Category: Market Segmentation

Introduction

To begin with, it is necessary to mention that the issues of international tourism and market segmentation in accordance with the traits of lifestyle generally play an ambivalent in the matters of contributing to cultural exchange and the development of the marketing principles. It is stated, that on the one the market segmentation, this includes a short-term consumer familiarity of other surroundings. This statement generally means that tourists have an opportunity to pay for some goods and leave, as they are travelling. On the other hand, tourism is claimed to increase the importance of valuing the cultural diversity, and tourism promotes the development of self-identification as the cosmopolitan. These are the two principles, the market segmentation is based on, taking into consideration the constantly moving origin of tourists’ nature.

Discussion

First of all it is necessary to regard the origins of the market segmentation according to the consumers’ lifestyle. The fact is that, the way of life is the matter of psychological preferences of the people. The psychographic segmentation is the factor which divides customers in accordance with their lifestyle, activities and interests. The variables of this segmentation are the following:

• Activities
• Interests
• Opinions
• Attitudes
• Values

The main aim of this segmentation is promote the transformation of the lifestyle market into customer driven, while the origins of such market is solely producer driven. As Craft (2004) stated in his research: “In highly competitive tourism markets, well informed, responsible consumers can put increasing pressure on the industry to behave more responsibly.” From this point of view it is necessary to emphasize that great deal of official proclamations have stated the individual freedom for everyone to have rest and leisure, nevertheless, it is often unobtainable for most people, while the prices for tickets, hotels and travels in general stay too high. Thus, the market is mainly oriented at the industrialized high income layer of community. The values, attitudes and behavior of these tourists are generally defined by their social environment and the matters of cultural identity (thus, tourists from Arab countries will not visit Israel, for instance). Michman (2005) emphasized the following fact in his research: “Tourism is heterogeneous in nature, made up of many different types of traveler, seeking a wide range of tourism products. Demand is influenced by irrational factors, e.g. fashion and trends. It depends on the availability of time and money, on images, perceptions and attitudes. Tourists have various needs, desires and motivations, both of a ‘push’ and ‘pull’ nature. While household incomes in major tourist sending countries are declining, industry sales projections continue to grow, indicating increasing competition.” In the light of this fact it is necessary to mention that numerous patterns of customers’ demands in the sphere of tourism reflect the untenable lifestyles of the customers from the developed societies.

The study by Gonzalez and Bello offers the consideration that the tourist segment of the lifestyle market may be divided into several sectors. The first segment is the home-lovers. These are the tourists who direct all their efforts to travel with their families “These people have inflexible nature, they are conservative in their views on life. Although they are not materialists, they are cautious in their attitudes towards the future, as they consider it uncertain and take precautions to protect themselves.” Thus, orienting to these segment is not beneficial.

The second segment is the segment of idealists. They prefer shop tours and long journeys. The main aim is to feel the beauty and comfort of their tourism. Thus, it is necessary to mention that these tourists require only high class goods and services.

Autonomous segment is the type of tourists who prefer arrange the whole trip by themselves. These are the people who will buy maps, GPS navigators, guides and other tourism staff for independent travelling. Gonzales and Bello (2002) emphasize that their main interests are frequent cinema visits and going out to enjoy nightlife. Their favourite types of music are pop, rock, disco and ballads. They are also noticeably not attracted to cultural activities such as exhibitions or touring monuments.

The group of hedonists is interested in every new thing service or feature on a market. Consequently, they mainly form the segment of eco tourists, as they prefer some virgin places and quiet corners of the planet.

The last segment is the conservative tourists. There is no need to mention that they require high quality and low price services and goods, however, it should be emphasized that they are rather pessimistic on the future of the society and they are too critical to the issues of law and order. Thus, these tourists are rear, nevertheless they may require too much attention to their personality.

Summarizing the information on all the segments of tourists it should be stated that a good theory for tourist motivation should incorporate the matters of traveler’s needs and requirements, and should not be restricted on some particular segment, Luckily, there universal requirements do exist. Taking into consideration the creation of the average tourist, it is necessary to mention that it would mainly incorporate the features of the third and the fourth segments. Still, from the customer perspective (which should be taken into account by marketing analysis), these tourists consider that quality is always more important than price, and this is reflected in their decisions about purchases. Gonzales and Bello emphasize that: “By way of pastimes, they enjoy cultural activities, such as regular visits to exhibitions, monuments or places of outstanding natural beauty. They have a wide range of preferences in reading material: books; magazines on home, fashion, gossip and health; and newspapers, usually local or regional.” All the segments enjoy and highly estimate their privacy and safety of their personal items. Thus, the services, which are provided should not presuppose the disclosure of confidential information, and the tourist operators should care about the safety of their customers and their property.

