In marketing, a group of persons with similar needs and wants is referred to as a market. Organizations might have multiple markets which might differ in terms of their needs, demands and wants (Kotler & Armstrong,2008). Due to the fact that it is relatively impossible for an organization to successfully satisfy the needs of each consumer, segmentation becomes an important marketing component. Segmentation is the process through which a market is divided into different consumer segments based on certain characteristics. Market segmentation usually precedes target marketing and is quite important for the success of an organization. Organizations use various ways to segment their markets
Demographic segmentation is the process of differentiating a market based on variables such has age, gender, level of income, household and education. Demographic segmentation is one of the commonly used methods of segmentation. Demographic factors are the major determinants of the amount of money spent by consumes, buying patterns as well as the type of products bought (Lynn, 2011).
Geographic segmentation is the process through which market segments are separated on the basis of geographical attributes such as a state, nation, neighborhood and region (Booth & Coveney,2015).These can usually have an impact on the marketing and promotion channel used as well as the marketing mix of a given product. Demographic segmentation usually differentiates people in terms of Geography. The basic assumption here is that people have different needs based on the geographical area that that they are located in (Hitesh, 2017).Under Geographic segmentation you might find a similar company with operations in two countries with different climatic conditions selling heaters in one country and coolers in the other.
Psychographic segmentation separates a market on the basis of their beliefs, attitudes, values and opinions .It also includes factors such as lifestyle. (Hitesh, 2017) observes that Psychographic segmentation has some similarities with behavioral segmentation with the only difference being that unlike behavioral segmentation, psychographic segmentation takes account of the aspects of the buying behavior of the consumer. An automobile company can for example segment its market in terms of consumer interested in luxury practicality and the environment (Lynn, 2011).
Behavioral segmentation separates consumers on the basis of shopping and buying behaviors such as purchase frequency, bard loyalty, media habits, and channel usage. Under behavioral segmentation buyers would be classified as online shoppers or those who buy products from the stores, those who prefer impulse buying and those who do research on a particular product before buying it (Hitesh, 2017).Smartphone market is a good example of a market which has successfully used Behavioral segmentation. With brands like Blackberry targeted for business people, Samsung for android enthusiasts and people who like free applications. On the other hand Apple was launched for premium users with the desire of belonging to a popular niche.
Advantages and disadvantages
According to (Martin,2012),Among the major advantages of behavioral segmentation is the fact that they allow a business owner or an enterprise to know their customers in detail. Knowing customer’s specific needs and wants can be important for marketing purposes. It can also be used to increase productivity without much budget. Understanding of the behavior of customers can enable a business owner to know the appropriate advertisements for that particular segment. Behavioral targeting can also be used to anticipate needs and wants current and potential clients
There are also a number of disadvantages of the use of Behavioral segmentation. Behavioral segmentation is quite expensive if connected with traditional online marketing tools. This strategy cannot also be used for all products especially those products with mass appeal. In such cases it might not be effective. The method also relies on detailed market analysis which might make the whole process inappropriate (Martin,2012).
Among the major advantage of geographical segmentation is the fact that it is clear, simple and can b easily understood by all the players. Due to the fact that promotion activities are confined to the boarders of a particular region or nation, the process becomes more simplified, it also removes the need for publications in multiple languages. It can be quite effective for large companies that operate in more than one country or Geographical region as it would enable to consider cultural differences among these regions. It also presents an option for small firms that are not endowed with resources to be able to operate in a defined area effectively(Dolnicar & Leisch,2004) argue that Geographic segmentation works well in countries or region that are composed of people with different lifestyles or belonging to different classes across regions.
Among the disadvantages of Geographical segmentation is the danger of viewing heterogeneous consumers from a similar geographical region as a homogenous segment which might not be the case.
Demographic segmentation has numerous advantages which include the fact that the approach is majorly focused on the people who are likely to be interested in a product or a service. The method is also cost effective in that there is no money wasted try to appeal to people on people who would not be interested in the in the given product or service (Kotler,2008). It is also less intrusive unlike other methods. It can also easily be understood by the management as well as the employees.
Among the disadvantages would be that in a situation where there were errors in the market research, efforts would be focused on the wrong demography. There is also the risk of alienating people who fall between classes as well as the people who do not belong to that particular demography but would be interested in buying for someone else.
This method presents an opportunity to understand the customer as an individual, which can contribute to the identification of underlying Consumer needs and motives. It is also important in developing promotional campaigns and understanding the reasons as well as what motivates Consumers to purchase particular products and brands.
Psychographic segmentation requires extensive market research which can be quite expensive .It is also not suitable for smaller brands or firms because of the related costs.
A primary market is market that an organization believes it will reap maximum benefits from it. While a secondary market is second most important consumer segment for an organization
Secondary market is a market that is the second most important for an organization after the primary market. The secondary target market for the Grocery is people within the same location or other parts of Australia with less demand for the company’s products. These have been chosen because; apart from Lack of interest with the company’s Products they can be potential customer for the grocery in the future (Kotler & Keller, 2016).
