You are required to complete a target marketing exercise for the organisation that was the subject of assessment one and two. Target marketing is described and discussed in Chapter 6 of your text book, and it comprised the three sequential stages of market segmentation, market targeting and positioning.
1. Discuss the various ways the organisation can segment their audiences. Critique the relative advantages and disadvantages of each of the four segmentation approaches. Support your response with various theoretical approaches used when segmenting consumer markets.
2. Based on your response in part A, identify and describe a primary and secondary target market for your organisation. Justify your decision based on the selection criteria that you have used.
3. Explain what positioning means and then analyse:
a. how your organisation has been positioned
The market segmentation is an integral part of the marketing communization. The market segmentation can be defined as the process of dividing a broad range of consumers unto different subgroups which have some shared characteristics. In the market segmentation, the researchers divide the target market based on some common characteristics which includes common needs, common interest or similar lifestyles. The aim of the segmentation process is to increase the effectiveness of the marketing process. Moreover, the segmentation process also assists in identifying the high yielding segments which refers to the market segments which are most profitable and have the most growth potential. Different business enterprises segment their target customers on different categories, such as Businessto2-Business enterprises segment their target customers according to different types of businesses and countries whereas Business—to-Consumer enterprises differentiate the target customers according to demographic features, behavior or lifestyle (Wrinstein, 2013). In market segmentation, it is assumed that different consumer segments require different marketing programs. The marketing segmentation is also conducted for better understanding the needs and the purchase motivations of the target customers. There are different basis of market segmentation process; however, each segment tries to minimize the differences between the members of a segment and maximizes the difference between different segments. The most common basis for the market segmentation is geographical, demographic, psychographic and behavior segmentation.
The geographic segmentation refers to the separation of a market according to different geographical boundaries. In this segmentation procedure, the geographical area is integrated with the demographic data which create more illustrated target market profiles. This approach conducts the consumer profiling according to the geographical area of the location. Is assists in distinguishing the customers according to the geographical location. The people residing in different locations or pertaining to different cultures have different taste, preferences and choices regarding to the consumer goods. The geographical segmentation is beneficial when the organization is focusing on personal selling or email marketing. It is an effective segmentation technique for the multinational customers whose customers are spread all across the globe. The companies can understand the needs of their customers as the people in different cultural location have different needs and wants. It is commonly employed by the business organizations as it is relatively easy to implement (Wedel & Kamakura, 2012).
The demographic segmentation is the process of differentiating the target customer according to the gender, age, household type, education and income. The demographics are used in the marketing as it assists the organizations in marketing the customers effectively. The primary advantage of the demographic segmentation is that the information is readily available for the people. The companies can use the census data to determine the characteristics of the target market. The companies can identify the growing markets and utilize it in increasing the customer loyalty and retention. When an organization focuses on identifying the needs and the preference of the customers, the customer retention and loyalty also increases. The most common variables used in making the demographic profiles of the customers is thee age, gender, income and the religion. The age is the most common variable in thee demographic segmentation as the needs and taste of the customers change with the age. The people working in college have different needs in comparison to the wring professions. It is important that the companies identify this factor and use it in its marketing strategy (Dibb & Simkin, 2013).
Another criterion for differentiating the target customers demographically is by gender. Men and women have different preferences when dealing with different products. There are several products in the market which are gender-focused, namely, deodorants, clothing, accessories and foot wears. Men and women have different choices in terms of the product color and design. It is important to acknowledge these differences in the preference of the customers and adopt them in product design. The income group is another differentiating factor which is used to create different target customer groups. The luxury products such as cars are targeted at the affluent sections of the society. On the other hand, some companies offer cost-effective products which are targeted at lower –income groups (Strydom, 2005).
