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Segmentation And Target Market Essay

1549 words - 7 pages

Segmentation and Target Market of State Farm


Segmentation and Target Market of State Farm
Over the past 10 to 20 years the personal lines insurance industry has had to increase its spending on marketing substantially with hopes of drawing in on customer loyalty. In 2011 the industry spent almost $6 billion on market, which is nearly three times what was spent a decade earlier. The downside to this is, while marketing spending has increased over 15 percent, the industry premiums growth remains almost unchanged.
State Farm originated in Bloomington, Illinois June 7, 1922 and was founded by retired farmer, George J. Mecheire. Mecheire deemed State Farm ...view middle of the document...

Demographic information is about the equivalent of what one might find when researching Census Bureau reports or other sources such as American fact finder. Demographic information is an excellent tool when deciding where to place a new location for the business as the information will entail where your target market is located. Demographics give a general idea of who the customer base is, where they are, and what they do.
State Farm’s demographic segmentation usage as it relates to marketing involves more of the who the consumer is as opposed to what the consumer does in a sense. The company has in recent years focused on branching out of its normal customer base, realizing that there is an untapped group of young adults, (ages 20 to 30) that other automobile insurance agencies are relying on as a primary market. The driving ideology behind other insurance agencies is that consumers now want to minimalize or even eliminate the middle man, (the agent). State Farm has chosen to disprove this concept but at the same time make it possible for consumers to do much of the non-claims process on their own. This concept is based on the fact that there will always be a need for an actual human-being during the claims process and that the interpersonal approach will always reign supreme when things go off course.
Even though an organization may have determined their group demographics, consumers in that grouping may still have very differentiating perceptions of the benefits or value of the product you intend to sale. It is these perceptions that motivate consumers to purchase goods and services for different reasons. These reasons are known as psychographics. Customer psychographics provide more in depth information about the target consumer. Psychographics consist of a type of profiling of the customer base which includes more detailed information about each individual consumer. This information may be as subtle as the type of music the consumer listens to, how often they go shopping, what types of brands they buy, or how much they spend when they are shopping. According to "The Difference Between Your Customer Demographics and Psychographics" (2013), “Psychographic information takes a detailed look at why consumers buy what they buy and when they buy it” (para. 3). Psychographic information is immensely important to acquire due to the diversity, (both racial and cultural), found in most communities today, as those elements do most often influence consumption habits. Customer demographics tell you who your customers are, but customer psychographics tell you why your customers are who they are
State Farm and Psychographic Segmentation
State Farm chooses to remain somewhat neutral as it relates to marketing towards a certain psychographic segment of the automobile insurance market. With so many insurers relying on price and ease of use to make sales, this makes the company look ancient in the eyes of the consumer. ...

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