Kool-aid’s Market Segmentation

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Table of Contents

Introduction
Kool-aid
Demographic segmentation
Geographic segmentation
Psychographic segmentation
Behavioral segmentation
Conclusion
References

Introduction

In defining market segmentation, one can say that it is a section of a market comprising of people or institutions with the same characteristics that cause demand for same products. A good segment should be able to meet its specific needs and be unique to other segments. In addition, another criterion that should be evident is being homogenous in that, it should have common needs of the market. Lastly, a good market segment should be responsive to the market stimulus and be accessible at any point in time (Nelson, 2001).

Kool-aid

This is a soft drink powder that is made using water; it is rich in Vitamin C and it is available in different fun flavors, which are good for kids as they keep them hydrated. Kool-aid retails at a third the cost of regular soda with a third less sugar content (Kool-Aid, 2011).

Market segmentation

In segmenting markets, there are important considerations that need to be in place which include

To better, the consumer needs through creating of different offers in each of the segments thus providing the customers with a variety of solutions that they can choose. In this regard, Kool-aid has a variety of different flavors that kids can choose.
Increased profit margin for the business; this is attributable to the fact that customers have different income disposal ways hence they become sensitive to the pricing of the products. Kool-aid has a pricing that is three times lower than most sodas thus making much more sales.
Improved growth opportunities; a good example to this is when customers are introduced to certain products and encouraged to them through their low price hence building on the business sales in return.
Helps in retaining customers; this can be done through marketing of products that appealing to the customers in different stages in life.
Helps in targeting market communications; this can be justified through reaching of more targeted customers more often at minimal cost (Doug, 2007).

Demographic segmentation

In demographic segmentation, division of markets into groups is done taking into consideration variables that are associated to the family setup. These variables form the most popular bases in market segmentation. This is due to the fact the customers’ needs revolves around variables like income and age. Another feasible reason is the availability of data for the process of demographic segmentation (Tutor2u, 2011)

Age

In order to market a product, one has to consider the consumer wants since they change with age. There is a need to design and market a product depending on the age group of the target market. Thus to this example in order to market the Kool-aid product in Australia, one has to consider that it is a product for kids hence should be suited for kids.

Gender

Segmentation in demographic view in terms of gender is widely applicable in marketing geared towards the consumer. This can be done by making the Kool-aid drink packages in pictures that reflect on gender parity.

Family size

This demographic segmentation variable considers how big the family size is. This affects the consumption or usage rate of a product. In a family with most members being kids, Kool-aid will be marketable in these families since the target market selection is right.

Income

In segmenting a market in terms of income, focus should be on the income of the consumer. When marketing a product, affluent consumers should be targeted with luxury goods and convenient services. Kool-aid can retail mostly in affluent families who like going for outings.

Education

This is marketing of a product based on the market segment depending on education level or status of the target market. In an example of the Kool-aid product, it can be designed to be educative since it is meant for kids.

Family life cycle

The consumers’ lifestyles or lifecycles adversely affects the demand of products in the market. In winning new markets, many marketing agencies design and advertise their products in many different styles and categories depending on the consumer needs.

Occupation

In segmenting a market according to occupation, the market is divided into different segments according to activities associated with the segment. Since kids like playing, Kool-aid is a good product for them since it is for fun.

Religion

This is done by grouping of market segments into different groups in regards to religious backgrounds of the target markets.

Nationality

Different nations use different products hence it is a good practice in marketing to know what type of products appeals to different nations.

Geographic segmentation

This type of segmentation divides the target market into different units according to geographical settings. Geographic segmentation is important when dealing with multi-national or global products. In the market niche required for a product, there is need for regional marketing programs depending on geographical units. In marketing Kool-Aid, consideration has to be on what different flavors appeal to each geographic region (Michman, 1991).

Region

This segmentation is done according to regions that can be an expanse of a country or an area such as a metropolitan city or town.

City size

This is done in regard to clusters in population. The segmentation considers population within a certain range or to a specific level.