The behavioral segmentation is the process of dividing the population based on their behavior. The consumer behavior is the study of the response and the knowledge of the consumers in regard to a specific product. Behavioral segmentation is important because there are several factors which a consumer take into consideration while taking a purchase decision. The decision-making of the consumers is dependent upon the several factors and the behavioral decisions are based on these factors. In this methodology, the consumer segments are divided into small homogenous groups which are based on the purchase behavior of the consumers. The behavioral segmentation is conducted according to the buying pattern of the consumers which includes factors such as usage frequency, brand loyalty and benefits needed. The primary benefit of the behavioral segmentation is that it allows the organization is clubbing the customers with similar taste in a single group. It is the most effective segmentation method as it captures the actual needs of the customers and assists in streamlining the marketing activities with the preference of the customers. While developing a marketing plan, the behavioral segmentation is the best approach for the identifying the characteristics of the customers which can build brand loyalty. However, the disadvantage of the behavioral segmentation is that the customer behavior change with time (Morrittt, 2007). The behavior of the consumers changes with time, location, occasion and the requirement; therefore, it is difficult to create a consistent behavioral profiling of the consumers. Moreover, the behavioral profiling of the consumers is based on qualitative data and certain assumptions. Therefore, market forecasting, budgeting and expenses are all based on certain assumptions.
Psychographic segmentation is another segmentation which differentiates the consumer characteristics according to the lifestyle of the consumers. It includes factors such as activities, interests and the opinions of the customers. The psychographic segmentation identifies how the consumers spend their leisure. Moreover, it also describes how the people spend their leisure and which external factors are they most responsive and influenced by. It is the best segmentation approach in tight consumer markets and assists in better understanding the consumer motivation for product and the brand choice. The psychographic segmentation includes the lifestyle, activities, interest and the opinion of the consumers to define the market. The lifestyle is the most crucial factor in the psychographic segmentation. Every person has different habits regarding their clothing, lifestyle and consumer products. The people in rural areas have different characteristics and lifestyle choices in comparison to the lifestyle choices of the urban consumers. Moreover, the consumers having different lifestyle will have different interests and opinions. Different consumers have different opinions and are interested in different activities. The values and attitude of the consumers also change with the lifestyle of the consumers. The psychographic method is the best approach to target a customer which otherwise seems very heterogeneous. It is used to identify the not-so-visible characteristics such as personality, lifestyle, attitude and lifestyle (Lamb, Hair & McDaniel, 2008).
Primary and Secondary Market
Coles Supermarkets is one of the leading supermarkets and retail organization in Australia. The company is facing tough competition from different competitors such as Woolworths and Aldi. Therefore, it is important for the organization to develop appropriate marketing strategy to attract majority of customers amidst high competition. It can be critiqued that a business organization differentiates the customers according into different target markets. The most lucrative market or the market which has the best chance to sell is called the primary target market of the organization. It is possible that the primary target market may not be the largest segment of the organization in the marketplace (Bathurst & Stein, 2010). The primary market of the organization is the specific group of consumers whom you want to attract your product or service. According to the market demographics, the customers can be grouped as primary, secondary and tertiary market. The primary target market of the consumers is the working professionals in the age group of 20-45. These people buy their groceries and household from supermarkets in abundance as they have little time for anything else. Although they have little time, they are concerned about the quality and the worth of the product. Therefore, the organization should remain focused on providing qualitative products to the target customers.
The secondary markets include the second most important target customers for the organization. It is not the primary customer base because they have little financial assets or demand for the product of the organization. The secondary target customer base of the organization may comprise of the future buyers of the organization. The characteristics of the secondary buyers are different from the primary buyers (Oh, 2015). In this regard, the secondary customer base for Coles has been identified as women customers. Generally, women are the primary buyers of the household appliances. They often buy groceries and vegetables from the supermarket. Therefore, it is essential that the organization adapt its strategies according to the secondary target market of the organization. The women in the age group 25-40 have been selected as the secondary buyer as they have the responsibility to buy items for homes. The women in the age group 25-40 have been selected as the secondary customer base for the organization as they are limited in number. However, it is a significant target customer for the organization and Coles should adapt its marketing strategies in regard to the new target customers.
The selection criterion used for the determining the primary and the secondary customer base is the number of customers and their frequency in buying the retail products form the organization. The company also sells the products of different prices and offers a wide range of products in different categories; therefore, the market segmentation cannot be conducted in terms of pricing and the lifestyle choices. When looking into the major buyers of the organization, it has been identified that the working professionals are the major buyers of the organization. They are also keen in buying the readymade food items promoted by the consumers.
