Basic Segmentation, Targeting and Positioning

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Segmentation
When entering a market, an organisation needs to identify its customers and what its customer needs are. A business can’t go into a market with a product and expect to sell it, because the demand for the product may not be there. It is important for the business to plan thoroughly before entering a market and understand the diverse nature of a market. For example, a market may have large range of consumers who have different tastes, preference and needs. So this is where the concept of segmentation will be applied.

Segmentation is defined as ‘the identification of individuals or organisations with similar characteristics that have significant implications for the determination of marketing strategy’. To break this down, an organisation will need to group together the consumers that share the same traits in order to serve them properly. A company is bound to fail if it has created a marketing mix which serves one customer, but does not serve another. By creating sub markets or market segments, a marketing mix can be created to suit the needs of each segment which will create satisfied customers.

Once a company has successfully segmented a market, it can then provide products or services that will satisfy customers in a specific segment. If a company does not have a product or service to satisfy a sub market, then it is in the company’s interest to develop a product or service that will satisfy that part of the market. This is because one of the main reasons for segmentation is maximising profits. Segmentation is a way to match consumer needs, which in turn can enhance profitability. When a segment hasn’t been supplied with goods or services, this is seen as an opportunity to enhance profits.

You may segment consumers into three main groups, Behavioural, psychographic and profile variables, each group has its own sub categories. Marketers use these as a basis to segment their potential markets, for example the behavioural segment has the following sub groups: * Benefit sought

* Purchase occasion
* Purchase behaviour
* Usage
* Perceptions and beliefs

Psychographic has the following sub groups
* Lifestyle
* Personality

Profile variables has the following sub groups
* Demographic
* Socio-economic
* Geographic

There is no definite way to segment a market, but these following sub groups can be used together to segment a market. For example you could combine lifestyle with geographic or purchase behaviour, personality and socio-economic to segment your market.

Lucozade developed a sports brand ‘Lucozade sport’ in 1990 and from there the brand has divided into sub brands to suit the needs of different consumers. Lucozade sport was developed as an enegery drink to replenish lost energy and rehydrate before, during and after sport. Lucozade then went on to create another brand extension ‘Lucozade Hydro Active’ which was also developed as a sub brand which is a fitness water that contains essential salts, selected vitamins and has a light fruit flavour to encourage consumption during exercise. Lucozade Sport Nutrition was another sub brand that included the Lucozade Sports Bar and Carbo Energy Gel products, which have been formulated to deliver an optimum diet for athletes in a convenient, portable format. You can see how the original brand has branched off into sub brands or brand extensions. For these brand extensions to be effective, Lucozade needed to understand and apply market segmentation. The marketing mix was also an essential key to the success of these products as the mix is a tool to implement strategy.

You can see how Lucozade implemented their marketing strategy using the marketing mix. For example, the company would have needed to make a choice on what product top offer, known as a product decision. Once a market has been segmented, it is easier for a company to make a decision on which product they would like to provide their customers. In...
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