Density

In this type of segmentation, consideration for the target market is on the population density within the area.

Climate

In segmenting a market in terms of climatic area, one should consider area such as northern area or southern area. This will enable marketing of the product easier and will reach more target market.

Psychographic segmentation

This type of segmentation is based on behavioral relationship of the customers towards a product and this gives insight on how to relate with the segments. The products and marketing of the products should be customized to appeal to the specific customers. In this scenario, Kool-aid packaging can be done in such a way that it can appeal to kids through making it more colorful and attractive (Gupta and Donald, 2005).

Life style

In terms of lifestyle, Kool-aid is generally for kids hence to reach this market segment there is need to include things like cartoons on the drink.

Personality

This type of segmentation covers the general personal traits of a customer in terms interests.

Status

This type of psychographic segmentation covers the customer social status in the market segment.

Socioeconomic

This type of market segmentation is all about combining market variables such as income, education, and occupation in deriving segments that can be easily reached.

Behavioral segmentation

In segmenting a market in terms of behavioral, the customers are divided into groups that are categorized depending on their response on a new product.

Occasions

A product is marketed depending on its time of consumption or purchase. This can be explained by example of cereals, which are traditionally marketed as breakfast product (Russell, 2001).

Benefit sought

This is an important base of segmentation in terms of behavioral segmentation. In this segmentation, the marketers need to understand the customers’ needs towards a product and what sort of benefit it has to them. An example to this is a market for toothpaste, which derives four main benefits. These benefits include economic, cosmetic, taste and medicinal. Thus in marketing Kool-aid consideration has to be on the benefits it offers to the target market (Yankelovich, 2006; Meer, 2006).

Loyalty status

In segmenting a market in terms of the loyalty status, more attention should be on the loyal customers as being of great value to the business. It is better to segment a market into groups of loyal customers who are easy to retain than those who rarely display loyalty to a product (Kaul andTomaselli, 1999).

Buyer-readiness stage

In segmenting a product, consideration has to on how ready the target market is for the said product.

Usage rate

This type of segmentation considers dividing the markets in regards to the ratings of the users of the product. This can grouped into light users, medium and heavy users.

Attitude towards product

This type of segmentation tends to justify how the customers react to products in the market. In case of the Kool-aid product, it can explain how the kids react to the drink (Biennial, 1997).

Conclusion

Market segmentation is a concept in marketing that is a broad idea and helps the marketers in applying more or their energy towards getting a market niche. In implementing market segmentation, a business can achieve brand positioning in the market for the products. Segmentation helps a business have a template for their product development. All these benefits put across justifies that market segmentation is a valuable asset to a business hence all businesses should be encouraged to practice market segmentation (Croft, 1994).

References

Biennial, F., 1997. Household Spending: Who spends How Much on What. Ithaca, N.Y: New Strategist Publications.

Croft, J., 1994. Market Segmentation: A Step-By-Step Guide to Profitable New Business. London: Routledge.

Doug, G., 2007. What is Customer Segmentation. New York, NY: MindofMarketing.net.

Gupta, S. and Donald, L., 2005. Managing Customers as Investments: The Strategic Value of Customers in the Long Run. Upper Saddle River, NJ: Pearson Education/Wharton School Publishing.

Kaul, C. and Tomaselli, V., 1999. Statistical Handbook on Consumption and Wealth in the United States. Phoenix, Ariz: Oryx Press.

Kool-Aid, 2011. Affordable and fun to drink. Web.

Michman, R., 1991. Lifestyle Market Segmentation. New York: Praeger.

Nelson, C., 2001. Market Segmentation. Web.

Russell, C., 2001. Best Customers: Of Consumer Demand. Ithaca, NY: Strategist Publications.

Tutor2u, 2011. Market segmentation: Introduction. Web.

Yankelovich, D. and Meer, D., 2006. Rediscovering Market Segmentation. Harvard Business Review.

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