Market segmentation
Segmentation is important as buyers have individual needs and wants. In segmenting a market, marketers look for broad classes of buyers who vary in their needs. There is no one right way of segmenting markets. A marketer has quite a few bases available to him for the segmentation of markets.
Geographic segmentation – In geographic segmentation the market is segmented according to the geographical area. It can be segmented according to nations, states, cities, climate etc. This is done because needs and wants are different in different parts of the world.
Demographic segmentation – In this type of segmentation the market is segmented on the basis of characteristics of population. It is segmented by the age, gender, income, family size, education level etc.
Psychographic segmentation – Here Buyers are divided on the basis of life style or personality.
Behavioural segmentation – In this type of segmentation buyers are divided according to their buying behaviour. Market can be divided like say for airline passengers into frequent flyers, seasonal flyers and occasional flyers.
There are six steps to market segmentation, targeting & positioning and these are
- Identifying qualities for segmenting the market
- Developing profiles of the segments created
- Develop measures of segment attractiveness
- Select target segment
- Develop positioning for each target segment
- Develop marketing mix for each target segment
Market Segmentation is used by a company to help boost up sales as you would target a certain group of people who the company would know would come back and be regular customers. They do this so that a certain people have products that are individually made for them. For example the Nokia N95 is made for people who have cars as the phone has a built in GPRS which means that people who have car can buy this phone instead of buying an actual GPRS. It is especially good for people who have just started driving or people who have just have come to the country they can buy the phone and just simply use it instead of buying a whole new GPS. This phones is mostly aimed at this market which means that people who
Branding
Branding is like setting names for products. Nobody would set up in business or launch a new product without giving it a name. Branding is a very important part of promotion. It can help a business to set up an identity to the product. Furthermore, ‘Branding’ contributes to the value and financial viability of businesses, just like their products, fixed assets and input.
Businesses therefore would spend large amounts of money on TV and newspaper advertising campaigns, in order to end up with name that foremost in everyone’s mind. Just think of ‘Coca-cola’ and ‘Pepsi’ competition, they both spend an obscene amount of money in promoting their brand each year, in order to become the dominant brand. We can also notice that many of their ads don’t even contribute to its product, but rather, selling their brand and try to create “brand awareness” as well as “brand loyalty. As they simply want to create a well known brand.
This becomes apparent as we just see how powerful ‘branding’ can be as a selling tool in the multi-media marketing environment.
Such good job at impressing its brand into customers mind may also gain advantages in competing with other brands/products. Even for businesses that have better products at higher prices, but without a well-established brand, they might still have disadvantages when comparing to one's corporate brand that is well known. From this, it can be seen that the power of branding might even be more important than the quality or price of your product. In addition, when competition is global, it may also gain advantages, as branding is a way to distinguish your product from other competitors’ products as well as separate yourself and your business from the competition.
Branding is also like the reputation of a company, which also effects business’ publicity. Often the choice of setting up an industry or a business is often directly linked to this notion of reputation. As a company has a good reputation, it may attract new customers, which would create ones’ demand and ‘brand loyalty’. Customers tend to purchase products from companies that have a good reputation. This is because as the firm have a good publicity, consumers tends to ‘trust’ their products, hence, consumers will be more willingly in trying their products, which would increases the amount of new customers for the business. As the business have more new customers, its demand and loyalty would eventually increase. As consumers try the products, satisfy with its quality, most of them will be used in using the product and are unwilling to change to another brand. The company would also gain more consumers’ recognitions. Thus, such consumers will repeat-purchase the product on a regular basis. This way, brand loyalty would not only eliminate competition, but also increases business’s sales and revenue, and presumably its profit would increases as well.
As a company have great amount of brand loyalty, the product’s price elastic would eventually be low. This is because consumers are unlikely to be price sensitive. As the price elastic is low, it enables company to increase the price level without much effort upon demand; hence, the company can create value and a premium price. Such companies would have the benefit in setting their price higher than the prices of similar products, such as products from “Burberry.” However, such products’ qualities may not necessarily be superior.
However, a ‘well-known brand’ is not easy to build, especially for young companies. Also, it takes years to build and can be damaged very rapidly. Furthermore, “branding” is a very expensive promotion tool. Therefore, it requires large amount of financial resources, which businesses may not have the ability to pay. For instance, businesses would have to pay for registration cost for trademark, which avoids other competitors to ‘steal’ your idea, as called as ‘legal’ cost. Even for a well-established brand name, it can be easily forgotten in consumers’ mind, therefore, it would be costly for businesses to pay for ‘continuous’ promotion of the brand.
Nevertheless, ‘branding’ is a very powerful tool in promotion and also very important tool for developing businesses. Although it is an expensive tool, which some businesses may not be able to afford the amount of money for ‘branding.’ Such businesses might results with some disadvantages when compare with a well-branded business, however for some cases/markets, branding may not be as important to consumers, such as plants. Ultimately business is only as good as the identity that underpins it, as ‘branding’ allows businesses attract new customers and make “established” customers return time and again. Thus, increases ones’ profit.
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
