Market Segmentation †How & Why Essay -- Business Management Studies

Market Segmentation – How & Why As well as the physical aspect of our store changing we have to look at the market differently. Where it was once possible to take a pile it high sell it cheap approach, to achieve broad appeal to the population we need to cater to the needs of the population. This is achieved by breaking the population into groups and then releasing products and services that meet the needs of these groups. This is known as target marketing. Although we all appreciate the theoretical economies of scale given by mass marketing a single product, there are few products that appeal to everyone. Naturally this has led to a segmentation of markets as companies that marketed one product, now produce a range of products. An example of this is Coca Cola. Originally they sold one product, as well as standard coke we now have diet coke, coke with vanilla, cherry coke, sprite, lilt and many more. By accepting that people have different needs and different shopping behaviours we can market ourselves to these segments and attract new customers. There are six steps to market segmentation, targeting & positioning and these are 1. Identifying qualities for segmenting the market 2. Developing profiles of the segments created 3. Develop measures of segment attractiveness 4. Select target segment 5. Develop positioning for each target segment 6. Develop marketing mix for each target segment. We have talked about segmenting the market. The question is how do we do this? There are many ways to segment. You could do this based upon household income, gender, age, previous purchases etc. In fact there are many ways to identify different market segments and I will briefly the more commonly used methods. Geographical It is possible to segment the population according to Geography, people from â€Å"the North† drink more Irn Bru than those from the South. This can be measured by the success of advertising, an example being the Jamie Oliver advert for Sainsbury’s was less successful in the north. Demographics. This is where segmentation is done by using personal characteristics of the population; Age, gender, income, stage in the family life cycle etc. Socio Economic Grouping. This is based upon the occupational status of the head of the household. It is based on the traditional social class system of this count... ...e of segments enables a company to specifically target an audience within a population. An example would be if I asked all of you what you would go out and spend fifty pounds on if I were to give it to you now. The chances are that everyone would come back with a different suggestion. However it I likely that some of you would go and buy clothes, some you would go and buy CD’s or DVD’s and some of you may possibly save the money instead. By grouping people together it is possible to target a product at an audience that will wan to buy the product. This should ensure a return on investment quickly for the producer and could lead to rapid growth. However a universal product is unlikely to appeal to a wide range of people so it is possible for a producer to create products for different market segments. Today we are going to discuss in more detail Cola drinks and C.D’s as product within our superstores. For the purpose of illustrating segmentation further it is worth noting that recent demographic shift of men drinking Diet Coke has been noted by Coca Cola and their adverts are targeted far less specifically at woman than the old â€Å"Diet Coke break† ads of the nineties.