Conclusion

Finally, it is necessary to mention that the market segmentation according to the lifestyle of the customers has several variables, which are claimed to characterize the segments of the customers. As for the matters of tourism, the researches provide their own classification of tourists, as people differ not only according to their lifestyle, but also by their behavior, thus, these factors should be taken into consideration when companies choose the behavior models for their customers.

References

1. Craft, S. H. (2004). The International Consumer Market Segmentation Managerial Decision-Making Process. SAM Advanced Management Journal, 69(3), 40
2. González, A. Bello, L. (2002) “The construct “lifestyle” in market segmentation: The behaviour of tourist consumers”, European Journal of Marketing, 36 (1/2), pp. 51–85.
3. Michman, R. D. (2005). Lifestyle Market Segmentation. New York: Praeger Publishers.
4. Swenson, C. A. (1990). Selling to a Segmented Market: The Lifestyle Approach. New York: Quorum Books.

Executive summary

Marketing segmentation is the new cliché in the field of marketing. Initially, mass marketing was very popular, but the new concept of market segmentation was developed to address challenges arising from mass marketing. Unlike mass marketing, market segmentation recognizes disparities that exist among different consumers and it is upon this notion that its principles both in theory and practice are founded.

During segmentation process, consumer needs among individuals with similar characteristics are identified and concurrently specific products and services are designed to suit those needs. The popularity of the above strategy has been accelerated by instability of segmentation variables such as demography, behavior and geography.

In addition, firms that have adopted marketing segmentation have realized benefits such as market niche benefits, consumer brand loyalty and competitive positioning in the market. On the other hand, market niche might lead to negative results especially to small firms in the event of sales decline.

Introduction

The concept of marketing is not anything new in business. The rise of free markets, in spite of its numerous benefits, posed serious challenges to businesses due to increased competition (Martin, 20011, p. 15). As a result, the idea of marketing was conceived as firms tried to promote brand recognition among potential consumers (Martin, 20011, p. 15).

Initially, firms embarked on mass marketing whereby consumer’s tastes and differences were not differentiated (Bell, 2009, p. 27). However, numerous researches in this field exposed new information that consumers’ needs were diverse and differed from one individual to another (Bell, 2009, p. 29). It is against this background that the concept of market segmentation was developed in theory and sooner adopted into practice.

According to Dibb and Simkim (2007, p. 53) the concept of market segmentation seeks to establish different needs of targeted consumers with an aim of grouping together individuals who share several characteristics.

Since the initial conception, market segmentation has experienced rapid growth owing to its popularity in the business arena around the world (Martin, 2011, p. 17). The recent popularity of market segmentation can be linked to several condusive environment factors.

Unstable and evolving demographic factors

To begin with, market segmentation is dependant on demographic composition of a population (Kim, 2011, p. 153). Concurrently, research studies have indicated that demographics variables such as lifestyle and gender based preferences and tastes are evolving each day (Martin, 2011, p. 16). For instance, only recently men were not known to take interest in cosmetic products and fashion.

However, in recent years, the rise of metro-sexual man has compelled producers to come up with cosmetic products, fashion magazines and other similar brands that target male consumers. For instance, Nivea for men brand which was developed to address the needs of the aforementioned type of men (Kim, 2011, p. 156).

In terms of lifestyle variable, research has shown that present day consumers have developed sophisticated tastes and this has greatly impacted businesses dealing with food be it raw or ready, as people become more conscious of their health.

As part of market segmentation strategy , products to suit the needs of this particular group of people have found their way into the market and it is now common to see food labels such as ‘low fat’ ‘whole meal’ , ‘high protein’ and so on (McWilliams, 2011).

Similarly, consumers’ needs vary with age, hence market segmentation based on the same. However, in recent years, aging is being looked at differently. Whereas there are individuals who are proud of the various body changes that occur with age, others despise the aging process.

For this reason, products targeting this group of consumers have evolved and nowadays it common to find cosmetics with labels such as ‘anti-aging cream’ in supermarket shelves (Martin, 2011, p. 17).

In addition, income disparities among populations have promoted market segmentation based on this concept. Marketers have realized that price sensitive buyers represent the larger part of the population (Raaij, 2004, p. 52). In order to maximize turnover, firms have no alternatives but to develop products and services that target this particular group of people.

The recent economic recession has reduced consumer spending habits and thus firms are rushing to tap the little money that consumers are willing to spend (Martin, 2011, p. 16). The recent rise and popularity of budget hotels all over the world can be attributed to reduced disposable income due to deteriorating economic times (Bell, 2009, p. 30).

Geographical factors and globalization

Secondly, globalization has accelerated market segmentation based on geographical variables (Gaston & Oscar, 2011, p. 268). As businesses explore international markets, they are compelled to modify their products and services with an aim of capturing the different and diverse market characteristics (Bell, 2009, p. 32).

