Segmentation is fundamental to the marketing process. Discuss why segmentation is so important for effective marketing.

Product segmentation is similar to consumer segmentation in that it is distinguishing segments based on characteristics; however it concentrates on how to market the product rather than how to sell it to a specific group of consumers. The characteristics of each product can be split mainly by the purchasing behaviour or trends of consumers, buying for occasions, consumers buying to gain benefits and also the consumption behaviour.  The first way of splitting it would be by looking at how customers tend to keep and follow brand names when making purchases, this shows how much impact a brand name can have on a consumers views, as new products brought out under an established brand name are more likely to succeed than the same product being brought out without an established brand name. Occasional segmentation mainly relates to purchase increase due to external factors, such as an increase in the sale of Christmas cards around the Christmas period, or an increase in the sale of umbrellas during autumn, and winter compared with the rest of the year. Another factor which can be taken into account when segmenting a market can be the benefits a consumer seeks to gain out of making a purchase. This can be seen most clearly with products such as hair products, where shampoo may be purchased because it has conditioner combined etc. Consumption behaviour is another way a company can identify a segment in which to direct its marketing campaign. This is because often when companies look at the purchases made by certain groups of consumers they concentrate on promoting the ones that are purchased often rather than trying to encourage purchases that are not. This can be seen by supermarket loyalty cards, where they post out vouchers to their customers based on recent purchases. By identifying products that consumers do not purchase and then giving vouchers or special offers on those items, will encourage consumers to buy those products. Another factor which may effect the purchasing of a product due to its position in the market may be customers attitude towards it. This can best be seen by some customers choosing to buy free range products and non genetically modified food stuffs in stead of those with artificial flavourings etc, another good example would be with make up products being animal tested or not may influence a consumers choice in purchasing that product.

In my opinion a good example of a company that has chosen its target market well is the Tie Rack as it has what can be described as a niche market. They have created a known name and image for themselves and have established themselves within a specific position of the market. Their market is the supply of fashionable and traditional silk ties, silk and fashion scarves, silk clothing and accessories, many of which are original in design. This means that their product segmentation covers several areas in that to some extent they can be purchased for special occasions as gifts, or perhaps buying a silk tie for a special interview. Tie Rack has also managed to choose a part of the market that will appeal to a specific group of consumers, the professional worker.

The Tie Rack has taken into account demographic factors when segmenting its market. It can be seen that in each of its product despite them being different are all targeted towards the same age group, which are the consumers aged between 20 and 30. However Tie Rack has also managed to gain the image of a good quality and fashionable items and whereas they may target the younger generation of office workers, it still manages to attract customers from older groups of consumers. Tie Rack may have started out as a producer of just ties, which would have made men the main target of its marketing but since has diversified into other areas and now produces items to suite both men and women, with the introduction of women’s scarves as well as new ‘photo bags’. Tie Rack also targets a specific socio economic group with its products. This can be seen by the fact that it would be a waste of resources to some extent promoting and targeting consumers whose occupation does not require a shirt and tie to be worn. The occupation can be related to socio economic factors as generally the higher the paid occupation; there becomes an increasing need for ties to be worn. The leisure activities of Tie Racks consumers doesn’t play that much of a part on whether or not the shop at Tie Rack since it covers such a wide base of consumers it is difficult to distinguish any correlation between customers and their leisure activities. The geographical location of the company’s consumers has an effect to some extent as considering its main consumers or main targeted consumers are likely to work in offices within large towns or cities rather than on farms. Tie Rack recognises this and has endeavoured to ensure that every large town or city has one of its branches. Behavioural factors play a large roll in the way Tie Rack segments its market as can be seen by the way they promote and emphasise on their ‘fashionable’ products. It plays off several pre conceptions held by consumers, firstly by describing its products as having ‘fashionable designs’, this will encourage the targeted market to make purchases in order to keep with the times and the latest fashions. Also by promoting the fact that many of its designs are made in Italy and that many of its products are made in Italy adds emphasis to the ‘fashion’. This is because people perceive that many of the best fashion designers come from the continent and so assume that the product will be of good quality. Also by producing all of their goods with silk, such as silk ties etc. it gives the product the image of being superior and made of a superior material.

As can be seen above market segmentation may not necessarily be seen as a fundamental to the marketing process but it is one of the key factors required to ensure that a marketing campaign is run efficiently and successfully. It is possible for a company to market a product without targeting a specific segment or group of consumers, and to be successful, this is known as mass marketing. However for the majority of companies and products, segmenting the market will focus the companies finances effectively and ensure that a new marketing strategy and product is successful. After identifying a target group of consumers it is possible to create a brand name eventually. This is a successful strategy as can be seen by Tie Rack, which has managed to effectively create both a brand name and has managed to gain control of its own niche market. Once a brand name is established and you have a targeted segment it makes it easier for a company to diversify or bring out new products, as they will have market already prepared.