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Market Segmentation Essay Sample

Market Segmentation Pages
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Find a product of two example businesses in your country or region, from your own experience or from your reading. If you cannot find such examples, use one or two case studies from your textbook or obtain one or two case studies from your local lecturer. Be sure to cite and reference the name and source of your case(s) in your assignment report. The product of one business should be mainly a good and the product of the other business should be mainly a service.

a) Explain how the example businesses have segmented the market for its major product and what its marketing mix strategies are.

b) If you were the marketing managers involved, what parts of (i) would you do the same and what would you do differently? Why?

EXECUTIVE SUMMARY

Market Segmentation is an essential part of the Marketing Strategy. It allows organisation to effectively target the relevant groups of consumers, allowing for the creation of a more effective marketing strategy. The strategy will guide a company to better satisfy the needs and wants of customers while creating value, be it for a product or service.

TABLE OF CONTENTS

1.IntroductionPage 5

a) Explain how the example businesses have segmented the market for its major Page 6 product and what its marketing mix strategies are.

2.Market Segmentation
a.A ServicePage 6
b.A ProductPage 8

b) If you were the marketing managers involved, what parts of (i) would you do the same and what would you do differently? Why?Page 11

3.ConclusionPage 12
4.ReferencesPage 13

INTRODUCTION

The basic idea of marketing is the process of identifying and satisfying the needs and wants of customers preferably at a profit. These needs can be tangible or intangible in nature and can be satisfied by a product or a service.

When marketing for a product or service, one must understand the difference in order to develop the right approach. While a product is something physical that can be seen, held, tasted, stored, a service is immaterial, it exists only at the point in which it is used, it is a profitable activity that can be at times be difficult to identify since it is closely associated with a product.

In this project, I will identify both a product and service and show how their respective businesses have been able to segment the relevant markets and how they were able to consider the marketing mix strategies. I will also analyse how effective their approach was and if there was room for improvement in their approach.

The need for identifying market segmentation is best decribed in the text book Marketing – An Introduction by Gary Armstrong and Philip Kotler – ‘Companies today recognize they cannot appeal to all buyers in the marketplace, or at least not to all buyers in the same way. Buyers are too numerous, too widely scattered, and too varied in their needs and buying practices… …Most companies have moved away from mass marketing and toward target marketing: identify market segments, selecting one or more of them, and developing products and marketing programs tailored to each. Instead of scattering their marketing efforts (the “shotgun” approach), firms are focusing on the buyers who have greater interest in the values they create (the “rifle” approach).’

a) Explain how the example businesses have segmented the market for its major product and what its marketing mix strategies are.

1.Market Segmentation
A company cannot provide a product or service to satisfy the needs of everyone, therefore when devising a marketing plan for a new product or service, the company will seek to divide the market into smaller sections of consumers with certain specific factors in common. This is known as market segmentation. The four most common areas for market segmentation are demographic, geographic, psychological, and behavioural. A company having segmented a market, it must now analyse this data and decide on which it will target.

1.1 A Service organisation

In Trinidad and Tobago we have an entity referred to as Movietowne. It was founded in 2002 and is now, 10 years later, considered to be the number one (1) location for entertainment and leisure on the islands. They have been able to provide an entertainment centre providing access to restaurants, shopping, and entertainment and have grown to 3 locations with further expansion carded both locally and regionally in 2013.

They were able to identify that there was a need in the Leisure and Entertainment industry and created a service that could satisfy this need. They were able to ascertain the right combination of the marketing mix variables to appeal to the wants and needs of a cross section of society. The marketing mix is the blend of Product, Price, Place and Promotion that businesses use to market and sell their products.

This mix is supported by the identification of the market segments which are broken down into four main areas: demographic, geographic, behavioural and psychographic elements.

Demographics – its consumers are diverse as it caters to people of many different walks of life, from kids, families, elderly, the young social crowd.

Geographic – with 3 locations currently in very different areas they have made themselves accessible to the greater population and will continue to do so with the planned expansion

Behavioural – it provides a safe environment with offerings by established brands

Psychographic – it caters to the middle and upper class when looking at the pricing structure as well as the available brands 1.2.A product

Unlike a service, market segmentation for a product takes on a much different approach. A successful marketing mix will result in the right product with the right features, in the right place so customers can access it, at the right time for when it is needed.