For instance, when MacDonalds ventured into China market, they realized that beef burger brand was not popular since the locals preferred chicken. To counteract this challenge, chicken burger brand was initiated although they still retained beef to cater for international visitors especially those who originated from U.S (Bell, 2009, p. 31).

A similar situation was present in India whereby due to religious concernss, beef in the burger was replaced with lamb (Raaij, 2004, p. 52). The examples above signifies that market segmentation in terms of geographical variable is not going to ease anytime soon since international business ventures are gradually gaining momentum.

Evolving behavioral factors

Thirdly, changes in consumers’ behavior have heightened the need for continuous market segmentation researches in order to capture the new and discard dated consumer needs (Dibb & Simkin, 2007, p. 58). The underlying principle behind marketing is to attract potential customers to a particular brand and consequently create brand loyalty.

At times, it is becomes necessary for a business to develop brands targeting loyal consumers. For instance, tour firms dealing with holiday packages design special offers for loyal customers (Martin, 2011, p.15). Still, market segmentation will continue to be popular based on the fact that consumer behaviors in terms of level of usage are changing.

For instance, initially women were not known to be heavy drinkers of beer, but this trend is slowly changing and beer manufacturers have diversified the brand of beers targeting women (Geraghty, 2009, p. 146).

Similarly, as organizations reduced usage for office machines such as fax and photocopiers mainly because more of the paperwork is nowadays conducted via digital platform, manufactures have come up with brands targeting light users of the said gadgets (McWilliams, 2011).

Benefits of marketing segmentation

It is imperative to mention that the rationale behind market segmentation was to confront the competition challenges present in mass marketing. Marketing literature indicates that a wide market segment attracts more competition among businesses than sub segments (Dibb & Simkin, 2007, p. 59). According to Thomas and Brook-Carter (2011) increased competition among firms limits the benefits of mass marketing.

Therefore, businesses use marketing segmentation to acquire a strategic niche in the market. Marketing segmentation is greatly advantageous especially to small firms whereby they concentrate their resources to develop a product that would meet the needs of a particular group of consumers who are more often ignored by the large companies (Gaston-Breton & Oscar, 2011, p. 280).

The dissatisfaction might be in terms pricing or quantity. For instance, Unilever, in an attempt to meet the needs of low income consumers in developing countries, it came up with small packaging of products such as toothpastes (Gaston-Breton & Oscar, 2011, p. 284).

On the other hand, marketing segmentation can also bring benefits to large firms whereby targeting different markets ensures that their brands do not compete against each other but achieves a competitive edge with competitors brand (McWilliams, 2011). For instance, the various brands of soaps such as Ivory, Coast, Zest and so on by Procter and Gamble target different market segments.

Needless to say, marketing segmentation enables marketers to establish hidden needs of their target markets and from this information, they get ideas for improving existing products to capture whatever hidden need is available (Martin, 2011, p. 18).

Similarly, through marketing segmentation, firms are able to establish whether their targets consumers bring froth profitable benefits and this act as guidance to the firm to avoid future investment in unprofitable brands (Thomas & Brook-Carter, 2011).

As aforementioned, brand loyalty is an important factor to beat competition, and this is usually promoted via market segmentation, whereby if a business suceeds to satisfy the needs of its target customers fully, there is a possibility that brand loyalty will be achieved (Martin, 2011, p.15).

Finally, the process of marketing segmentation lays the foundation for competition analysis. Kim (2011, p. 155) highlights that it is highly important to be knowledgeable about the strengths and weaknesses of a competitor in order to succeed in market segmentation.

Competitors’ analysis should aim at establishing areas where a competitor have exhibited some weaknesses and capitalize on the same to achieve success in segmentation and probably realize higher return of marketing expenditure (Kim, 2011, p. 157).

Shortcomings of market segmentation

The fact that effective marketing segmentation has the possibility of reaping maximum benefits for a business is not disputable. However, literature in this field indicates that there are several shortcomings arising from this marketing strategy.

However, it is important to mention that there are several strategies that firms adapt in the process of market segmentation and each strategy is susceptible to unique shortcomings (Geraghty & Torres, 2009, p. 149).

As exemplified above, small firms can benefit from niche market segmentation. Apparently, niche markets can do both harm and good to the profitability of small firms. Isolated but closely related case studies have indicated that sales and growth of economies of scales in niche markets is greatly restricted. The above situation can threaten the survival of a firm in the event of declining sales (Kim, 2011, p. 152).

In a nutshell, it is evident that the recent concept of market segmentation is gaining popularity in marketing. Increasing competition amongst firms triggered and heightened by globalization has accelerated adoption of the concept owing to myriad of benefits attached to segmentation.

Although the strategy attracts both benefits and shortcomings, the benefits exhibit more weight. Thus any profit minded firm have no otherwise but to adapt market segmentation. As a matter of fact, mass marketing is both ineffective and expensive as compared to segmented marketing.

