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Market Segmentation - How & Why

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Introduction

Market Segmentation - How & Why As well as the physical aspect of our store changing we have to look at the market differently. Where it was once possible to take a pile it high sell it cheap approach, to achieve broad appeal to the population we need to cater to the needs of the population. This is achieved by breaking the population into groups and then releasing products and services that meet the needs of these groups. This is known as target marketing. Although we all appreciate the theoretical economies of scale given by mass marketing a single product, there are few products that appeal to everyone. Naturally this has led to a segmentation of markets as companies that marketed one product, now produce a range of products. An example of this is Coca Cola. Originally they sold one product, as well as standard coke we now have diet coke, coke with vanilla, cherry coke, sprite, lilt and many more. By accepting that people have different needs and different shopping behaviours we can market ourselves to these segments and attract new customers. ...read more.

Middle

Situation Specific This refers to the actual situation where the consumption of the product takes place, e.g. special occasions or in groups. Developing these market segments is done through the use of research. Using qualitative or quantative research and then analysing the results one can potentially identify market segments. However it is worth validating that these are real and are not a chance occurrence within the population sample chosen. Much research has been done by ourselves and our competitors on shopping behaviour and the following six groups of shopper have been identified. Habit Bound Die Hard Generally older person, has traditional views, tends to be frugal and sticks to a traditional eating pattern. The Habit Bound Die Hard displays a great amount of loyalty to his supermarket but hates when things are moved around. Self Indulgents Self Indulgents only make up about 15% o the population. They tend not to have any money worries and drink a lot of wine. They generally live in one or two person households and tend to buy expensive coffees. They eat low fat yoghurts and tend to buy convenience ethnic foods. ...read more.

Conclusion

The use of segments enables a company to specifically target an audience within a population. An example would be if I asked all of you what you would go out and spend fifty pounds on if I were to give it to you now. The chances are that everyone would come back with a different suggestion. However it I likely that some of you would go and buy clothes, some you would go and buy CD's or DVD's and some of you may possibly save the money instead. By grouping people together it is possible to target a product at an audience that will wan to buy the product. This should ensure a return on investment quickly for the producer and could lead to rapid growth. However a universal product is unlikely to appeal to a wide range of people so it is possible for a producer to create products for different market segments. Today we are going to discuss in more detail Cola drinks and C.D's as product within our superstores. For the purpose of illustrating segmentation further it is worth noting that recent demographic shift of men drinking Diet Coke has been noted by Coca Cola and their adverts are targeted far less specifically at woman than the old "Diet Coke break" ads of the nineties. ...read more.

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