University:
Acadia University
Course:
BUSI 2013 | Managerial Accounting
Academic year:

2024
Views:

191

Pages:

3
Author:

Nabila n.

Market Segmentation Market segmentation involves dividing an entire market into smaller customer groups. Segmentation is a great way for businesses to identify smaller groups of customers with common wants or needs that it can target with tailored products or marketing activities. Identifying Market Segments A business can segment its market based on its distinguishable characteristics, or demographics, including the following: Location Customer wants or needs can vary depending on location, so it is important for businesses to understand regional variances in tastes and demand. Example Welsh cakes and laver bread are unlikely to sell well anywhere other than in Wales. Income Income levels have a big bearing on what customers are willing to pay for a product. Businesses frequently offer different products and brands to customers with different budgets. Example Most major supermarkets have budget and luxury own-brand products, such as Tesco's Everyday Value and Finest ranges. Market Segmentation Lifestyle Customer interests and lifestyles are constantly evolving. Therefore, businesses try to recognise trends and identify groups of customers with similar interests so they can target them with specific products and messaging. Example Businesses that produce high-protein snacks will want to identify and target people who are interested in health and fitness. Age People of different ages have different interests, tastes and budgets. Therefore, a business often segments its market by age so it can create tailored products and messages to suit each age group. Example Car manufacturers will target different age segments with different cars and marketing activities. Competition Competitors are businesses that sell the same types of products in the same markets. Within a market, there are various businesses competing for the same customers. To remain competitive a business must constantly be aware of its competitors' strengths and weaknesses. A business can use the following factors to analyse its competitors and ensure that it is performing at its best. Price Customers want value for money. Although lower prices may attract more sales, they can also lead to lower profits or even a loss. Businesses offering a unique product may not need to worry about low pricing. Customer Service Good customer service can result in increased sales and repeat business. Training staff to provide good service or offering extra services are ways in which businesses can differentiate themselves from others. Quality Customers will pay more for good quality. Convincing customers that a product is of better quality than that of its rivals can result in increased sales and repeat business. Product Range A diverse product range opens up new markets for businesses, with customers able to access a wide selection of products from one supplier. Moreover, new products can make a business more competitive. Location Customers are more likely to buy from businesses that are in a convenient location or online.