behind the most viable prospects. Many of his clients acquired during his former job had been close families in his town. Several of them had been regulars at the local mosque as well as members of the community and sports club. Wazir is of the view that one of the best approaches to screen the prospects is to conduct a geo-demographic segmentation of his own as part of the targeting and segmenting process. i) What is geo-demographic segmentation and how is it different from psychographic segmentation? ii) In conducting the geo-demographic segmentation, what are among the actions that Wazir may take in order to ensure that the prospects will fit into his target segment? iii) Why do you think that Wazir has chosen this approach?

Answer 1

Geo-demographic Segmentation refers to a range of methods used for classifying and characterizing neighborhoods and localities based on the principal that residents living near each other are likely to have similar demographic, socio economic and lifestyle characteristics.

Psychographic Segmentation is the market segmentation strategy in which the total market is divided on the basis of psychology, personality of people, characteristics, attitudes, etc. It helps to identify people based on the way they think and the kind of life they want to live.

Geo- demographic Segmentation is based on not just one or two but several factors of consideration such as the age group, locality or region of residence, occupation, gender, and similar other elements. Then there should be Quantitative comparison. It is an assumption that the differences within the group will be way lesser than those existing between the various groups.

This leads to a state od so-so homogeneity and makes marketing of products customer specific. Thus, this is extremely important because if you do not know who to target then how do you publicize your product and ensure that items are sold in the market. After all, sale ensures profit.

The technologies employed are:

1. Geographic Information System 2. Database Management Software

There are two basic principle on which Geo- Demographic Segmentation is based on are:

1. People putting up in the same neighborhood are inclined to have similar tastes and preferences.

2. Two neighborhoods with similar characteristic features can be put into the same category, irrespective of the distance between the two.

These two Principle is favorable to Wazir, that is why using geo-demographic segmentation is favorable to him.