Identify and Describe at Least Six Markwt Segments free essay sample

Customers are people who buy products and services from other people (usually companies of one sort or another). What customers think and feel about a company and/or its products is a key aspect of business success. Attitudes are shaped by experience of the product, the opinions of friends, direct dealings with the company, and the advertising and other representations of the company. Irrespective of whether a business customers are consumers or organisations, it is the job of marketers to understand the needs of their customers. In doing so they can develop goods or services which meet their needs more precisely than their competitors. The problem is that the process of buying a product is more complex than it might at first appear. Customers do not usually make purchases without thinking carefully about their requirements. Wherever there is choice, decisions are involved, and these may be influenced by constantly changing motives. We will write a custom essay sample on Identify and Describe at Least Six Markwt Segments or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The organisation that can understand why customers make decisions such as who buys, what they buy and how they buy will, by catering more closely for customer’s needs, become potentially more successful. Term buyer are ones who purchases goods or services; also called customer. A consumer makes purchases for his or her own use or purpose. A professional buyer makes bulk purchases on behalf of a retailer or wholesaler. A media buyer purchases media space or time for an advertiser. Factors That Influence Consumer Purchasing Decisions Factors that influence consumer purchasing decisions are price, income, credit facilities, reference groups, and need satisfaction, (uPublish. info, 2005-2012). I believe a factor that is most important is the ‘needs satisfaction. ’ According to uPublish. nfo, 2005-2012, Maslow’s theory of motivation suggests that human beings seek to satisfy lower needs and then the higher needs: 1. Physiological needs- this includes the basic needs such as food and shelter 2. Safety- this include shelter and the needs to protect one from danger 3. Affection- these are the needs for one to belong to certain groups or family 4. Self-esteem- these are th e needs for recognition and dignity 5. Self-actualization- these are the needs to realize our full potential As we saw fuel prices rise, there was less traveling involved, thus this affected airline companies and vacation destinations. For the most part, people need to feel secure with basic needs, such as food, shelter, gas, etc. before making big purchasing decisions. A bad example of this would be the housing market. Many banks were lending money to people who could not afford to make the monthly payments. I do not know whether the people knew this or the bankers convinced them they could make the payments. Somewhere they must have felt ‘secure. ’ Some factors markets can be segmented are environment, demographic, and culture. For example, it does not snow where I live and it is about 100 degrees until winter. There have been some years where we are wearing flip-flips and shorts in December. It would be ridiculous to have ski wear or extreme winter clothing here. Another example is, Whole Foods Market. Market segment Segmentation refers to a process of bifurcating or dividing a large unit into various small units which have more or less similar or related characteristics. Market Segmentation  ¦Market segmentation is a marketing concept which divides the complete market set up into smaller subsets comprising of consumers with a similar taste, demand and preference. A market segment is a small unit within a large market comprising of like-minded individuals.  ¦One market segment is totally distinct from the other segment.  ¦A market segment comprises of individuals who think on the same lines and have similar interests.  ¦The individuals from the same segment respond in a similar way to the fluctuations in the market. Basis of Market Segmentation Gender The marketers divide the marke t into smaller segments based on gender. Both men and women have different interests and preferences, and thus the need for segmentation. Organizations need to have different marketing strategies for men which would obviously not work in case of females. A woman would not purchase a product meant for males and vice a versa. The segmentation of the market as per the gender is important in many industries like cosmetics, footwear, jewellery and apparel industries. Age Group Division on the basis of age group of the target audience is also one of the ways of market segmentation. The products and marketing strategies for teenagers would obviously be different than kids. Age group (0 10 years) Toys, Nappies, Baby Food, Prams Age Group (10 20 years) Toys, Apparels, Books, School Bags Age group (20 years and above) Cosmetics, Anti-Ageing Products, Magazines, apparels and so on Income Marketers divide the consumers into small segments as per their income. Individuals are classified into segments according to their monthly earnings. The three categories are: * High income Group * Mid Income Group * Low Income Group Stores catering to the higher income group would have different range of products and strategies as compared to stores which target the lower income group. Pantaloons, Carrefour, Shopper’s stop target the high income group as compared to Vishal Retail, Reliance Retail or Big bazaar who cater to the individuals belonging to the lower income segment. Marital Status Market segmentation can also be as per the marital status of the individuals. Travel agencies would not have similar holiday packages for bachelors and married couples. Occupation Office goers would have different needs as compared to school / college students. A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it caters specifically to the professionals. Types of Market Segmentation  ¦Psychographic segmentation The basis of such segmentation is the lifestyle of the individuals. The individual’s attitude, interest, value help the marketers to classify them into small groups.  ¦Behaviouristic Segmentation The loyalties of the customers towards a particular brand help the marketers to classify them into smaller groups, each group comprising of individuals loyal towards a particular brand.  ¦Geographic Segmentation Geographic segmentation refers to the classification of market into various geographical areas. A marketer can’t have similar strategies for individuals living at different places. Nestle promotes Nescafe all through the year in cold states of the country as compared to places which have well defined summer and winter season. McDonald’s in India does not sell beef products as it is strictly against the religious beliefs of the countrymen, whereas McDonald’s in US freely sells and promotes beef products. Criteria for selecting Market Segments Measurable A segment should be measurable. It means you should be able to tell how many potential customers and how many businesses are out there in the segment. Accessible A segment should be accessible through channels of communication and distribution like: sales force, transportation, distributors, telecom, or internet. Durable Segment should not have frequent changes attribute in it. Substantial Make sure that size of your segment is large enough to warrant as a segment and large enough to be profitable Unique Needs Segments should be different in their response to different marketing efforts (Marketing Mix). Consumer and business markets cannot be segmented on the bases of same variables because of their inherent differences. Bases for Consumer Market Segmentation There are number of variables involved in consumer market segmentation, alone and in combination. These variables are:  ¦ Geographic variables  ¦ Demographic variables  ¦ Psychographic variables  ¦ Behavioural variables Geographic Segmentation In geographical segmentation, market is divided into different geographical units like:  ¦ Regions (by country, nation, state, neighbourhood)  ¦ Population Density (Urban, suburban, rural)  ¦ City size (Size of area, population size and growth rate)  ¦ Climate (Regions having similar climate pattern) A company, either serving a few or all geographic segments, needs to put attention on variability of geographic needs and wants. After segmenting consumer market on geographic bases, companies localize their marketing efforts (product, advertising, promotion and sales efforts). Demographic Segmentation In demographic segmentation, market is divided into small segments based on demographic variables like:  ¦ Age  ¦ Gender  ¦ Income  ¦ Occupation  ¦ Education  ¦ Social Class  ¦ Generation  ¦ Family size  ¦ Family life cycle  ¦ Home Ownership  ¦ Religion  ¦ Ethnic group/Race  ¦ Nationality Demographic factors are most important factors for segmenting the customers groups. Consumer needs, wants, usage rate these all depend upon demographic variables. So, considering demographic factors, while defining marketing strategy, is crucial. Psychographic Segmentation In Psychographic Segmentation, segments are defined on the basis of social class, lifestyle and personality characteristics. Psychographic variables include:  ¦ Interests  ¦ Opinions  ¦ Personality  ¦ Self Image  ¦ Activities  ¦ Values  ¦ Attitudes A segment having demographically grouped consumers may have different psychographic characteristics. Behavioural Segmentation In this segmentation market is divided into segments based on consumer knowledge, attitude, use or response to product. Behavioural variables include:  ¦ Usage Rate  ¦ Product benefits  ¦ Brand Loyalty  ¦ Price Consciousness  ¦ Occasions (holidays like mother’s day, New Year and Eid)  ¦ User Status (First Time, Regular or Potential) Behavioural segmentation is considered most favourable segmentation tool as it uses those variables that are closely related to the product itself. Bases for Business Market Segmentation Business market can be segmented on the bases consumer market variables but because of many inherent differences like  ¦ Businesses are few but purchase in bulk  ¦ Evaluate in depth  ¦ Joint decisions are made Business market might be segmented on the bases of following variables:  ¦ Company Size: what company sizes should we serve?  ¦ Industry: Which industry to serve?  ¦ Purchasing approaches: Purchasing-function organization, Nature of existing relationships, purchase policies and criteria.  ¦ Product usage  ¦ Situational factors: seasonal trend, urgency: should serve companies needing quick order deliver, Order: focus on large orders or small. Geographic: Regional industrial growth rate, Customer concentration, and international macroeconomic factors. Explain why the different types of target consumers are chosen for different? As discussed earlier, the countrys consumers can be divided into so many different consumer groups. Based on which consumer groups they li e in, the consumers will have different needs. Also they will find different things that appeal to them. So before you launch a marketing campaign, you need to identify which set of people does your business cater to? What we mean by this is that you need to know who your customers are? What kind of life do they live? Who influences their buying decision? What kinds of media are they exposed to? How much purchasing power do they have? Etc. Knowing this information, you can target your marketing campaign to appeal especially to this group of customers you have chosen. Many a times, you may find that the product or service you are offering is consumed by not only one group of people. You may find that your product has many varied uses and hence has many varied possible consumers. Because of this you may want to choose more than one group of people as your target market. Your marketing strategy will fail if you try to be everything to everybody. When you make a marketing strategy you have to choose only one group of people and design your marketing strategy so that it appeals to the group you have selected. If you have many groups of people to choose from, choose only the group of people that you can best cater too and will offer you the best opportunities to grow. For example, if you are a small firm that makes women’s perfumes, your target market could be teenage girls, house wives, rich women who can fford to spend highly on perfumes and other such accessories etc. You could choose any one of these customer groups as your target market. Suppose you choose the rich women group then your marketing plan will be designed to appeal to rich women. The price of your perfume will be high. Your ads will be designed to appeal to rich women etc. These ads cannot simultaneously appeal to younger middle class women also. If you come up with a marketing strategy to appeal to more than one target group of customers, your strategy will not be effective. Your sales will be eaten away by specialist products or specialist marketing strategies. Just consider the case of shampoo. If someone is looking for a shampoo to deal with their dandruff problem, they are more likely to buy a shampoo which says Anti-dandruff shampoo than a shampoo that says, Hair shine, Hair strength and Anti-Dandruff shampoo. This point will be explained later again in more detail. The thing to understand is that the first step to making a marketing strategy is to select the â€Å"target market† for who the marketing campaign is to be designed.