The Use of Market Segmentation: Plan, Advantages, Disadvantages, and Limitations

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Table of Contents

Market Segmentation
Principles of Using Market Segmentation to Increase Ticket Sales
Variables to Segment the Customer Market
Plan to Segment the Market
Conclusion
References

Market Segmentation

Creating conditions for a stable increase in profits through effective marketing approaches and solutions is a common practice in the sales market. One of the concepts that allow addressing the interests of the target audience and, at the same time, ensuring a steady demand for specific goods or services is segmentation. According to Liu et al. (2019), “market segmentation is a strategy that involves the division of a large market into segments of consumers with different needs, characteristics or behavior which might require separate marketing policies” (p. 2). About the considered situation of the need to increase ticket sales, this approach can be an effective solution to create sustainable demand. Online purchases are common today, and since football is one of the most widespread sports, utilizing a segmentation strategy to drive profits through an appropriate plan is a potentially successful step.

Principles of Using Market Segmentation to Increase Ticket Sales

The use of market segmentation as a mechanism to promote ticket sales is due to the real prospects for increasing profits. According to Sun et al. (2019), one of the practices that accompany this strategy is price differentiation, an approach that allows creating individual plans for the purchase of specific goods or services. About the sale of tickets, prices can be differentiated based on such criteria as the importance of games, the status of teams, and other factors that may affect the choice of tickets. As a result, this mechanism is one of the possible steps to increase profit in the next year.

Variables to Segment the Customer Market

Demographic Variable

To segment the target market, specific variables may be applied, which can help divide potential customers into individual categories. One of the variables is demographic; as Johansson (2017) states, it allows using such characteristics as gender, income, age, and other customer features. Applying this principle may contribute to creating unique promotional offers for different client groups and encouraging customers to use personalized criteria for selecting appropriate football tickets.

Geographic Variable

In football, the geographic variable is a valuable parameter to apply to implement a segmentation strategy successfully. According to this criterion, the target audience is divided by location and belonging to a specific community (Johansson, 2017). Consequently, football matches can be convenient for building a pricing policy based on such a variable. Games with teams from other regions or even countries cause a stir among fans, which, in turn, may be used to the advantage of organizers. The pricing of tickets based on a geographic principle is a common practice, but it is valid when mass events are involved.

Psychographic Variable

This variable implies taking into account customers’ purchasing decisions and motives. Johansson (2017) notes that personality traits, attitudes, and some other individual features are crucial factors to assess when compiling a segmentation strategy. For football ticket sales, customers’ lifestyles may be assessed, for instance, regular fans or occasional spectators. This separation can help create unique promotional offers, thereby increasing profit through more intense sales.

Plan to Segment the Market

Importance of Segmentation

Engaging a segmentation strategy to increase football ticket sales and profit is a valuable and important aspect to differentiate pricing while addressing individual customer needs. According to Scheuffelen et al. (2019), applying this approach creates a link between supply and demand and expands sales opportunities, which is the ultimate goal of any business. For online football tickets, segmentation can influence clients personally, thereby increasing their interest and enhancing customer loyalty.

Advantages/Disadvantages

The existing types of segmentation, based on the aforementioned variables, can have advantages and disadvantages that are critical to consider when making a plan for the case under consideration. Geographic segmentation, for instance, is useful because it narrows the spectrum of work down to a specific location. At the same time, according to Qi and Zhou (2020), this practice hinders the achievement of competitive advantage due to limited interventions, which is a negative aspect. Demographic segmentation is a convenient mechanism for categorizing potential customers into groups of personal criteria, thereby creating individual offers for each of them. However, as Scheuffelen et al. (2019) remark, demographic clusters can be too large, which requires many efforts to get actionable outcomes. For instance, football fans differ not only by age and gender but also by social status, income level, and other parameters.

Finally, psychographic segmentation is a convenient approach to identifying specific decision-making drivers for the target audience. For example, in the Ford case, Christen et al. (2001) view increasing tire size as a strategy to influence customer relationships, thereby dividing potential buyers based on their preferences. At the same time, this approach does not allow addressing consumer relationships comprehensively since only one segmentation criterion is applied. Therefore, each type has individual strengths and weaknesses to take into account.

Suitable Contexts

Each of the considered types of segmentation is relevant to a specific context. Applying the demographic type to increase ticket sales is convenient if teams of specific associations play, for example, college teams. According to the case presented by Lee et al. (2018), who look at the travel industry, demographic data provide the most accurate information on customer loyalty. When applied to the football tickets, the interests of boys and girls, adults and young people, and other groups can help ensure differentiated demand. The geographic segmentation principle is optimal when selling tickets for a match between regions or countries. These mass events often cause a stir, and this is the marketing department’s job to take advantage of this. Finally, psychographic segmentation is a technique that comes in handy when selling tickets to game connoisseurs who are good at football. This approach, taken in the Ford case, proves that true car connoisseurs can feel the difference between vehicles with old and tire sizes (Christen et al., 2001). Therefore, the segmentation of sales, for instance, according to the principle of the significance of the game for the championship, can stimulate additional profit.

Limitations

Using individual segmentation types in the case in question can be complicated by special constraints. For instance, in the psychographic approach, personal incentives may not be enough motivation to pay more for a particular ticket. From a demographic perspective, some characteristics, such as age, may not be an effective criterion due to the specific interests of a particular age group. As a result, the geographic type is the most stable since the confrontation based on the team’s belonging to a certain location always arouses public interest due to the prevailing sports disputes.

Conclusion

Implementing a segmentation strategy as part of increasing sales and profit in the next year can help achieve the stated goals with proactive approaches to engaging the target audience. Based on the analysis, the geographic type of segmentation is the most robust, although, in some contexts, demographic and psychographic types may also be acceptable. In case none of the approaches justify their strengths, special measures will have to be taken. In particular, the marketing department will need to analyze the dynamics of ticket sales for specific matches and compare the statistics of visits to the games reviewed. This will provide a relatively objective picture of customer preferences, thereby creating a background for successful segmentation.

References

Christen, M., Soberman, D. A., & Cothier, G. (2001). Ford KA (A): Breaking new ground in the small car market. Harvard Business Publishing. Web.

Johansson, R. (2017). Which market segmentation variables are most effective to determine new business potential? [Unpublished master’s thesis]. International Business Management with Nordic Focus.

Lee, T. H., Jan, F. H., Tseng, C. H., & Lin, Y. F. (2018). Segmentation by recreation experience in island-based tourism: A case study of Taiwan’s Liuqiu Island. Journal of Sustainable Tourism, 26(3), 362-378. Web.

Liu, J., Liao, X., Huang, W., & Liao, X. (2019). Market segmentation: A multiple criteria approach combining preference analysis and segmentation decision. Omega, 83, 1-30. Web.

Qi, X. F., & Zhou, L. H. (2020). Market segmentation and energy efficiency – An empirical study based on China’s provincial panel data. Energy Efficiency, 13(8), 1781-1797. Web.

Scheuffelen, S., Kemper, J., & Brettel, M. (2019). How do human attitudes and values predict online marketing responsiveness? Comparing consumer segmentation bases toward brand purchase and marketing response. Journal of Advertising Research, 59(2), 142-157. Web.

Sun, M., Tian, Y., Yan, Y., & Liao, Y. (2019). Improving the profit by using a mixed after-sales service as a market segmentation.Nankai Business Review International, 10(2), 233-258. Web.

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