• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

P5 Introduction to Marketing: What is Market Segmentation?

Extracts from this document...


P4 Introduction to Marketing What is market segmentation? Segmentation in consumer markets Market segmentation is a very valuable technique used by companies when planning strategic marketing. It enables businesses to target products at the right customers more effectively. In essence, it is about identifying the specific needs and wants of the customer groups and then using the intelligence into providing products and services which meets customer?s needs. After all, a business cannot satisfy all the needs and wants of all consumers. Each market segment is unique and is comprised of a number of individuals who share common thoughts and characteristics. Segmentation can also be applied within Business to Business markets, although this has large number of similarities to consumer marketing, many differences also exist and this is explored later on. Market segmentation can be defined as ?The process of defining and subdividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics. Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment? Each segment has its own profile made up of criteria commonly known as bases. A segment consists of; 1. A large identifiable group within the market 2. Similar wants and needs 3. Purchasing power 4. Geographical location 5. Buying attitudes/ habits and trends Segmentation allows businesses to identify different groups within the market and apply different marketing and promotional techniques to each segment. It is not however necessary for a company to target every segment; they may wish to target specific segments as part of their strategic marketing plan. Example: Motor vehicle companies such as Volvo develop a large number of models which are all aimed at different market segments in terms of lifestyle, gender, income and age. In addition to this, they also have services and products specifically aimed which caters for a large number of commercial businesses.. ...read more.


In addition, young people are more likely to purchase the products as they have more disposable income as they probably will not have the responsibility of a child and most likely living at home. The market is very accessible as young adults generally have access to all forms of media channels including the internet such as social networking, YouTube and email. Social networking is very effective in reaching out to the younger target markets as a result of the widespread use of this technology. In addition, the market is generally very mobile and more likely to have opportunities to see marketing campaigns through billboards, vehicles and shops. A wide range of marketing communications is therefore very effective in reaching this target market. Apple will have to consider the current and future prospects of this target group. Overall it is perceived that this group will create a good return currently and in the future. In order to ensure that the market will continue purchasing Apple products in the future, they need to carry on developing their products and staying ahead of competitors. It is envisaged that this market will be highly profitable as the segment is large and is growing in size. It has the capacity to gain loyal customers as technology advances. Apple Mission Statement ?Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.? The mission statement fits in well with the target market because this target group always want the latest technology. Apple?s mission statement implies that they are leading innovation in technology and revolutionising the way we use technology. This appeals to young adults as Apple fulfil the needs and wants of the segment; who are wanting the most up to date technologies. ...read more.


Profitability of this segment is high and customers are prepared to pay high amounts for the service. Current and future demand levels will likely to remain stable and have the potential to increase. Age is often a strong determinant of product choice in the health industry Health club/gym example... Aged 18-34 Goal is to ?look good? Aged 35-54 To help ?deal with stress? Aged 55 and over For ?medical-physical therapy? Business markets (Corporate memberships) Corporate gym memberships are becoming more and more popular among businesses and LA fitness is meeting the needs of businesses by providing corporate memberships at highly discounted rates. This appeals to businesses for a variety of reasons such as; healthy employees are more productive, a healthy workforce results in reduce healthcare costs and the non-financial benefits include having an engaged team and positive brand. Why is segmentation so important? There are a number of reasons why a business needs to segment a market which is explained below; More effective in meeting customer needs Different types of customers require different needs. Creating bespoke offers for each segment makes sense and provides customers with a personal solution. Increased profits for business Customers have different demographic properties. Therefore they are different in how sensitive they are to price. Segmenting markets will enable businesses to raise average prices and subsequently further increase profits Increase customer loyalty Circumstances change regularly in customers? lives. For example people grow older, create families, change jobs or get promoted, change their buying patterns. Through effective marketing that markets products that appeal to customers at different stages of their life, a business can retain customers who might otherwise have the tendency to switch to competitors? products and brands. Target marketing communications It is necessary for a business to consider the needs of all audiences. If the target market is too vague, the potential for customers to be missed out and the cost of communicating to customers becomes unprofitable. By segmenting markets, the target customer can be targeted more cost effectively. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Marketing & Research section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Marketing & Research essays

  1. Marketing Research. Explain how different marketing research methods have been used to make a ...

    This showed us that it would be a good idea to have a range of products that are aimed at women. Market research helps us to understand our customers and potential customers. We learn about how they shop, where they shop, how much they can afford to spend and what is important to them when deciding to make a purchase.

  2. The Promotional Mix used by Ford and Apple to Market their Products.

    They advertise on channels such as ITV, Channel 4 and 5 and they also sponsor Sky Soccer Sunday as they know a lot of families will be watching television on Sundays. Ford will also advertise in Newspapers and magazines especially car magazines as this will advertise to people in to

  1. Explain the special characteristics of agricultural markets.

    Since the agricultural market is inelastic, in theory the farmers could raise their prices and the consumers would still have to pay. The ceiling price makes sure that the consumers aren't put into this situation where they are obliged to buy overpriced products to eat.

  2. Unit 3 - Marketing Research And Marketing Mix

    retailer or reliability. GlaxoSmithKline would also be heavily reliant on third parties to implement their marketing plan which could lead to conflict in the chain and finally to sales. Achieving placement objectives GlaxoSmithKline will have to use a mix of direct and indirect selling.

  1. Marketing Travel and Tourism products and services

    Also families travel to other destinations and stay. All these social factors are affecting the travel and tourism industry in many ways. Lot of travel agents such as Thomson's Holidays try to find new destinations to meet their customer social lifestyle.

  2. Applied Business Studies

    * Common in professional practices - some people within the business are practiced in a certain thing. Advantages of Partnership: Easier to raise the capital More owners mean more ideas The partners can specialise in areas that suit their expertise.


    So it is vital that they monitor it carefully. Once they find an issue they need to see how this is being cause, so what exactly the problem is, it may be that the production team are not using their machinery properly and they need to have more machines on during an order.

  2. Describe how marketing techniques are used to market products in two organisations. The two ...

    These may be new markets geographically new market sectors or perhaps uses for the product. Diversification: A new product in new markets is a much more risky strategy because the organisation is moving into areas in which it has little or no experience.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work