Market Segments and Targets free essay sample

Many organizations are utilizing target marketing to compete more effectively. Companies focus on the customers which they can most likely satisfy, instead of scattering their marketing effort. Effective target marketing requires identifying distinct groups who have different needs and preferences which is called market segmentation and select one or more market segments to enter which is called market targeting. In addition, for each target segment, marketers must establish and communicate the distinctive benefits of the company’s market offering which is called market positioning (Kotler, 2006, p. 40). Market segmentation is the process of grouping a market into smaller subgroups. This is derived from the recognition that the total market is made up of segments. These segments are homogeneous within (ex: people in the segment are similar to each other in their attitudes about certain variables). Because of these similarities, they are likely to respond similarly to a given m arketing strategy (Zikmund, 1996, p. 258). Successful segmenting can greatly improve marketing effectiveness. Companies can purchase the right list, improving advertising results and increased consumer satisfaction. The requirements for successful segmentation are: 1. Homogeneity with in the segment 2. Heterogeneity between segments 3. Segments are measurable and identifiable 4. Segments are accessible and actionable 5. Segment is large enough to be profitable (Zikmund, 1996, p. 255). These criteria can be summarized by the word SADAM: 1. S Substantial: the segment has to be large and profitable enough 2. A Accessible: it must be possible to reach it efficiently 3. D Differential : it must respond differently to a different marketing mix 4. A Actionable: you must have a product for this segment 5. M Measurable: size and purchasing power can be measured (Zikmund, 1996, p. 257). The variables used for segmentation include: 1. Geographic variables a. Region of the world or country b. Country size – metropolitan cities, small towns c. Density of Area – urban, rural d. Climate – hot, cold, humid, rainy 2. Demographic variables a. Age b. Gender c. Sexual orientation d. Family size e. Family life cycle f. Education g. Income h. Occupation i. Education j. Socioeconomic status k. Religion l. Nationality/race m. Language 3. Psychographic variables a. Personality b. Life style c. Value d. Attitude 4. Behavioral variables . Benefit sought b. Product usage rate c. Brand loyalty d. Product end use e. Readiness-to-buy stage f. Decision making unit (Zikmund, 1996, p. 255 256). Geographic segmentation includes distinctions based on continents, cultural regions, and climate. Another basis for segmentation is political boundaries, such as state and city lines. However popul ations are not always adequately described by political boundaries. Marketers are most often concerned with the population map. The company can operate in one or a few areas, or operate in all but pay attention to local variations (Zikmund, 1996, p. 254). Marketers often use zip codes as a basis for market segmentation. People and households in the same zip code area are often similar in demographic characteristics (Zikmund, 1996, p. 254). Some approaches combine geographic data with demographic data to yield even richer descriptions of consumers and neighborhoods. Claritas, Inc. has developed a geoclustering approach called PRIZM that classifies over half a million U. S. residential neighborhoods into 15 distinct groups and 66 distinct lifestyle segments called PRIZM clusters. The groupings take into consideration 39 factors in 5 broad categories: (Kotler, 2006, p. 49) 1. Education and Affluence, 2. Family life cycle, 3. Urbanization, 4. Race and Ethnicity, and 5. Mobility (Kotler, 2006, p. 249). Individuals within a cluster tend to lead similar lives, drive similar cars, have similar jobs, and read similar magazines. Here are four new PRIZM clusters: 1. Young Digerate – couples or single, most with kids, who live in urban cen ters, tend to hold master’s degrees, affluent, tech-savvy, in their 20’s. 2. Beltway Boomers – forties and fifties, college-educated, upper-middle-class homeowners married late and are still raising children. They live in comfortable suburban subdivisions and are still pursuing kid-centered lifestyles. 3. The Cosmopolitans – continued gentrification of the nation’s cities has resulted in the emergence of this segment, concentrated in America’s fast-growing metro areas. These households feature older homeowners, empty nesters, and college graduates who enjoy leisure-intensive lifestyles. 