The Primary market for Coles Supermarket is the Grocery buyers living around Coles Torch Media, Australia
These people are located at close proximity with the grocery which makes is relatively easier for them to access the grocery easily at any time. At such a close proximity this market can be quite resourceful for the grocery since they can easily access the premises to make purchases.
The segment seize of the market is also quite large. The segment is composed of an approximate number of 8,460 Grocery buyers at each location. This population is therefore quite significant and has a possibility of turning g around the fortunes of the grocery.
Among the major attributes of this segment is its high growth rate .The segment has been recording a significant growth in the recent times. This therefore shows the great potential that is within the segment. With this the segment is likely to become a bigger reliable market for the grocery.
The Company is endowed will sufficient to enable it to compete successfully with other players in this segment for this reason the segment has become an important segment.
In this market also it would be relatively easier to access the appropriate distribution channels without the necessity of so much new investments.
Positioning is marketing concept that defines where a company’s products stand in relation to the similar products offered by competitors in the market as well how consumers perceive these products. According to (Kartajaya, Kotler & Setiawan,2013) positioning is the act of making a given Company’s product or brand occupy a unique place in the mind of the target consumer or market. It offers a description of how a brand or product differentiates itself from others in the market and how it is perceived in the customers mind.
Good positioning can be very important for the success of an organization giving its products a unique selling point and driving the urge by the consumers to continue using the product. As competition in the corporate world keeps increasing, a good positioning strategy can give a company a competitive edge against its competitors regardless of the price offered against that of the competitor’s product. A good positioning should allow flexibility of a product with regard to the products advertising, distribution, extension and changes. Good positioning might involve incorporation of distinguishing features in a brand or a product. Grocery has established a brand through the use of place, product, price and promotion.
The Grocery has strategically positioned itself in the food industry. The company has for over the last 100 years continued to offer its clients quality products, excellent customer services and creating value for Millions of Australians. The company has stood out as a company that is focused on the sustainability of the future as well as supporting local jobs in its industry and creating of mutual lasting relationships with Aussie farmers. The company has also put more emphasis on its customers and any major undertaking has had the customers in mind (Plunkett,2007).
Price is the amount of money that is required to possess a certain product or the amount of value that is placed on a given product. Pricing is major position strategy that is used by organizations to enhance their competitiveness the competitiveness of a product or brand is to some extent determined by the price adopted in comparison to the prices set by competitors. Coles supermarket has adopted charging low process for its products compared to its competitors in the food Industry particularly its main rival Woolworth (Murray et al, 2016). The Supermarket’s recent pricing strategy has involved permanently cutting down prices for a number of Grocery products in order to attract more customers. Lowering of prices has positioned the company as the best option for many consumers in terms of quality products and fair prices in the Australian market. By positioning itself as a supermarket that is concerned with permanently making affordable its products to its consumers the Supermarket has been able to outdo its main rival Woolworths. As a result of fair pieces, the company’s sales have significantly grown. Low pricing strategy allows an organization to attract many customers through its wide range of products that can be accessed at lower prices I comparison with the prevailing prices in the market. Lower pricing has enabled the Supermarket to retain its customers. Among the products whose prices the Supermarket has lowered to achieve these targets include rice, tissue, chicken and tooth paste (Booth & Coveney,2015).
The supermarket offers a wide range of fresh products to its customers. Its main products include dairy products, baby products fresh fruits and vegetables, meat, bakery, liquor and Kosher (Armstrong et al,2014). Apart from these the Supermarket also offers its own brands such as BonSurco sugar and graze-grass fed beef. It has positioned itself as the natural food brand in the market. Among its strategies to improve its competitiveness, the supermarket currently concentrates on offering meat that is free from growth promotants; it has also removed pork produced through the use of sow stalls from its shelves. Its major focus is on offering a wide range of products to its customers. By positioning itself as natural food purveyor Coles has been able to improve its competitive edge in the market.
As part of its distribution strategy, the supermarket reaches out to its users through its more than 2300 outlets. It has also continues to avail its products to more people by opening up more outlets like the 2015 state of the Art supermarket. In the same year also the supermarket opened more 20 new supermarkets. The company also has an online presence through its Coles online Supermarket that allows Consumer to view the various products that it offers at any time and place and be able to place orders. The Supermarket also facilitates delivery of fresh food to various locations (Baker,2016).
Its promotion campaign is majorly centered on the Supermarkets’ low pricing strategy among the common phrases used in its promotion campaign include cheap groceries, extra value for me and you and why pay more emphasizing the low quality charged by the supermarket on its products. The supermarket also uses promotional schemes during certain times of the year such as Christmas Eve and New Year (Knox & Knox, 2015).
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