The main elements of market segmenting are that they should be easily identifiable; they should be measurable, should be different enough in the marketing mix to satisfy the needs of customers, allow for a profit to be made, accessible enough for distribution, promotion, purchase and within the guidelines of what the company stands for.

Carib Brewery Limited currently holds the lead in market share in the beer industry in Trinidad and Tobago. The company provides a number of alcoholic, non-alcoholic, light alcoholic beverages allowing them to cater to numerous demographics. The company also distributes two major international brands (Guinness and Heineken), however their main product also considered their signature brand is Carib Beer.

While this product is not new to the market, they continue to hold firm in their lead and continue to increase their market share by continuous research and renewed market segmentation. They have recognised that we live in a changing environment where new products are available on a daily basis to satisfy the needs of customers and by keeping abreast of consumer habits they can keep ahead of the competition by adjusting their marketing mix as required. They have introduced a new marketing campaign and have launched their image with the inclusion of their new slogan: ‘Know Who You Are. Drink What You Like’.

Old:

New:

They have again segmented the market along the key guidelines of demographic, behavioural, psychographic, and geographic.

Upon further analysis these can be further broken down:

Demographic – Carib Beer’s current marketing campaign is targets men between the ages of 18 – 25,, they see this as the young upcoming market and they can grow with the Beer over the years.

Behavioural – they are playing on the culture of the people, especially the youth of Trinidad and Tobago. They have aligned themselves with major sporting activities as well, such as boat racing, cricket amongst them and also with a lot of the cultural events like carnival.

Psychographic – their pricing is competitive for the age bracket they have targeted and affordable as compared to the other international brands on the market. They have branded Carib Beer as being a premium lager playing on the minds of their consumers. They have changed the look of their packaging and have made the products are available is different forms such as bottles or cans.

Geographic – they are available anywhere on the island. They also have a very strong presence regionally and have targeted small but manageable portions of markets internationally.

A quick SWOT analysis on the Carib Brewery will show some of its immediate its strengths, weaknesses, opportunities, and threats. Its major strength includes the introduction and use of state of the art machinery to produce its products. As stated it is currently the leading beverage manufacturer, with its major brand is being Carib lager, and the company has shown a very high level of corporate social responsibility both locally and regionally. Though the Brand leading the markets locally and regionally, it’s weakness is that it has only penetrated the international market on a small scale though this can be used as an opportunity to expand further in the world markets. The company has a union presence and this at times can prove to be a volatile environment, with potential employee protests being a threat to company production levels.

b) If you were the marketing managers involved, what parts of (i) would you do the same and what would you do differently? Why?

When I look at the result on the markets for both Movietowne and Carib Beer, I must say that I agree with their strategies thus far. They have both been able to hold their market share as well as continue to increase it. Their products have evolved over time and are accessible, sustainable, and different in what they offer as well as measurable.

They have taken the time to understand who their customers are and what they want. They are able to understand to whom they will sell their products and what they should sell them on an on-going basis. With this knowledge they are able to adjust the variable of their marketing mix and devise appropriate strategies to allow them to continue to grow in their respective industries; they have also recognised that their target markets are large enough to be able to sustain their businesses

CONCLUSION

There are a number of advantages and disadvantages to Market Segmentation. The advantages can be understanding exactly what your customer wants or needs and allow for more efficient marketing to them while at the same time satisfying the businesses marketing concept. It also allows you to target the right consumer group especially if your resources are limited. The disadvantages can be easily listed as being costly and time consuming with even the process being used, being faulty.

In the end the idea is to satisfy customers need and wants while creating value. As stated in article “ Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, By W Chan Kim and Renee Mauborgne Boston, Harvard Business School Press

The secret to create this richer opportunity lies in viewing customer activities meticulously. This means studying customer’s activities, costs, capital needs, information flows, and priorities that one can help improve by making an important shift- from responding to customer needs to anticipating them.

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