Market Segmentation
Essay Preview: Market Segmentation
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Q1. Using a product (market for) example of your choice, demonstrate your understanding of the process of market segmentation and how to evaluate its effectiveness, by answering the following:
• Describe the process of segmentation.
• Apply the criteria for successful segmentation.
The process of market segmentation begins with selecting a market or product category for study. Consider, for example, if I were a hunting outfitter in the market of the “Sportsman’s Paradise” that is Louisiana. I would consider the trends in hunting including the varied and changing hunting regulation in the area. I then would choose the basis for segmenting the market based on my market knowledge and insights.
Is there a target market that is sustainable? The market must be large enough to warrant the development of a marketing mix that will prove profitable.
Can the market be easily identified and measured? Demographics must be attainable to include the age, geography, ethnic diversity, and economic buying power to justify investing in the market.
Can I access the target market? Identifying a market that can be served is not the same as actually having access to serve the market. Are there barriers to entering the market such as geography, language or literacy? Is my target market so spread out that it would be difficult to focus my marketing mix in a central location, which leads to the final criteria.
What is the responsiveness of the market? Can my market be enticed with the same special offers or is there such diversity in the population that for reasons such as age, literacy or ethnicity the different groups within the target market will all respond to different stimuli?
Once I understand the diversity of my market population, I will have to define the descriptors to use. If I chose to examine big game hunter, I would use criteria such as age, income levels and occupation. I would soon learn that the fastest growing segment of big game hunters is bow hunters. The typical bow hunter fits the profiles associated with middle aged professionals with above average income and somewhat more leisure time than their lower income counterparts. This market also tends to spend more time perfecting their craft and trend more toward heavy users of equipment.
The next step would be to analyze the segment and profile their preferred brands and identify any brand loyalties that exist, and look for life cycle indicators such as children that would indicate future market growth. Do spouses also hunt or shoot recreationally/competitively? These factors must be considered for long term profitability in the market. Selecting the market at this point becomes easy. Bow hunters stand out as a growing segment of the total hunting population in Louisiana. Though the sport is specialized, customers tend to be more affluent and willing to invest time and resources into perfecting and perpetuating their sport. From this determination a marketing mix can be designed and implemented to most effectively reach the market using the correct products, in the best and most centralized locations, most effectively promoted and at the most competitive prices.
Q2. Assume that you have selected the target market (selected segment) in your previous example in Q1. You are now asked to determine what specific product feature/benefit you must focus on in your marketing plan for that target market. Describe a marketing research process