References

Bell, J. 2009. BRICOland brands: the rise of the new multinationals. The Journal of Business Strategy, 30(6), 27-35.

Dibb, S. & Simkin, L.2007. A program for implementing market segmentation. Journal of Business & Industrial Marketing, 12(1), 51-65.

Gaston-Breton, C & Oscar M. M. 2011. International market selection and segmentation: a two-stage model. International Marketing Review, 28(3), 267 – 290.

Geraghty, S. Torres,A. M. 2009. The Irish wine market: a market segmentation study”, International Journal of Wine Business Research,21(2), 143 – 154.

Kim, T. H. 2011. External validity of market segmentation methods: A study of buyers of prestige cosmetic brands. European Journal of Marketing, 45(1/2), 153– 169.

Martin, G. 2011. The Importance of Marketing Segmentation. American Journal of Business Education, 4(6), 15-18.

McWilliams, J. 2011. MARKETING: Singing Coke’s praises evolves: Company strengthening ties to music world to reach young buyers. Web.

Raaij, W. F. 2004. Domain-specific Market Segmentation. European Journal of Marketing, 28(10), 49-66.

Thomas, J. & Brook-Carter, C. 2011. Social Media in the Food and Drinks Industry – 2011 edition: Case Studies. just – food: Social Media in the Food and Drinks Industry [Online ].

The different levels of market segmentation

While developing effective marketing strategies and plans, managers refer to segmenting the market in order to determine the areas in which the product or services will be proposed. The overall levels of segmentation include the mass market, the segments, niches, and individuals. The managers choose whether to compete within the mass market, the certain segment, the specific niche, or be oriented to individuals. When segments are selected, the managers focus on their characteristics and differences in order to address the chosen category directly (Kotler and Keller 213). In their turn, the segments as groups of customers with specific needs and expectations in the market can be determined with the help of focusing on variables or differences of potential customers.

Dividing the market into segments

The process of dividing the market into segments includes the focus on variables or characteristics of customers. Traditionally, the managers divide the market into segments while referring to such variables as behavioral, geographic, psychographic, and demographic ones. The whole process of the segmentation includes several steps like the identification of the buyers’ profile with the focus on their interests and needs. At this stage, the managers select customers with references to their demographic characteristics such as age, gender, ethnicity, religion, family size, education, and income among others.

They also pay attention to the psychographic elements like personality traits, their specific lifestyles, and visions in order to create the complete profile of the ideal customer. In this context, the potential buyers can be divided into innovators, thinkers, achievers, experiencers or survivors, believers, strivers, and makers (Kotler and Keller 226). The next step is the focus on the behavioral segmentation. It is important for the managers to select the category of customers according to their attitude and actual responses to the product. The segmentation is realized according to the decision roles or behavioral variables (Kotler and Keller 227). Then, the managers select the specific market segment or several segments to start operations in them. The managers also rely on the geographic segmentation, and they determine which countries or cities they will serve or where the products can be purchased effectively.

The requirements for effective segmentation

The market segmentation can be discussed as effective when certain criteria or requirements are addressed. First, the managers need to focus on measurable markets. It means that the segment’s features such as the number of potential customers can be measured. Second, the segment should be substantial in terms of its size and potential advantages. It is profitable to serve large markets selected according to the careful segmentation process. The next requirement is the accessibility. It is important for the company to identify segments that can be easily served. In addition, segments need to be differentiable. It means that segments need to differ from each other in terms of the customers that are included in them. One more requirement is that the segment needs to be actionable (Kotler and Keller 232). The managers should have the opportunity to formulate and develop effective programs to address segments.

Business markets segmentation

Business markets are segmented like consumer markets, but there are also additional variables. As a result, the business markets are determined with the focus on demographic variables, numerous personal characteristics, operating variables, specific purchasing approaches, and definite situational factors that influence segments. Demographic variables include the segmentation according to the company’s size, industry specifics, and the company’s location. Operating variables refer to the customer technologies and capabilities. Purchasing approaches include all policies and rules associated with the process of purchasing the product or service. Situational factors include the order specifics and its urgency. Personal characteristics are important to determine the loyalty factor and attitudes (Kotler and Keller 230).

Choosing the most attractive target markets

Markets can be targeted as mass markets, segments, niches, and individuals. It is a challenging task for a company to identify the most attractive market to target, and this process should be based on the certain kind of analysis. It is necessary to measure the attractiveness of the market segment with references to its size, number of potential customers, and its accessibility. However, it is also necessary to correlate the attractiveness of the segment with the company’s specific goals and capacities. Thus, it is important to choose target markets in terms of their size, the potential for the development, profitability, and minimal risks. The correlation with the company’s objectives is a necessary condition because the market that is discussed as generally attractive can be inappropriate for the company because of available resources and set goals (Kotler and Keller 232). The company can choose the full market coverage while having enough resources; the specialization in several segments to address more consumers; the specialization in only one segment while having the limited resources and the narrowly targeted product; and the individual marketing when the number of potential customers is rather low.

