Watch the following animated explanations on segmentation of markets to develop
ID: 1200248 • Letter: W
Question
Watch the following animated explanations on segmentation of markets to develop a strong understanding of the concepts:
Understand the characteristics of markets and market segments.
Understand the criteria for successful market segmentation.
Understand the bases commonly used to segment consumer markets.
Understand the steps involved in segmenting markets.
Watch the following video on how the Food Network® uses segmentation and target marketing to appeal to consumers: View it here
Choose a cooking show from the Food Network® website (2014 Television Food Network G. P.) at: http://www.foodnetwork.com/shows.html to study and answer the questions below.
Using research from Chapter 8, to help substantiate your understanding of the segmentation and target marketing concepts, answer the following questions related to the segmentation and targeting of consumer markets for your chosen show:
Identify a minimum of three (3) segmentation bases that might be used to segment the market for your chosen show.
Describe the specific reasons each of the three (3) segmentation bases might be used to segment the market for your chosen food show.
Describe the type of target marketing strategy that might be used to reach the consumer for your chosen food show. Discuss the product differentiation strategy used to distinguish your chosen show from the rest of the shows on the Food Network® website (2014 Television Food Network G. P.).
Describe the most likely positioning base or bases that might be used to appeal to consumers in the target market for your chosen food show.
Explanation / Answer
1. Understand the characteristics of markets and market segments.
As Smith, 1956 defines, "Market segmentation is based upon developments on the demand side of the market and represents a rational and more precise adjustment of product and marketing effort to consumer or user requirements.” Market segmentation is an important tool to enable marketers to better meet customer needs. The following are the characteristics of market segments:
1. Measurable: Market segments should usually be measured in terms of sales value or volume. Reliable market research should be able to identify the size of a market segment to a reasonable degree of accuracy, so that strategists can then decide whether, how, and to what extent they should focus their efforts on marketing to this segment.
2. Substantial: There would be no economic sense in wasting marketing budget on a market segment that is insufficiently large, or has negligible spending power.
3. Accessible: When demarcating a market segment, it is important to consider how the group might be accessed and, crucially, whether this falls within the strengths and abilities of the company’s marketing department. Different segments might respond better to outdoor advertising, social media campaigns, television infomercials, or any number of other approaches.
4. Differentiable: An ideal market segment should be internally homogeneous (i.e. all customers within the segment have similar preferences and characteristics), but externally heterogeneous. Differences between market segments should be clearly defined, so that the campaigns, products and marketing tools applied to them can be implemented without overlap.
2. Criteria for successful market segmentation.
Measurable and Obtainable: The size, profile and other relevant characteristics of the segment must be measurable and obtainable in terms of data. It has to be possible to determine the values of the variables used for segmentation with justifiable efforts. This is important especially for demographic and geographic variables. For an organisation with direct sales (without intermediaries), the own customer database could deliver valuable information on buying behaviour (frequency, volume, product groups, mode of payment etc).
ii. Relevant: The size and profit potential of a market segment have to be large enough to economically justify separate marketing activities for this segment. If a segment is small in size then the cost of marketing activities cannot be justified.
iii. Accessible: The segment has to be accessible and servable for the organisation. That means, the customer segments may be decided considering that they can be accessed through various target-group specific advertising media such as magazines or websites the target audience likes to use.
iv. Substantial: The segments should be substantial to generate required returns. Activities with small segments will give a biased result or negative results.
v. Valid: This means the extent to which the base is directly associated with the differences in needs and wants between the different segments. Given that the segmentation is essentially concerned with identifying groups with different needs and wants, it is vital that the segmentation base is meaningful and that different preferences or needs show clear variations in market behaviour and response to individually designed marketing mixes.
vi. Unique or Distinguishable or Differentiable: The market segments have to be that diverse that they show different reactions to different marketing mixes. If not then there would have been no use to break them up in segments.
vii. Appropriate: The segments must be appropriate to the organisation’s objectives and resources.
viii. Stable: The segments must be stable so that its behaviour in the future can be predicted with a sufficient degree of confidence.
ix. Congruous: The needs and characteristics of each segment must be similar otherwise the main objective of segmentation will not be served. If within a segment the behaviour of consumers are different and that they react differently, then a unique marketing strategy cannot be implemented for everyone. This will call for a further segmentation.
x. Actionable or Feasible: It has to be possible to approach each segment with a particular marketing programme and to draw advantages from that. The segments that a company wishes to pursue must be actionable in the sense that there should be sufficient finance, personnel and capability to take them all. Hence, depending upon the reach of the company, the segments must be selected.
Apart from the above-mentioned characteristics, the segment must have some other features:
Growth potential, Profitable, Less risk prone, Less competition intensive
3. Steps involved in segmenting markets.
The first step in creating market segments is to clearly define the market of interest i.e. Identify the segment.
Second step is to determine the possible marketing channels.
Third step is to engage in early marketing.
Fourth step is fine tuning in terms of receiving feedback and altering the plan if needed.
Fifth step is Advertising with more specificity and broadly.
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