TASK 3 - MARKET SEGMENTATION

Market Segmentation: is defined as dividing a large population into separate groups or markets based on a set of common characteristics, each group representing a distinct target market with its own requirements for a marketing program.        

There are several important reasons why Sony PS3 segment their markets,

 Among these are the following:

  • Enhanced profits for its products; consumers have different disposable income. They are therefore different in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits.
  • Better matching of customer needs; Customer needs differ.
    Creating separate offers for each segment makes sense and provides customers with a better solution.
  • Better opportunities for growth; Market segmentation can build sales. For example, customers can be encouraged to trade up after being introduced to a particular product with an introductory, low priced product.
  • Retain more products; customer circumstances change, for example they grow older, form families, change jobs or get promoted, change their buying patterns. By marketing products that appeal to customers at different stages of their life (life-cycle), a business can retain customers who might otherwise switch to competing products and brands.
  • Target marketing communications; businesses need to deliver their marketing message to a relevant customer audience. If the target market is too board, there is a strong risk that the key customers are missed and the cost of communication to customers become too high/unprofitable. By segmenting markets, the target customer can be reached more often and at a lower cost.
  • Gain share of the market segment; unless a business has a strong or leading share of a market, it is unlikely to be maximizing its profitability. Minor brands suffer from lack of scale of economies in production and marketing, pressures from distributors and limited space on shelves.
    Through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs become the preferred choice of customers and distributors. This is trying to show that segmentation offers the opportunity for smaller firms to compete with bigger ones.
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Problems of segmentation

  • Individual products can be easily picked off by competitors:
  •  Range proliferation:
  •   Highly segmented niche products may not be as profitable as expected:

Markets for the Sony PS3 are segmented into three boards, these are summarized below: 
 
Geographic: Geographic segmentation tries to divide markets into different geographical units. These units include the following:

• Regions: the Sony PS3is segmented into region. E.g. U.K this involves England, Scotland and Northern Ireland.

• Countries: these are categorized by size, development or membership of geographic region. E.g. France, USA.

• City ...

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