Chart

Works Cited

Kotler, Philip, and Kevin Lane Keller. Marketing Management. New York: Prentice Hall, 2011. Print.

Market segmentation is the process through which a huge and homogenous market is subdivided into segments that can be identified without difficulties. The segments are characterized by similar wants, needs, or demand qualities.

Segmentation aims at developing a marketing mix which meets customer’s expectations in a particular segment. Most companies are small; hence, they find it difficult to adequately satisfy the whole market; thus, the entire demand is broken down into segments. Segmentation has several disadvantages that companies should overcome.

Although segmentation has its advantages, the strategy still has disadvantages that companies should find ways of overcoming. This is because segmentation may lead to losses instead of the anticipated profits and growth of the companies. Different companies experience losses as a result of their failure to overcome the disadvantages associated with segmentation.

The first disadvantage of segmentation that companies should overcome is the disadvantage of the high cost of segmentation. Companies that engage in segmentation incur additional costs since the process of developing separate marketing mixes for each segment involves a lot of effort and additional costs.

This interferes with the financial stability of companies and often leads to financial problems. Companies can diversify their sources of income to overcome the disadvantage of increased cost associated with segmentation. They should not solely rely on the financial resources of the company. For example, companies can look for sponsors and other internal ways of increasing their income to cater for segmentation costs. This is a viable method they can use to overcome the disadvantage.

The second disadvantage of segmentation that companies should overcome is the loss of focus on important markets. Market segmentation requires companies to satisfy too many market segments; thus, some crucial markets lack enough attention. This leads to financial shortages because of losing focus on markets that are key in funding companies.

To overcome this disadvantage, companies should identify the most important markets and focus on them as they carry out market segmentation. For example, certain workers can be assigned the work of monitoring the crucial markets to ensure that the profits of the company do not go down as a result of losing focus on important markets.

The third disadvantage associated with segmentation that companies should overcome is cannibalization. This occurs when some segments overtake others such that no gains are recorded. In some serious cases, the market shares are completely lost. Also, segmentation can send the wrong information to the customers or result in brand dilution. To overcome this disadvantage, companies should ensure that all segments are given equal attention. For example, if the companies decide to add the stock, this should be done in all segments.

Market segmentation can also result in over segmentation where individuals are excluded making it difficult to assess the profitability of the market. This disadvantage can be overcome by companies by keeping segmented sections generalized and large to prevent segmentation downfall.

Generally, companies should consider the reasons for carrying out segmentation to overcome their disadvantages. In diverse markets, companies should develop marketing mixes that cater to the needs of small sections of the market instead of developing mixes that meet the needs of all the people. For example, companies can curve a niche in particular segments and customize the marketing efforts to realize full profits. This enables them to satisfy and meet the needs of certain niches in the market hence overcoming most of the disadvantages of segmentation.

Identifying target markets of Seconal Foods

Many segmentation approaches can be applied to Seconal Foods’ market: sales-based segmentation, structural segmentation, bolt-on segmentation, and effective segmentation (McDonald & Dunbar, 2012). Out of these four approaches, it is recommended to use sales-based and bolt-on segmentation methods. Unlike other approaches, sales-based segmentation allows organizing a company around the organization of its sales function (McDonald & Dunbar, 2012).

Seconal Foods plans to open new locations in Canada; therefore, by taking this approach to segmentation, the company will be able to adjust its offers to the needs of the foreign market. It is also recommended to adopt a bolt-on segmentation approach because it is driven by customer data (McDonald & Dunbar, 2012).

Effective segmentation requires “internal (company) and external (market) matching” (McDonald & Dunbar, 2012, p. 47). It allows a company to have a comprehensive framework for evaluating how it has defined and segmented its markets. In the case of Seconal Foods, it is clear that by using bolt-on and sales-based segmentation approaches, the company has managed to make a clear distinction between explicit and implicit functions of its market. This evaluation makes it possible to conclude that the organic foods retailer is a firm that has structured itself around its chosen market segments. Seconal Foods should proceed with taking a customer-driven approach to viewing the marketplace to gain a competitive edge.

A successful positioning strategy hinges on a differential advantage; therefore, it is necessary to correctly identify the most likely sources of a competitive edge. Seconal Foods has a wide range of products that come from different suppliers. Taking into consideration that its competitors such as Whole Foods are bound by their limited supplier base, it can be argued that the company’s product range, which does not depend on local suppliers, is its main differential advantage. Support from complementary industries is another source of differential advantage for Seconal Foods.

The product strategy of Seconal Foods

Value Proposition

Seconal Foods is a company that provides its customers with organic products that contain an extremely limited amount of artificial additives such as preservatives, sweeteners, flavors, and colors among others. Unlike other similar companies, it not only specializes in the retail of organic foods but also offers its consumers a wide range of value-added services.

