Modeling Of Market Segmentation Essay.

Types of Market Segmentation

Discuss about the Modeling of Market Segmentation.

Nestle is one of the leading FMCG company, founded in Switzerland. Currently, the company is having an operation in almost 86 countries. The company consists of the 339,000 employees along with the sales of more than $130 billion in 2014. By the year 1906, Australia had become the second largest export market for the company. Nowadays the company is making the sales of more than $ 550 million across the world. Nestle include some famous brands such as Nescafe, gourmet, Kit Kat, Maggi, Nestea, etc. (Nestle, 2017)

The company is having a good market and follow the marketing strategies. The company has adopted the culture of different countries and has established their operations. The report talks about the market segmentation, target audience and position of the brand in the market (Venter, Wright, & Dibb, 2015)

Market segmentation is marketing concept that is used by the company's to understand the customer's requirement by satisfying their needs.  Different customers have different requirement, it is difficult for the company to satisfy the needs of the customers at the same time or collectively. This is the reason each and every organization is following market segmentation strategies (Boone, & Kurtz, 2013). There are 4 types of market segmentation on the basis of customer characteristics.

• Geographic area
• Demographic area
• Psychographic area
• Behavioural area

Geographic segmentation: - This segmentation is based on the location of the customer. The target audience preferences vary according to their locations. Geographic segmentation can be done on the basis of the world or country region or rural area segmentation (Peck, Christopher, Clark, & Payne, 2013).

Nature; Nestle has segmented its current market for Nescafe Ice on the basis of geographic weather such as warm and cold. Nescafe Ice is a coffee which may be consumed with ice. During the cold season, most of the customer avoid consuming ice. This shows that nestle make the product available according to the demand of the product.

Demographic segmentation: - This segment includes the target market on the basis of the age, gender, family size, income, etc. nestle main products are based on the generations (Dietrich, et. al., 2015). Different products like Cerelac, lectogen, Koko, Krunch, Nido contain different segment market according to the products.

Age: - Nestle offers it products to people that consists different age group. It totally depends on the product which product they are offering. Each product of company contains some or other minerals; those are inculcated by company according to different age group peoples.

• Nido; it is nutritious milk which is available for the children’s whose age group is 2 years or above. This product contains 25 minerals and vitamin D which helps in the growth of the children.
• Cerelac; ceralac contains a mixture of milk and rice which is available for the one year baby. So the company targets new born babies. This product fulfills the demand of nutrition in foods.
• Nesquick, Koko Krunch; this is a chocolate milk for babies. It contains vitamin, protein, and minerals that plays an essential role in child's required growth.

Advantages and Disadvantages of Different Segmentation

Income: - Nestle targets the customers on the basis of their income. Nestle product is also available for the low-income group people. The most popular product of a company that is used by the people is Nescafe coffee.

Psychographic segmentation: - This segment involves the market based on the values, attributes, a lifestyle of the people, etc. (Hamka, et al., 2014).

• Lifestyle: - Lifestyle includes the living standard of the people. Products of a company are in demand because of hike in the living standard of people. Peoples consume nestle products as this indicate their rich and prosperous lifestyle.
• Social class: - The products of the nestle brand itself shows a class. People who consume the products think that consumption of this product will add to the class.

Behavioural segmentation: - This market strategy is actually based on the consumer buying behavior. It segregates the market on the basis of the knowledge of the customers, their attitudes towards the product (Browne, Pullinger, Anderson, & Medd, 2013).

Benefits: - The market of the Australia is segmented according to the requirement of the product. Nescafe coffee is in demand by the people after knowing the benefits. Similar with the cerealc that contains high nutrition that is beneficial for the child whose age is less than a year. The products are more in demand because the customers keep knowledge of the product and they have a preference for the products.

Segmentation Base	Advantages	Disadvantages
Geographic segmentation	·       Geographical segmentation allows companies to consider cultural differences of different countries across the world. ·       Provide an opportunity to the company to expand the business globally after understanding the culture of the countries (Nasiopoulos, Sakas, Vlachos, & Mavrogianni, 2015.	·       In this segmentation, a company needs to assume that all the customers are similar and have similar demands.
Demographic segmentation	·       It is very simple to apply for the companies. Companies can consume the data available with the government. ·       Required data related to the consumer and their preferences can easily obtain by the company (Gunter, & Furnham, 2014).	·       Different consumers of a different age group and income group have different demands. So a company may find difficulty in segregating the group.
Psychographic segmentation	·       The organization can give better insight to the customers in understanding the needs and motives of the customers. ·       A better understanding of customer needs may help a company to deliver a better experience to the customers (Bo Liu, et.al., 2014).	·       Organisations who consider this segment need to acquire appropriate data/research that can be used by the company for segmentation.
Behavioural segmentation	·       This segmentation is often used by the company to attract the heavy users. It can also be utilized to identify the knowledge that customer has regarding the product that company is offering.	·       This segment is dependent on the detailed market intelligence, database, testing, and experimentation. This makes it an expensive process (Vinerean, Cetina, Dumitrescu, & Tichindelean, 2013).

