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Market Segmentation Argumentative

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For a company or business to effectively respond to different customers needs and wants in order to increase sales, they make use of market segmentation. Market segmentation as defined by Kerin, author of Marketing, 10e; involves grouping potential customers who have common needs and will respond similarly to a marketing action. In further elaboration to define segmentation, if there is a demographic group of customers who are all on diets and are watching their weight (common needs/desires) and a business markets the segment of dark chocolate as a healthier option to satisfy sweet cravings, this would be an example of market segmentation. On the same token if a company were to market the medical and health benefits of dark chocolate, a demographic that would similarly respond to this marketing action would be the health-conscious demographic.

There are a few different segmentation basis’s that are relevant to chocolate bars, it is a multiple product aimed at multiple market segment industry, a few segments that can be used in the chocolate industry are demographic, psychographic, and behavioral. Demographic includes age (kids are more likely to chocolate than adults), gender (Females are more likely to have cravings for chocolate than males are), and life stage (parents with young children are likely to purchase chocolate). Psychographic segmentation includes personality (compulsive buyers, people with a sweet tooth, etc), lifestyle (single people dating will buy chocolates for dates), and needs (health needs such as diabetes would need a sugar free chocolate bar). Behavioral… Read Full Essay

The iPod was innovated by Tony Fadell, a former employee of General Magic and Phillips. Fadell wanted to bring a player by using small hard-drive player that can be link to a delivery system where users can obtain or download music legally (Hormby and Knight. 2005). In October 2001, Apple announced their first strike into the digital music market by announcing the iPod. The iPod was a hard disk based digital music where when compare to the portable tape decks, it was smaller. The iPod could compete with both the flash-based player and hard disk based player. Apple was able to make the iPod smaller by using a 1.8″ hard disk. Apple believed that the iPod represented the perfect combination between both size and storage capacity.

Beside size and capacity, iPod also had impressive industrial design where it has been missing from the other hard disk players in the market. Apple also believed that the iPod is such a potential product because if Apple misjudged the market, the iPod might be another G4 Cube in its hands. It turned out to be that Apple judged the market very well and the iPod has sold better then anyone had ever expected (iPod n.d.). The demographic segmentation is based on the United States of America market by age, gender, income and ethnic background. In a report by Pew Internet and American Life Project, twenty-two millions of adults owning iPod, thirteen percent of men own the player compared to nine percent of women. Sixteen percent of African-Americans and English speaking Latinos own iPod compared to ni1.1.

Behavioural Segmentation: Kotler (2007), discuss about behavioural segmentation that is dividing a market into groups based on consumer knowledge, attitude, use or response to a product. Apple uses this segment technique very smartly by the innovations that lead to brand switching. Firstly, Apple introduced its iphone 3 by considering consumer’s behaviour, their attitudes towards new technological changes. What consumer aspects from the one smart-phone that provides multifunction facilities. Innovations of new features can appeal and influence in the behaviour of customers. Iphone with its new technological features combines three products into one small and lightweight handheld device.

Iphone 3 is a mobile phone with a widescreen iPod, and the availability of Internet in your pocket with best-ever applications on a mobile phone for email, web browsing and maps. iphone users in an era of software power and sophistication never before seen in a mobile device, which completely redefines what users can do on their mobile phones hence it get fit in innovations category. Secondly, by influencing with the differentiated product or by behavioural segmentation, Apple has grabbed 17.3 % ( Canalys) of the smart-phone market, placing it second in the world with growth of 523 percent from third-quarter 2007 to third-quarter 2008. RIM capture 15.2 % of the smart-phone market. Nokia share shrunk 3.4 %.

Also adding an easy way for iphone users to access Microsoft Exchange e-mail made the iphone more attractive to customers looking to integrate the device into their work life. About 40% users replaced smart-phone (Rubicon consulting, Inc.2008). This shows strong brand switching capability enforced by iphone in smart-phone market. Thirdly, by influencing behavioural attitude with their innovative product like iphone 3 Apple made its perceptions in consumers’ mind and is regarded as an innovative company. It has a vast customer loyalty base. Customers trust Apple for its technology and security. It is the result of this loyalty that 52% of iPod users bought iphone according to a research from Solutions Research Group. 1.2. Psychographic Segmentation: According to Kotler (2007), psychographic segmentation is dividing a market on the basis of social class, life style, and personality characteristics etc. Apple very carefully investigates psychology of consumer’s trends and their life styles.

The lifestyle of a person is linked to his or her preferences. Lifestyle is reflected in activities, interests and opinions. Now different people have different lifestyles. Apple identified this and provided different features for different people in one phone like touch screen, iPod for a trendsetter youngster, or calendar and fast web browsing for a sophisticated businessman. 1.3. Demographic Segmentation: Kotler (2007) describe that the division of market into the group on the basis of demographic variables such as age, gender, family size, family life cycle, income, education, religion and nationality. Apple iphone 3 segmentation is based on gender and age variables. Around 2/3 of the 2.3 million US iphone users are men (Nielsen).