Characteristics

The company prides itself on high-quality standards, a large supplier base, support from complementary industries, and an extremely loyal and motivated workforce that is interested in providing Seconal Foods’ customers with the best products for the lowest price.

Nature of Product

Seconal Foods offers its consumers organic foods that have been produced in compliance with the most current standards of organic farming in the United States. The company’s products also have more antioxidant compounds as compared to the foods offered by its competitors.

Establishing distribution channels

The Value network of Seconal Foods represents social and technical resources available to the firm. All links in the company’s value network are responsible for the delivery of the overall worth of its products as well as value-added services such as the creation of diet plans for its customers. The network includes the following elements: Seconal Foods, organic foods providers in the United States, organic foods providers in Canada, marketers, and customers. To keep its supply chain as nimble as possible, the company has contracted a Canadian distributor that can take care of the local market needs. Moreover, Seconal Foods has a wide range of suppliers that allow the company to quickly respond to changes in the market.

Reference

McDonald, M., & Dunbar, I. (2012). Market segmentation: How to do it and how to profit from it. San Francisco, CA: Wiley.

Since I am taking online marketing classes I will advise my friend to focus on online marketing apart from using physical marketing since by using online marketing my friend will be able to market the products over the internet this will acquire more customers hence increasing the sales. Through internet marketing, my friend will be able to attract more customers at a lower cost since the distribution of information on the products is free and this tends to cover a wide scope of customers who can easily acquire the information on the product over the internet and purchasing it without necessary visiting the clothing store itself (Sandhu, 2000).

Since there is increased competition from the Walmart store will advise my friend to spend more time focusing on how her clients will benefit from the product and listen to the customers comment about her products and the services received during the whole purchasing period. After analyzing this I will advise my friend to market her products in a way that is customer friendly as well as the services she will be offering (Kerin, 2003).

I will also inquire her to market her products to the people who seem to be parents and focus on generating her daily customers as well as advertising through the media and networking. Should also inform the potential customers about the benefits and the features of your product and ask your employees about the issues affecting the business and how to solve them (Silk, 2006).

Cross-border alliances can be defined as an international agreement that is formed between two or more companies that produce goods and services to share risks and profits without merging or the full ownership of each company (Hisrich,2000). Cross-border alliances enable companies to achieve their set objectives and goals in a competitive market environment (Wedel, 1999). In addition, they enable companies to achieve goals that can not be attained through mergers and company privatization.

Cross border alliances are very important when it comes to large scale economies as it helps such large scale economies to survive and work in a competitive environment as they bring down the costs and risks involved in introducing a new product in the market. They are also involved in the reduction of time needed to study the market requirements in a particular business environment since they help in the elimination of the difficulties that are involved when two or more companies are merging. Moreover, cross-border alliances play a major role when it comes to the initiation of visions and plans since they are enable participating companies to develop in growing markets where local partner involvement is required (Sterne, 2001).

To begin with, list segmentation can be described as a technique set by direct marketers to lure individuals who are more likely to respond to a direct mail. The first benefit of list segmentation is that it enables proper marketing budget since marketers using this technique implies that people mailed are likely to respond quickly which reduces the likelihood of wastage of resources budgeted for marketing (Croft,1994).

The second importance of list segmentation is that it facilitates an environment through which marketers can easily identify and know-how well target audience tends to respond to the messages sent to them by the marketers. Furthermore, it provides a way through which the marketer can compare the audience between those who respond and those who don’t which in the end enables the marketer to effectively evaluate the difference and develop a clear understanding of the cause Marketing managers need research to know which product or service they are going to introduce in the market as it provides the direction and facts which are vital in decision making which can not be gained from the normal knowledge of the market but needs to be in analyzed data.

It provides the decision-makers with the actual data on the effectiveness of the current marketing strategy and the challenges facing it. It also enables decision-makers to know about the available investment opportunities in the market (Birn, 2002).

Market segmentation is the process of dividing the market into diverse uniform groups of consumers. This, therefore, provides a way through which firms can easily modify their marketing mix to specifically identified consumers to effectively satisfy these consumers. To achieve this effect it implies that the market segment should be measurable, durable, accessible by all communication as well as distribution channels, and should be sizeable enough to be profitable. To identify a proper marketing mix then first all the customer’s needs should be identified and it should clearly respond to the marketing stimulus of the customers (Arndt, 1974).

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Market segmentation is used by various companies to tailor their products and services to the target demographic or consumers who are thought to be most interested in these products and services. One of the research methodologies developed to segment people into different groups is called Values and Lifestyles (VALS).

