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The concept of segmentation and the bases for segmenting markets - The main methods of segmenting -  The benefits and drawbacks of segmentation - The development of targeting decisions and strategies for positioning.

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Introduction

The concept of segmentation and the bases for segmenting markets. The main methods of segmenting. The benefits and drawbacks of segmentation. The development of targeting decisions and strategies for positioning. All organisations sell or provide a service to the consumer; each service is significant and has its own place within the market. It is of the understanding that organisations cannot appeal to all markets or at least to all buyers in the same way. Buyers are all different and all seek a different array of needs, wants and desires. Companies vary widely in their abilities to serve different market segments of the market. Each company has to seek to identify their own markets that it can serve best. Segmentation provides the understanding for this. McDonald and Dunbar 1995 define segmentation as: "Market segmentation is the process of splitting customers into different groups, or segments within which customers with similar characteristics have similar needs. By doing this, each one can be targeted and reached with a distinct marketing mix." This enables the organisation to provide the best service for their customers. Kolter, Armstrong, Saunders and Wong 2001 define segmentation as a compromise: "Segmentation is thus a compromise between mass marketing, which assumes everyone can be treated the same, and the assumption that each person needs a dedicated marketing effort." Mass marketing is not of common nature today and few companies practice it. ...read more.

Middle

This will also improve communication. Therefore small changes in segments can be responded to quickly. Competitor's analysis allows for competitors to be identified and understood. It is important to be aware of who your competitors are, knowing what they are doing better than your organisation so that you can compete against them. This will assist in the decision making process and help your organisation to identify competitive advantage. Considering markets in different ways from competitors once you know what they are offering can help an organisation to target the appropriate market perhaps one, which has not been identified. All organisations have limited amount of resources for an organisation to target a whole market would be unrealistic and out of reach. With the use of effective resource allocation ensuring that personnel and material resources are focused, it will assist in maximum effectiveness being achieved. Strategic marketing planning divides markets helping marketers to develop plans, which suit the particular needs and requirements of customers in different segments. Time scales, which are developed from the use of strategic plans, can also be structured accordingly. Segmentation can help to enhance profits; this is a major benefit to all organisations and is extremely achievable. Prices can be varied to suit segments this benefits the organisation and customers and is an all round better solution. Prices can be varied to suit segments ensures a better solution to the organisation and customer. ...read more.

Conclusion

Strategies for re-positioning which can be resultant in changes of tastes poor sales and performance. Product and market remain the same and change image. Market remains the same and product is modified. The Product remains the same but there is a change in the market an example of this is when Lucozade changed it image form Lucozade being for people who were sick and in hospital. Now it's the energy drink and the target market is people in sports. A change in product and market. Market research is vital if an organisation is to understand the current market situation. For an organisation to be able to trade successfully, a business must endeavour to satisfy its target customers in away, which rivals its competitors giving it competitive edge. The segmentation process requires strict management if it is to be effective. It is a creative process and is regarded as one of the key elements of modern marketing. It has been devised to help satisfy customers in doing so creating competitive advantage for the organisation, which it has been implemented in. It is defined by the customers needs not the companies. Segmentation, targeting and positioning should be reviewed regularly and adapted as and when necessary. It is available to all organisations. "No longer the exclusive domain of large companies with supercomputers and massive marketing budgets, segmentation tools are now available to virtually any company with customer data and desire to maximise marketing return on investment." Ellis 2003 1 Fiona Kearney BA (Hons) Hospitality Management HTM510J1 ...read more.

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