A target market is a group of individuals which is targeted by the company for their products. The company target audience on the basis of segmentation. Nestle distributed their target market because of a numerous number of requirements and wants of the company. Nestle decided to choose differentiated marketing (Gilani, Kazemi, Asadi, Samadzadeh, & Atashpanjeh, 2014). This shows that company target different customers according to the requirement of the customer for different products. This is done on the basis of different ages, occupation, season and climate.

The company makes separation in the target market. They target on the basis of a primary and secondary target market. The primary target audience includes the customers who are most likely to buy the product. On the other hand, the secondary market includes who second most important customers for the company. Nescafe is a preferable product for the consumers (Begum, 2015). The primary target market includes people who like to prefer coffee on the regular basis without any hassle. Customers who want to enjoy different flavours of the coffee (latte, mocha, Cappuccino). Demographic segmentation is a primary target for nestle company. The age group which is considered as the primary target is 20-35 of middle and upper class. Nestle cerealc is increasing in the demand. This is the reason customer consider new born babies age of 1-5 years into the primary target market.

Target Market

The secondary target market of a company include the people of the age group of 35-50 or 5-20. The reason begins there are some of the products like nestle kit kata and Maggi which is mostly preferred by the people having the age group of 5-20. The Nescafe one of the products of the company is least in the demand by the age group of 35-50. Apart from the age group, income group also matters. The average and low-income group are considered in a secondary target market. The below given is the customer profile of the company. This customer profile is based on the segmentation. This shows that from each segment how company targets the audience. 

Geographic dispersion	Urban suburban position (no rural positioning done as it is not cost-effective)
Family life cycle	Full nest-I
Social stratification	Upper- upper class Lower- upper class Upper- middle class
Age segments	Infants (0-5) Mothers (18-45) Children’s, adults, youth and teenagers of different age group
Income	Average Above Average High-income group people
Gender	Male and female, including children’s
Lifestyle or social class	People who maintain a high standard of living and people who believe in social class.
Social class	Some people believe that consuming products of a company will add value to their class and social status.
Occupation	Youth, working professionals, athletes, health enthusiast, and sports enthusiasts.

Positioning defines as the place that a brand captured in the mind of the customers which is different from its competitors (Armstrong, Kotler, Harker, & Brennan, 2015). Nestle is making a place in the market very easily as compared to its competitors.

The above image shows the perpetual map of nestle company in which position is visible.  The company position is in between the high price and high quality. The company is following different strategies to maintain the position in the market. There are some of the strategies which are explained below that company follows (Shank, & Lyberger, 2014).

Strategy related to product differentiation: - Nestle makes available different products to their customers. The company provide a product such as Nescafe coffee, Maggi, Nescafe ice, etc. company provides different products which make the brand popular in the market. The customers who are not aware of the product will get to know about the product. Maggie includes instant Maggi in 2 minutes which contain minerals and vitamins (The Next Practice, 2017).

Strategy related to Channel differentiation: - Channel of distribution followed by a company is unique. The company believes in delivering the products to the customers through experienced market salesman and transportation. Hence, their products are going to be easily available to the customers (Silva, 2013).

Strategy related to Image differentiation: - The logo of the company is unique and different from the competitors. The customer can easily choose nestle in the market for its effective benefits for nestle products. The logo presents the image of the company.

Nestle can work on the positioning strategy of the company. The company should try to implement the standard testing ways. The standard testing will reduce the faults in the products. The products introduced by the company need to be tested and there should be some standard. Products are offered from infant to youth or aged. So a company should try to deliver best quality products that will enhance the position of the company in the market. Cerealc is one of the products which are offered to infants. Hence, the company should make sure that they are delivering a tested product. Earlier while testing food quality it was found that Maggi contains lead in it. This case created an impact on the positioning of the company. The customers of the company either switched the brand or started using Maggi again after some time. 

Primary and Secondary Target Market

This shows that the company needs to focus on the testing of the product and the quality of the product. Positioning is based on the quality of the product. This also impacts the demand and sales of the product. The company needs to maintain the standard of the products that they are offering to the customers. This will help in enhancing the position as well as the demand of the product.

Conclusion

The report throws light on the segmentation, targeting and positioning of Nestle. The company is a largest food processing company. With the change in the time, there is a change in the demand of the customers. The company believes in providing quality services to their customers to increase the efficiency of the target audience. This target audience is separated into different segments. Segmentation is done by the company considering the demands of the product by the customers (Keegan, & Green, 2015). The quality product and services of the company will enhance the position of the company in the market. To enhance or to maintain the positioning of the company follows some strategies. The company should test the product before introducing it into the market.

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