VALS segmentation model segments all US citizens into 8 distinct types, or “personas”: innovators, thinkers, believers, achievers, strivers, experiencers, makers, and survivors (US Framework and VALS™ Types, n.d.). Different groups are segmented according to motivations and financial resources in order to predict their behavior as consumers. The outcome of a VALS test is a certain persona assigned to the individual based on their responses interpreted by the VALS algorithm. In my case, the test results were not completely accurate. It part I believe it is due to the fact that the test is not a real representation of reality as it ignores context. In other words, the data obtained by the questionnaire is inconclusive and only some predictions, such as purchasing power, can be made. In the case of Costco Wholesale, a retail company chosen for the project, our target demographic is correlated with the general demographic of Costco. This fact is largely explained by the Costco business model, with the company’s stores open only to members and their guests. Costco customers are financially established since the average annual household income of its members is estimated at $156000 (Robins, 2015, par. 5). Costco members plan before their actions and are not influenced by what is popular since they enroll in a membership program. These two facts put Costco’s target market into the following VALS categories: thinkers and achievers. In the case of Costco, psychographic segmentation is important, because products sold at Costco should be aimed at consumers who visit these stores.

Another segmentation model is Claritas’ PRIZM, which provides much detailed segmentation with 66 different profiles or personas (Segment details, n.d.). Different groups are segmented according to demographics and behaviors (Segment details, n.d.). The most common segments for ZIP Code 97006 Beaverton, OR are young digerati (wealthy younger family mix), money and brains (wealthy older family mix), American dreams upper mid younger family mix), urban achievers (lower mid younger family mix), and new beginnings (low-income family mix). The majority of households are comprised of 1 to 3 people, and about half of the people living in Beaverton have children. It is difficult for me to judge whether the data is actually representative of the real Beaverton population. PRIZM segmentation does appear to be more accurate than VALS due to a much larger pool of personas, which means the segmentation is much more detailed. In addition, the fact that the data is based on income, education, occupation, and home value, makes the segmentation scientifically valid. I would say that the data seems to be interpreted correctly for my hometown.

The most difficult challenge faced by marketers today is finding the right demographic which will help create and advertise products and services specifically tailored for them. Market segmentation is the solution to this problem. The rapid development of technology allows for better data acquisition and processing, and it is quite logical to use this data to improve decision-making. The biggest takeaway for me relative to my group marketing plan is that it is important to consider market segmentation to help us tailor our marketing messages and create a better marketing strategy.

References

Robins, J. (2015). Costco’s Surprisingly Large-Circulation Magazine. Web.

Segment Details. (n.d.). Web.

US Framework and VALS™ Types. (n.d.). Web.

Segmenting Consumer Markets

Geographic segmentation: Demand for some goods and services can vary according to the geographic region. Most major brands get 40-80 percent of their sales from what are called core regions.

Demographic segmentation: Dividing consumer groups according to characteristics such as sex, age, income, occupation, education, household size, and stage in the family life cycle.

Psychographic Segmentation: Divides a population into groups that have similar psychological characteristics, values, and lifestyles.

Product-related segmentation: Dividing a consumer population into homogeneous groups based on characteristics of their relationships to the product.

Buying characteristics by age groups

The Market Segmentation Process

Stage I: Identify Segmentation Process

• Segments predefined by managers based on their observation of the behavioral and demographic characteristics of likely users.
• Segments defined by asking customers which attributes are important and then clustering the responses.

Stage II: Develop Relevant Profile

• Marketers seek further understanding of the consumer in each promising segment.
• Develop a profile of the typical consumer and each segment.

Stage III: Forecast Market Potential

Combination of market segmentation and market opportunity analysis to produce a forecast of market potential within each segment.

Stage IV: Forecast Market Share

• Analysis of competitors’ positions in targeted segments.
• The firm determines the expected level of resources it must commit to tap the potential demand in each segment.

Stage V: Select Specific Segment

The preceding information, analysis, and forecasts allow management to assess the potential for achieving company goals and to justify committing resources in developing one or more segments.

Reaching the target market

Undifferentiated marketing: When a company produces only one product or product line and promotes it to all customers with a single marketing mix; also referred to as mass marketing (Market Segmenting, Targeting, and Positioning, 2010).

Differentiated marketing: When a company produces numerous products and promotes them with a different marketing mix designed to satisfy smaller segments. It increases costs, though firms may be forced to practice differentiated marketing to remain competitive.

Concentrated marketing: Also referred to as niche marketing. when a company commits all of its marketing resources to serve a single market segment. Common with small firms that have limited resources and firms offering highly specialized goods and services.

Micromarketing: Involves targeting potential customers at a very basic level, such as by ZIP code, specific occupation, lifestyle, or individual household.

Positioning requires the firm to plot customer survey data on a perceptual map (a two-dimensional graph that visually shows where your product stands relative to competitors and based on consumer criteria. This could be in terms of price, quality, level of customer service, etc. This is a vital part of marketing that enables a firm to position its products on an appropriate part of the map where the competition is not clustered (Market Segmenting, Targeting, and Positioning, 2010).

