Life-stage segmentation for the BFSI Industry | Part 2

As consumers go through various life-stages, their needs, wants, preferences and requirements change. Especially when it comes to financial products and services! Just think about it from the perspective of your own life.

When you were a fresh graduate or looking for your first job, would you have been in search of a housing loan or investment advice? Or would you have appreciated a starter bank account that set you up with a debit card and a no-nonsense savings account?

Similarly when you were well-settled in your job and reaching for personal and professional excellence, would you appreciate a banker trying to interest you in wealth creation and future-planning products or would you resonate more with someone who was hard-selling you a no-frills basic savings account?

The answer is obvious, right? As customers go through life stages, not only do their needs and preferences change. Their ability to earn and therefore spend at higher levels also changes. As they mature, they become less sensitive to price and are willing to pay more for preferential service. As they age, they are more interested in products which will ensure that their hard-earned wealth makes its way to the next generation.

For the sake of convenience, I have segmented all the life-stages we discussed in a previous post into five main buckets. Please note that these are by no means conclusive or authoritative. Different BFSI Institutions segment customers (or even sub-segment them) depending on how they classify their own product mix. Like with everything else, there is no one-size-fits-all approach!

The five segments I would like to define are:

• ·         Starting Out
• ·         Double Income, No Kids
• ·         First Home Buyers
• ·         Established Families
• ·         Retirees

Let us deal with them one at a time.

Starting Out

The audience profile: This consists of consumers who are typically older teenagers or young adults who are starting out on their career. At this point in their lives, they only have a need for relatively simple financial products, such as the transaction account and perhaps a credit card.

The Marketing Opportunity: Considering that they are just starting out, they are not likely to have the need for sophisticated financial products From time to time, may need a small loan (similar to the survival 'payday loan') or will have a small amount of money to invest. Being relatively younger, their ability to take risks is higher. A very small segment may choose to dabble in the stock market.

Double Income, No Kids

The audience profile: This is the life-stage when the audience forms a serious relationship or perhaps gets married. At this time, there are typically no children in the relationship (which may never happen). As there are no immediate financial commitments, such couples can continue to rent without the emotional pressure to purchase.

The Marketing Opportunity: DINK couple usually attempt to start saving more money. This may take the shape of some Systematic Investment Plans or basic Mutual Funds. Typically they are looking for short-term investments - ranging from a year to two years. They may be the right audience to tap in terms of large borrowings in the shape of vehicle loans or personal loans for holidays/vacations and the like.

We will take a look at the remaining segments in another post. Stay tuned for more!