A recent research done by Solutions Research Group has showed that Apple was successful to attract youngsters as 63% of its customers were under 34 years and average age of its customers is 31 years. The typical iphone user is a young, wealthy, male tech geek type. Why youngsters are more interested towards apple iphone 3 because it provides a features that are more attracted to youngsters like i-tunes, video player, net browsing, gaming, and more disk space for downloading. Basically, apples product iphone 3 features are designed which are more demanded by the youngsters.

In psychographic segmentation their personality, motive, lifestyle and geodemographic segmentation is to suit the middle to high class consumer and customers. Reason why I say this is because you have to have money in order to buy their devices. For the middle and high class these psychographic segmentation compliments each other as they try to suit the need of everyone in these classes. Apple income wise comes in with middle to high class people and is use in all ethnic groups. Apple Inc. Characteristics are very big when it comes to demographics, locations and meeting ethnic group needs. Apple computers are very big in the music industry as they are used to produce songs, Dj in parties and are harder to catch a virus which will damage important music files.

Demographic market segmentation is one of the most common approaches to segmenting markets. With this strategy, a company simply divides the larger market into groups based on several defined traits. Age, race, gender, marital status, occupation, education and income are among the commonly considered demographics segmentation traits. As a simple example of usage, a company that sells feminine hygiene products will include “female” in its description of its primary market segment. Geographic

Geographic segmentation is used by companies that sell products or service specific to a certain community, state, region, country or group of countries. Local businesses usually get no benefit in paying for national or international advertising. Companies that operate nationally can often save by delivering the same marketing messages to a national audience through one television, radio, magazine or newspaper ad. Global businesses typically decide whether to maintain a universal message or tailor messages to each country’s marketplace. Related Reading: Define Market Segmentation & Targeting

Psychographics or lifestyle segmentation has become increasingly common as companies look to identify consumers based on interests and activities in lieu of demographics. As an example of this strategy’s benefits, consider the lifestyle of an outdoor adventurer. Camping enthusiasts, for instance, typically have few consistent demographic traits. Campers are a diverse group. Thus, marketers would likely target a segment of outdoor hobbyists or campers for new camping equipment through outdoor programs or magazines. Behavioral

Behavioral segmentation is based on user behaviors, including patterns of use, price sensitivity, brand loyalty and benefits sought. A company may have customers with a similar demographic makeup but distinct behavioral tendencies. Some may use the product daily, while others use it weekly or monthly. Higher-income earners may have more interest in higher-quality models versus low-cost models. This may prompt the provider to target higher-end products and services to one group and more value-oriented offerings to lower-income or budget-conscious customers. Business Segmentation

Segmenting for business customers often has overlap but commonly includes geographic, customer type and behavior-based strategies. Geographic business segmentation is similar to that with consumer segmenting. Customer type segmenting may include business size or the nature of the business. Banks, for instance, often have different products for small versus large businesses. Behavioral segmenting is based on repeat or loyal customers versus one-time users. segmentation.

Ans. There are several ways or methods to segment a market. Such ways or methods depends upon consumer characteristics and their responses to the products or services. A paradigm shift has taken place in the way the Indian corporate (is) viewing customers. There has been a shift from organizing by-products to organizing by-market segments. For example, Maruti is segmenting is customers on the basis of economic and premium class, which was not done previously. I. GEOGRAPHIC SEGMENTATION :

In geographic segmentation, the market is sub divided on the basis of area. — Region : Regional segmentation is made because regional differences exist in respect of demand for products. For example, buyers from south India are different from the buyers in north. — Urban / Rural : There are differences in buying behaviour of urban and rural customers. Accordingly, marketing strategies must be designed depending upon their likes, dislikes, moods, preferences, fashions and buying habits. — Locality : Consumer’s buying behaviour is also reflected by the locality within a particular city. For instance, there are differences in terms of buying patterns of people residing at Parel and Parle, within a city like Mumbai.

Demography refers to study4about the different aspects of population. Markets can be divided on demographic factors like age, gender, education etc. The various demographic factors are : — Age : The primary method of analysing markets by age is to divide the total population into age groups and analyse the wants and needs of each group. — Gender : Marketers devote much attention to male and female differences in purchasing. Today, marketers segment female groups into college girls, working women, housewives, etc. Again, male groups can be further classified. — Income : Buying patterns depends on income of the consumers. No two individuals or families spend money in exactly the same way. If a researcher knows a person’s income, he can predict with some accuracy wants and needs of that person and how those wants are likely to be satisfied.