Reference

Market Segmenting, Targeting, and Positioning. (2010). Principles of Marketing and business Communication, 94-113.

Introduction

One of the reasons why Groupon remains on top of the e-commerce marketing industry is precisely done market segmentation. To target its audience, the company chose several areas of focus, segmenting the consumer groups according to geographic, demographic, psychographic, and behavioral factors (Armstrong and Kotler, p. 171). In terms of demographics, the most popular consumer groups may be young adults who are employed, well-educated, and have a middle income. While Groupon might target European countries, its primary audience resides in North America. The business may also consider rich and poor neighborhoods, as well as different population densities in the city, suburbs, and rural areas when segmenting for geographic factors. Since the most targeted consumer group in demographics is young adults, in the psychographic segmentation, Groupon may be interested in promoting their services to current university students and graduates with outgoing personalities who like going out, exercising, and traveling. For the behavioral variables, the business might focus on potential and regular users of the product with a medium to the heavy usage rate.

Main body

Based on the brief market segmentation provided above, one market that Groupon may expand to is full-time university students with young children. Thousands of mothers, currently enrolled in their studies, have to choose between spending a significant amount of money for babysitting or skipping classes to take care of their children. To step into the market, Groupon may introduce discounts for daycare services on the territory of the university, if available, or negotiate the discount under cooperation with local daycare systems.

This consumer group has the potential to bring revenues to the company, fulfilling the requirements of M.A.S.D.A. First, according to “Single Mothers in College,” there are around 2 million single parents in undergraduate school (1), which provides a measurable segment to target. Second, with Groupon already targeting college students and mothers separately, the company has access to sell services to single-parent university students. Third, the business would make a substantial profit, generating income from their investment, since single parents have to spend money on childcare services regularly. Additionally, this consumer group constitutes a differentiable segment. Though it might overlap with single-parent mothers, who do not currently study in universities, when promoting discounts in local daycare services, childcare on the college territory is available to enrolled students only. Finally, this segment is actionable, since Groupon has sufficient knowledge and resources to negotiate on the daycare discounts for single parent undergraduate students.

Works Cited

1. Armstrong, Gary, and Philip Kotler. Customer Value-Driven Marketing Strategy. Marketing: An Introduction. 13th ed., Prentice Hall, 2017.
2. “Single Mothers in College: Growing Enrollment, Financial Challenges, and the Benefits of Attainment.” Institute for Women’s Policy Research, 2017.

Mountaire Farms wishes to launch a new poultry product plant to supply to an existing market. The factory will enable the company to expand its market locations and increase its market share to achieve a competitive edge over its rivals. For the firm’s new product to perform well in the market, the company must have some strategies in place to ensure that the organization sells and meets the needs of the business.

Research Methods

Mountaire Farms wishes to determine its market for the new poultry products. The company wanted to reach the whole population, from the youngest to the oldest in society. The firm considered the value and importance of the food products on the lives of the targeted clients to arrive at the choice of reaching the entire market. The company conducted quantitative and qualitative research methods, which according to Dolnicar et al. (2018), helps understand the nature of the market. It did a study on the demographic and behavior of the expected customers as an approach to market segmentation.

Mountaire Farms designed a demographic segmentation based on the gender, a household earning, and age of the customers. Age and income levels are significant variables that indicate success in the poultry product market (Folitse et al., 2018). The research on a market’s demography requires the collection of numerical data, which is analyzed using quantitative methods to give trends and relations between various variables used in the research.

Mountaire Farms also conducted behavioral segmentation research to assess how different people respond to poultry products. Consumer behavior is critical since most people consider several factors before they decide to purchase a product or not (Kumar & Smith, 2018). The decision to buy a good or service mainly resulted from the users’ understanding of such products’ effect on their lives. The company conducted a qualitative study through face-to-face interviews to enable it to collect as much information as possible.

Importance of the Research Approach

Market segmentation was used in the research because it allowed Mountaire Farms to conduct the study from different perspectives and collect qualitative and quantitative data. In particular, demographic segmentation enabled the company to understand the most abundant age group and the poultry products fit for different people. On the other hand, behavioral segmentation was crucial as it depicted how users perceive various products manufactured by the business.

References

Dolnicar, S., Grün, B., & Leisch, F. (2018). Market segmentation analysis: Understanding it, doing it, and making it useful (p. 324). Springer Nature.

Folitse, B. Y., Sam, J., Dzandu, L. P., & Osei, S. K. (2018). Poultry farmers’ information needs and sources in selected rural communities in the greater Accra region, Ghana.International Information & Library Review, 50(1), 1-12. Web.

Kumar, A., & Smith, S. (2018). Understanding local food consumers: Theory of planned behavior and segmentation approach. Journal of Food Products Marketing, 24(2), 196-215. Web.