The positioning refers to the assumption of the consumers regarding a particular brand. It defines how a brand is perceived in the mind of consumers and how it is distinguished from other competitors. Once a brand attains a strong position, it becomes difficult to change its relative marketing position (Brinckerhoff, 2010). In simple terms, positioning can be defined as the relative place of a product in relation to other similar products or services in the marketplace. The good positioning makes a product unique and the customers perceive and associate the product with distinct benefits. When a product has good positioning, the product attains a unique selling point. The good positioning makes the brand stand out from other similar products. A relatively good positioning also assist the organization in charging higher prices and move above the market competition. When a brand has a good position, it also attains flexibility in terms of extension, changes, distribution and advertising.
The business organizations implement a number of strategies to increase their relative position in the mind of the consumers. The foremost step in implementing the positioning strategy is to conduct the target market analysis. The target market analysis is useful as it assists in identifying the needs, wants and the interests of the target customers. A marketing analysis can assist in creating positioning approaches for the organization. Moreover, a business organization can also try to achieve positioning through advertisements and prices (Baker, M.J., & Hart, 2016).
Positioning of Coles Supermarket
The Coles Supermarket is positioned in second place after its leading competitor Wesfarmers. Woolworths has claimed the leading position after branding itself as the fresh food brand. Its positioning and tag line are strongly recognized among the consumers. In the recent years, Coles has revamped is logo and image to reinforce the public image of the fresh farm produce. The organization has also frequently changes its image and adopted the image of fresh farm produce. However, it has negatively impacted on the image of the organization as big organizations do not frequently change their image. It has also promoted itself as an organization which is accessible to common people and offer great deals and discounts (Stark, 2007).
Coles invest a substantial amount of money in advertising. The organization is promoted itself as a unique Brand which offers fresh products at good prices. In the retail industry, the marketing strategies are important as there are fewer factors which can contribute to the competitive advantage of the organization. Therefore, advertising and promotion are important for the companies operating in the retail industry (Homewood, 2016).
Coles has invested huge amount of money in the advertising and promotion which assist it in creating brand awareness. People also assume that the organization is capable of investing more money in the advertising as it is able to earn more from its retail business. Although the company is smaller in size and budget than its counterpart Woolworths, it has outshouted in its promotional campaign. The organization has used attractive taglines and branding strategy which promotes the freshness of their products as well as induce positive reactions from the users. In all its promotional campaigns, liking or the enjoyment factor is the common element.
In order to overcome its weakness and creating a perception of popularity, the organization has adopted a number of strategies and promotional campaigns. At present, there are only two leading retail organizations in the Australian retail industry. Therefore, brand awareness is not a major concern for the organization is already recognized by most of the consumers. However, the major concern for the organization is to increase the brand salience or making it the first organization which comes in the mind of consumers when the people think of retail shopping. Coles has also created several differentiating factors such as ten dollar or hormone free meals which distinguish it from its competitors (Brand Truth, 2012).
The organization has been positioned like it because it needs to create brand awareness and unique perception in the mind of customers. It is important that the organization creates brand awareness due to the duopoly in the retail industry in Australia. In retail industry, there are little factors which can be used in developing core competency. Therefore, it is important that the organization adopts unique advertising strategy so that brand awareness can be achieved. The company is positioned as a unique organization which sells fresh farm produce at low cost.
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Bathurst, J., & Stein, T. (2010). Performing Arts Management: A Handbook of Professional Practices. Skyhorse Publishing, Inc.
Brand Truth. (2012). Why Coles is ‘better’ than Woolworths. Retrieved on 15 May, 2017 from https://brandtruth.com.au/
Brinckerhoff, P.C. (2010). Mission-Based Marketing: Positioning Your Not-for-Profit in an Increasingly Competitive World. John Wiley & Sons.
Dibb, S., & Simkin, L. (2013). Market Segmentation Success: Making It Happen. Routledge.
Homewood, S. (2016). Coles eyes off the customer and 'fresh' positioning. Retrieved on 15 May, 2017 from https://www.adnews.com.au/news/coles-eyes-off-the-customer-and-fresh-positioning#dMIvAsGT66Z7QD3q.99
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Oh, T.P. (2015). The SMART Marketing Workbook. Lulu.com.
Segmentation Strategies for Hospitality Managers: Target Marketing for Competitive Advantage
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Strydom, J. (2005). Introduction to Marketing. Juta and Company Ltd.
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Wrinstein, A. (2013). Handbook of Market Segmentation: Strategic Targeting for Business and Technology Firms, Third Edition. Routledge.
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