Explain how and why groups of customers are targeted for selected products
What is segmentation?
Market segmentation is the division of a market into sub groups with similar characteristics. A business can then target these groups and develop products and services for each of them. There are several ways in which consumers can be split up into. These is geographically which includes location, demographically which includes gender, social class, age, income, ethnicity or religion, psycho graphically which includes lifestyle and personality, and finally behaviourally which includes type of user, high quality products, size and value. Characteristics of segmentation
Business to Business
This is the process of a business selling their goods or service to other businesses. This can be between a manufacture and a wholesaler or a wholesaler and a retailer. For business to business the market can be divide into: Age – Many businesses pay close attention to the ages of their customers which means that over 50’s can be seen as one segment, while teenagers ages 14-18 can be viewed as another segment. For teenagers, Hip hop CDs can be targeted for teenagers whereas Hits of the 90s can be suitable and see as more attractive for older buyers. Gender – Businesses may choose to target either male or females because usually they differ in spending patterns. They take into consideration into what men and women both respond to for example cars, play stations, video games may be targeted more for men as they may show more interest, whereas perfumes, bags, shoes and clothes may be more attractive to women. Social class – Markets are often divided into social groups. Classes are based on employment status and conditions. This kind of division is used in government reports and survey. The Institute of Practitioners in Advertising divides social class into six categories and they are used to decide which groups to target for promoting a product. Income – Income is also another segment which businesses slip customers into. The population can be slip up into income groups and targeted accordingly to their occupation. For example electricians, builder, nurse, doctor, social worker, teacher, cleaner etc they can all receive different incomes or class so businesses take that into consideration when targeting specific customers. Religion – Businesses may divide the market by religion groups for example Jewish, Christian, Hindu, catholic, Pentecost etc. All may be targeted with good or services different from the others because of their preference. Ethnic grouping – Markets can also be segmented by country of origin or ethnic grouping. Businesses take in mind that different good or service can attract differently to each ethnic groups. Products such as clothing, hair accessories are usually targeted towards African Caribbean groups. Business to Consumer
This is the transaction of when a company sells its goods or services to individual consumers. For business to consumer it can be divided into: Brand loyalty – Consumers can be categorised according to their product loyalty. For example special loyalty cards, rewards, sales, deals and special offers. Furthermore, the Tesco club card offers discounts to their existing regular customers of the business to reward and encourage loyalty to Tesco and its goods. Usage rate – Businesses categorised the consumers according to their quantity of spending and how frequent they purchase their products. For example the Three shop do monthly phone plans of internet, messaging and calling minutes to encourage and develop the custom of regular mobile users. Location – Location can be essential in business segmentation. Businesses use different locations to reach specific target consumers. For example to find younger population businesses would go to the mall to sell their products as they know they will find younger consumers in game shops or clothe shops. Whereas older consumers they can be targeted...
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