Segmentation is essentially the identification of subsets of buyers within a market that share similar needs and demonstrate similar buyer behavior. The world is made up of billions of buyers with their own sets of needs and behavior. Segmentation aims to match groups of purchasers with the same set of needs and buyer behavior. The family life cycle is a model that was originality identified by Wells and Gubar (1966)They identified nine life? cycle stages-which try to depict the consumption behavior of consumers , from bachelor to retired solitary survivor.
The basic assumption underlying the family life-cycle approach is that most households pass through an orderly progression of stages, each with its own characteristic financial situation and purchasing patterns. This is a historically important and intuitive approach to segmentation because customers do buy different products at different stages of their life. For instance, first mortgages are highly associated with prospects in their mid- to upper-20s, and home equity loans are highly associated with customers in their 40s with children entering college.
The family life cycle is indeed an important tool in segmenting as this tool caters for the preconditions of segmentation to work. Marketers and companies can direct their marketing effort to subsets of the family life cycle. In the hospitality industry, the family life cycle is a significant tool and a good case in example in the cruise ship market could be to market cruises for empty nesters (middle-aged couples whose children have moved out), for newlyweds, and for bachelors (cruises aimed at singles).
Club Med has vacations for couples, families, and singles. A builder of condominiums might segment the market for homes by stage in the family life cycle. Very small apartments with tiny kitchens can be targeted for singles. You might have a swimming pool and some tennis courts. In fact, these are the kind of apartments being built in areas filled with unmarried people. Larger apartments with three or four bedroom can be aimed for full nesters. Small apartments with ramps for older empty-nesters, and instead of tennis courts, shuffle board and bingo rooms.
The family life cycle has however demerits. From the date of its identification and inception in 1966, the life cycle has not remained static and different authors have infused their own life cycle in the literature. Murphy and Staples (1979) devised a more modern family life structure, as follows: (1) young, single; (2) young, married without children; (3a) young, divorced without children; (3b) young, married with children, infant, 4 to 12 years old, adolescent; (3c) young, divorced with children, infant, 4 to 12 years old, adolescent; (4a) middle? ged, married without children; (4b) middle? aged, divorced without children; (4c) middle? aged, married with children, young, adolescent; (4d) middle? aged, divorced with children, young, adolescent; (4e) middle? aged, married without dependent children; (4f) middle? aged, divorced without dependent children; (5a) older, married; (5b) older, unmarried, divorced, widowed; (6) others. Thus this confusion of no universally agreed life cycle makes it difficult in operationalizing and interpreting the stages.
Significant disagreement has in defining the stages has been noted and no single uniform set of classifications has emerged (Fliegel 1961; Lansing and Kish 1957; National Industrial Conference board 1965; Stapfl 1978)the other inherent flaw of the model is that by grouping people into these stages, it assumes a pattern of homogeneity within these subsets. It translates to that these people will have the some attitudes and patterns towards expenditure.
Derrick and Lehfeld (1980) argue that if one takes, for example the commonly used “young, married, with no children” stage, there is a considerable number of ages that qualify. Young is generally defined to mean that the age of the household is less than 40 or 45. Thus, one is led to believe that a newly married couple with a household head of 40 will behave similarly to a couple married for 20 years with a household head of 40. Or alternatively, a couple with a household head of 20 is and a couple with a household head of 40 are supposed to have the same expenditure patterns.
Certainly, based on experiences, wealth differences in taste one would expect some substantial variation and yet the standard approach is to divide the age groups into young and old. The engaged couples and the recently divorced spend money on similar products, although for different reasons. Engaged couples are buying products to begin a life together and the recently divorced are buying products that they already had and now need to replace. Extended parents are grandparents taking care of their grandchildren.
Same sex couples and singles are grouped together whether they have children or not, because of their lifestyle and interests. An empty nester is someone whose children are now grown adults and have moved out of the house. Boomerang kids are adult children who are living with their parents By placing individuals or families into stages of questionable fit, important information about the family`s expenditures will be offset other family types. In line with this, Engel, Kollat and Blackwell (1969) proposed that these stages must e broad enough to contain sufficient data for estimation and application to the real world.
Derrick and Lehfeld (1980) further state that the traditional life-cycle definitions do not allow alternative life styles, such as the mature single or the single adult who is raising children as a result of death or divorce. In the past,5 to 10% of the data did not fit the traditional stages, however this percentage will continue to rise as a result of decreasing family size, increasing divorce rates, remarriages, and families headed by a single adult. This prediction was indeed true as the world has not been static since the inception of the model.
The world has seen the emergence of same sex couples, adults living together but not married, people postponing marriage for advancement in their careers. All this phenomena has not been catered for in the family life cycle. One might also argue that the family life cycle will not remain constant as we transcend borders as family structures will be defined by cultural aspects. In the western world, it has become culturally acceptable for same sex unions but ere in Zimbabwe, it is not tolerated.
To then use the traditional life cycle as a universal fit would likely prove disastrous in the marketing effort. The family life cycle with its inherent flaws, still proves to be an important tool in segmentation. It must however not be used as a standalone tool as a basis as some other factors [attitudes, income, taste] cannot be homogenized within any subset. It however provides a basis for segmentation and marketers should be wary about the constant of change in our society-new family substructures have sprung and these should not be left out in void.