Our discussion up to this point has emphasized what market segmentation is all about.  The discussion has been intended to provide a conceptual understanding of how market segments are derived from larger, more diverse markets. We now shift gears and move into an examination of how market segments are identified i.e. we examine the processes that can be used to tease-out meaningful market segments from larger product-markets. To this end, we next develop two applied examples of how markets are segmented.   

Segmenting The Health Club Market

The health club market is employed to illustrate two common approaches to applied market segmentation.   Both of these examples illustrate the value of marketing research (specifically, consumer-based survey research) for creating market segments.  Both segmentation processes begin with the administration of a survey questionnaire to a sample of consumers in the relevant market.   Lets start by reviewing what this questionnaire may contain.

The Survey Questionnaire

Let's begin by examining the questionnaire employed to collect the survey data.  Most good applied market segmentation studies are based on primary data collected from actual consumers in the product-market under examination.   Our questionnaire focuses on consumers of health club services.   As part of a class project conducted by MBA students at UNT, a random sample of 575 customers of health clubs in the Dallas-Ft. Worth area were surveyed over a two-month period.  The sections of the questionnaire are summarized in Exhibit 1.   These sections should make sense.  Just think about what you would include in a questionnaire if you wanted figure out how the health club market could be segmented, and who might be the customers in each of the resulting segments. You probably would want to know:

All of this information is valuable for helping us understand customers’ wants and needs, and why they may be attracted to one type of health club instead of another. The questionnaire contains sections that address all of these questions.   Let’s look at each section, beginning with customers' desired facilities and services.

Facilities & Services Desired in Health Clubs

Exhibit 2 highlights some of the questions that were used to assess the perceived importance's to customers of different facilities and services offered by health clubs. Customers were asked to rate each of the listed facilities/services on an importance scale ranging from "1" to "7", with "1" being very important and "7" representing relatively unimportant.

Browse the items in the exhibit. It should be apparent that most of the questions are about facilities and services that are typically important to customers of health club operations. It also should be apparent that not all facilities will be equally important to all consumers.  However, groups of customers probably will have some common preferences for facilities and services that will produce common patterns of responses to many of these questions. Because these preference patterns closely reflect customer wants and needs with respect to health clubs, they can be used to help us understand how this market can be segmented. 

Facilities & Services Usage Patterns

Next, let’s examine the items employed to assess customers' health club usage patterns. Usage patterns reflect how often customers tend to use certain types of equipment in health club setting versus other types of equipment. In order to obtain facility usage information, our scale is modified just a little bit (Exhibit 3). Instead of assessing "importances," the wording is changed the to indicate the extent to which customers make use of a given facility with each visit to the health club.  A "1" to" 7" scale is employed in which '1' represents always using the item and '7' means the item is never used.  For example, with respect to free weights, the respondent simply checks the appropriate point on the scale that indicates how often free weights tend to be used on a typical visit to the health club. 

In addition to equipment, most health clubs offer a variety of services (Exhibit 4). For example, personal trainers, nutrition counseling, aerobics classes, self-defense classes and a wide range of other services are provided at different health clubs.  The questions in Exhibit 4 ask respondents to indicate the extent to which such services are used on each visit to the health club.

Most clubs also provide a range of support facilities, such as saunas, steam rooms, whirlpools, showers, locker areas, snack bars, and even daycare facilities (Exhibit 5). Many of these facilities are very important to customers.  It would be nice to know which are used and which are not. 

Motives for Exercising

A section of the questionnaire also addressed the reasons why people exercise at health clubs. In other words, we were interested in assessing their motives for exercising in a health club environment. The scale used to assess these motives was an "agree/disagree"  scale. This type of scale, again, is called a Likert- type scale. Respondents were asked to indicate their levels of agreement (or disagreement) with various possible motives for working out at health clubs, such as increasing muscle mass, losing weight, improving cardiovascular fitness, because of doctors' orders, improving body shape, and so on.

Other Questions

Additional questions included in the survey are shown in Exhibit 7.  These questions addressed the frequency with which subjects visited health clubs (i.e., how often per week patrons used the club), how long a typical work out lasted,  the types of exercising done outside of a club setting.  We also threw in a few questions that allowed us to assess whether or not one particular "brand" of club was preferred over another i.e. whether subjects had preferences for specific clubs.

Page last modified: January 24, 2001