— Education : Market can be segmented on the basis of education – matriculation or less, under graduates, graduates, post-graduation, etc. Most studies show that the highly educated people spend more than the poorly educated in respect of housing, clothing, recreation, etc. — Family Size : The consumption patterns of certain products definitely vary with the number of people in the household. Manufacturers of certain products such as ice-cream market family packs. — Family Life Cycle : The market can be segmented as bachelors, newly married couples, married with grown up children, older married couples, etc. For selling tours and vacations, Life Insurance policies etc., this segmentation is of use. — Race and Religion : Consumption patterns of certain products differ on the basis of religion and race, such as alcohol and meat products. III. SOCIOGRAPHIC SEGMENTATION :

The market can be segmented on the basis of sociological factors such as : — Cultural Influences : The marketer must consider cultural influences while segmenting markets. People in urban areas are influenced to a certain extent by western culture, whereas, many people in villages follow more or less traditional culture. Culture is influenced by our socio-cultural institutions like family, religion, language, education, and so on. — Influence of Social Class : Buying behaviour is reflected by the influence of social class to which the consumers belong. The social class can be segmented as – lower -lower, middle-lower, upper-lower, lower-middle, middle-middle, upper-middle, lower-upper, middle-upper and upper-upper.

Firms dealing in clothing, home furnishing, automobiles, etc. can design products for specific social class. — Influence of Reference Groups : A reference group may be defined as a group of people who influence a person’s attitudes, values and behaviour. Consumer behaviour is influenced by the small groups to which they belong or aspire to belong. These groups include family, religious groups, a circle of close friends or neighbours, etc. Each group develops its own set of attitudes and beliefs that serve as guidelines for members’ behaviour IV. PSYCHOGRAPHIC SEGMENTATION :

It refers to individual aspects like life style and personality. — Life-Style : Sellers study the life-styles of the consumers. For example, a manufacturer of readymade garments may design his clothes differently matching different life styles of college-students (more fashionable), office-goers (more sober) and so on. — Personality: Personality characteristics such as leadership, independence, masculine, impulsive, ambitious,-etc., do influence buying behaviour. V. BEHAVIOURAL SEGMENTATION :

In this case, buyers are divided into groups on the basis of their response to the product – usage rate, user status, loyalty status, buying motives, and so On. — Usage Rate : One possible way to define target market is by product usage. There can be heavy users, medium users, light users, and nonusers. Targeting on this basis may be useful to the seller who want to increase consumption by present users and to convince and induce nonusers to become users. — User Status : Market can be segmented on the basis of user status such as: non-user, ex-user, potential user, first-time user, regular-user, & so on. —

Readiness Stage : Market can be segmented on the basis of people’s readiness to buy the product. Some people are well informed and are interested to buy the product. Some other may be well informed but not interested to buy the product. — Buying Motives : Buyers buy the product with different buying motives such as economy, convenience, prestige, etc. Accordingly promotional appeals can be directed to the target audience. Demographic Segmentation:

In demographic segmentation, the market is divided into groups on the basis of variables such as age, gender, income, occupation etc; these demographic variables are so popular with marketers so that they are often associated with the consumer’s needs and wants. Segmentation variables are easily measurable. Here are the demographic variables have been used to segment markets. The companies target audiences primarily are the bachelors, youth and the professionals Red Bull segments its customer base by age as follows – Age

16 to 30 years – they account for the major share of the customer base Below 16 – They account for most of the sales of their other line of products of red bull soda. Middle age and elderly – red bull came out with zero calorie and special edition (cool breeze) for the elderly tastes. – Gender: They mainly target males, although females are a part of their customer base – Income: Red bull associated a certain luxury with their brand name and hence caters to a segment that is ‘well off’ in terms of income. x- Occupation: Students, working professionals, sports enthusiasts, athletes Psychographic Segmentation:

It is the science using psychology to better understand the psychology of the consumers. With the changing marketing, Red Bull continuously tries to cope up with the new trends and come up with new flavors and offers to attract more customers. Psychographic segmentation buyers are divided on following ways:

Lifestyle: Business class, working class executives, students Personality: ambitious, open to experience.
Occasions: Regular, special.
Benefits: Quality,
User status: regular user
Usage rate: medium
Loyalty status: medium Loyal
Readiness stage: intending to buy
Attitude toward product: enthusiastic

Geographic Segmentation:
Geographic segmentation is done using the spatial location to segment the market. In geographic segmentation there are different schemes for the different geographical units such as states, regions, cities. Markets are mainly divided into the rural and urban areas. The Geographical variables have been used to segment markets in following ways:

Area: Red bull limits itself to semi urban and urban India as that is their major consumer base City: Class-A and Class-B cities i.e. metro politician cities Region: Distribution of redbull is constant across regions in India

Socioeconomic Classification:
The people belong to the high job profile with efficient communication knowledge can use it. The purchase potential of this product is limited up to the B1, B2, A1 and A2.

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