4. Old Milltowns – Just as America’s once thriving factory towns have aged, so have their residents. Old Milltowns reflects the decline of these small, once-industrial communities, now filled with retired singles and couples living quietly on fixed incomes. These home-centered residents make up on the top segments for daytime television (Kotler, 2006, p. 249). In demographic segmentation, the market is divided into segments based on things like age, gender, income, occupation, education, religion, and race. Demographic segmenting is popular because consumer needs, wants, and usage rates and product and brand preferences are frequently associated with demographic variables (Kotler, 2006, p. 249). Psychographics uses psychology and demographics to understand consumers. Psychographic segmentation divides consumers based on personality traits, lifestyle, or values. Individuals in a similar demographic group can have different psychographic profiles. Benefit segmentation is a type of market segmentation in which consumers are grouped according to the specific benefits they seek from a product. In consumer markets, segmentation variables include demographics, socioeconomics, psychographics, geographic factors, behavior patterns, consumption patterns, and consumer predispositions. In business markets, geographical areas, organizational characteristics, purchase behavior and usage patters, and organizational predispositions and policies are used as segmentation variables. The appropriateness of any one variable or combination of variables varies considerably from case to case. The marketing manager must determine which variables will isolate a meaningful target market (Zikmund, 1996, p. 261). The Advantages and Disadvantages in Segmentation Advantages The main objective of segmentation is to increase your sales and increase your profits. It helps you achieve this by helping you to; 1. Identify new product opportunities. It does this by helping you identify the needs of different market segments and developing products to satisfy those needs. 2. Identify new product opportunities. It does this by helping you identify the needs of different market segments and developing products to satisfy those needs. 3. Develop more efficient methods of promoting existing products. 5. Identify new or highly profitable markets or new channels of distribution. 4. Target a particular market segment more efficiently than spreading limited resources over a wide area. 5. Maintain sales but reduce expenditure on promotion and advertising (â€Å"UniSdirect†, 2003). Disadvantages Generally, there is an increase in costs with segmentation stemming from increased; 1. Market research the need to better understand the needs of the various market segments. 2. Research and development the need to produce different products for the different market segments. 3. Production costs-the need for different products for different market segments. 4. Administrative costs-the need for separate marketing plans for the different segments. 5. Inventory costs-the need for additional stock to cover variations in demand plus additional stock holding and control systems. 6. Distribution costs-the need for different distribution channels for different market segments (â€Å"UniSdirect†, 2003). Mississippi Army National Guard The Mississippi Army National Guard’s marketing objective is to create a positive image which leads qualified individuals to consider and/or continue Guard membership. This will be accomplished with an emphasis on television, as well radio, direct mail, collateral material, public relations and direct contacts. The Mississippi Army National Guard marketing objectives are as follows: 1. Actively pursue the recruiting of prior service and in-service candidates. 2. Highlight the opportunities available to Guard members to be leaders of the future in terms of technology, education and training. . Position the Guard Members as â€Å"American Soldiers† who protect our freedom and the American way of life. 4. Promote Mississippi specific benefits. 5. Achieve and maintain a state strength of 100% or higher. 6. Maintain a 17% or less attrition rate for each unit in the state. 7. Utilize direct response programs to generate qualified leads for recr uiter follow-up. 8. Position the Guard as a stepping stone to greater career opportunities by providing training, building a resume, and networking. Several Army National Guard units have returned from deployment only to lose many of their qualified personnel. The Freedom Salute Campaign is a wonderful program that helps in the retention of soldiers returning from deployment. The Mississippi Army National Guard needs to do a better job at presenting this program. The Mississippi Army National Guard must aggressively target employers for special recognition and invitations to unit activities to ensure that employers of Guard personnel are informed and supportive of their employees Guard membership, and that employers are shown that the Guard appreciates their sacrifices and commitment.