What are the benefits of Market Segmentation?
Customers differ from each other in many ways, such as; the benefits they want from a product or service, the amount they are able or willing to pay, the amount they buy, when and where they buy it and the type of marketing they see that draws them to a product or service. This is why market segmentation is crucial to any business. Market segmentation is the process of dividing a market into parts that reflect different customer wants and needs. When dividing a market, there are four different segments that a business could use to enable them to accurately target customers and differentiate itself from competition.
Firstly, a business could use demographic segmentation. This is when a market is split up into age, gender and occupation to name a few. For example, Nivea segment their market via gender. They started over 100 years ago by producing skincare for women, until the 1980’s when they began branching out with skincare for men also, aptly titled ‘Nivea for men’ (Nivea, 2020). This means Nivea are now clearly segmenting their market and can advertise products accordingly. For example, Nivea products for women are advertised on day time TV and between programmes such as Loose Women and Coronation Street, where as Nivea for men products are advertised during the evening by using adverts between sporting events that are televised. The benefit of segmenting via demographic is that marketing communications can be targeted effectively and the marketing message can be delivered to the relevant audience. By successfully segmenting via gender, Nivea made sales of $5.2b in 2018 (Forbes, 2019) and are one of the market leaders in the consumer-packaged goods industry.
Psychographic segmentation is another way a business could segment their market. This type of segmentation is slightly more difficult as it is subjective and based on personality traits, motivations and values. Ferrari could be seen to segment psychograpgically as they specifically target wealthy customers who are image conscious. Ferrari price their cars between £200,000 and £300,000 meaning they are not aiming at the general public, so it is especially important to segment their market. Ferrari are aware that their customers are image conscious, who value quality and status and do not mind paying the expensive price tag. It’s extremely beneficial for Ferrari to segment their market because of the high price of their cars, they therefore need to meet their customer needs in order to make a sale.
While demographic and psychographic focus on who a customer is, behaviour segmentation focuses on how the customer acts. Behavioural segmentation can assess purchasing habits and brand loyalty. An example of a business who segment via behaviour are Nike. They clearly split their product portfolio into the benefits sought by the customer. For example, they released a whole campaign dedicated to ‘yogis’ (people who partake in yoga) in 2018 due to the fact that this leisure activity saw in increase in participation. By segmenting via behaviour, it meant that Nike could target a very specific market segment and increase their profits as they were specifically creating garments for yoga. Nike also did the same with their trainers and expanded their product portfolio to target niche markets such as ‘cross country runners’. Again, by releasing footwear specifically for this segment, it means that Nike were able to target more customers with direct marketing. This could lead to an overall increase in market share for a business such as Nike due to them meeting such a variety of customer needs.
Finally, a business could segment the market geographically. This is when a business can segment via a country, a post code, or climate. A business who conducts this segmentation successfully is KFC. They adopt various different menus based on where their restaurants are located. For example, in Egypt, due to it being a Muslim country, KFC serve halal meat in all restaurants so they are adhering to cultural regulations. By segmenting geographically, it means that KFC have better opportunities for growth. This is because they can start to expand in more countries, meeting customer needs along the way with their diverse menus in order to gain a competitive advantage against the likes of McDonalds and Burger King.
Overall, segmentation is extremely beneficial to any business considering releasing a new product or expanding their product portfolio. Markets are increasingly dynamic and fast paced so a business must take this into consideration when segmenting their target audience. A clear benefit of segmentation is the impact it has on the marketing mix. It not only means promotions can be targeted to a clear audience, rather than wasting resources on the wrong customers but segmentation can also give a clear indication of the product that needs to be released into the market, the price a business needs to set their product at and a place where they need to sell their product from, so that it is specifically tailored to meet customer needs and they can adopt a key position in customers minds.
How can Social Media be used effectively in marketing?
There are minimal marketing buzzwords that seem to elicit more attention than that of social media. That’s because when a social media campaign is creative and well-executed, it can prove a powerful addition to any companies marketing strategy.
But with so much competition for attention, ever-adapting algorithms and high costing marketing mistakes, many businesses face a difficult time generating a significant return on investment from social media. Yes, social media marketing may face some struggles, but it’s also packed with potential, and with 45 million social media users in the UK in 2019, equating to 67% of the population, (AvocadoSocial, 2019) if used effectively it can have hugely beneficial impacts to any business.
One primary benefit of social media in marketing is its cost effectiveness. With the average Brit spending one hour and 50 minutes of their day on some form of social media (TigerMobiles, 2020) it is more likely that whilst scrolling down their feed they will come across some form of advertisement, whether it be on Twitter, Face book or Instagram. The benefit this has to the business in question is that this account will have been free of charge to set up. In this day and age advertisement is becoming more expensive and difficult to get a hold of. A business can pay up to $5.6 million dollars for a 30 second TV advertisement slot (CNBC, 2019) during major TV ad breaks such as the likes of the Super Bowl. Obviously, not all businesses can afford this kind of cost, thus creating their social media campaigns online for free, and only being held at a fee is they choose to actively pay for their brand to be promoted. If used effectively, social media marketing can have a vast outreach and catch the attention of millions of social media users, making them aware of a campaign and increasing a business’ brand recognition.
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An example of a business that uses social media marketing effectively is Missguided. Missguided use numerous social media platforms however their main platform in Instagram. They currently have 6.5 million followers just on that one individual platform. They often vary their content to keep users engaged by showing things such as tutorials, music and any offers or incentives. This is effective to Missguided as it means they are keeping up with the current trends and thus keeping followers engaged. In 2018, Instagram played a huge part in making Missguided’s financial and marketing success. Missguided used Love Island celebritites to promote their campaigns, using them to advestise and upload photos of their new clothes ranges. They posted stories on their Instagram page such as ‘shop the look’, which received a huge interaction with fans across the platform and resulted in sales increasing by a huge 40% (Newswhip, 2018). Missguided’s social media marketing was increasingly effective due to their understanding of the demographic wants of their consumers. Having a good understanding of social trends within society is a huge part of the steps to establishing a successful social media campaign.
Another way that social media can be used effectively in marketing for business is through them watching and keeping up with their main competitors. The benefit of social media is that it’s unrestricted. Although this can have its downfalls, it can also be used to a business’s advantage. If a brand wants to remain competitive in the digital marketplace, it is vital that they start working toward building a presence on social media, as it is incredible likely that in this day and age, that is what their competitors are doing. By watching their competitors’ social media, a business can have an increased insight on their following, their marketing techniques and sales tactics; a business can then take this information and use it to their own advantage. This technique is heavily taken onboard within the fast food industry. Rivals Dominos and Pizza Hut closely monitor each other’s marketing presence and analytics, and if they see a marketing technique that they like and has proven to be a success, they’ll take it, and use it on their platforms to help them achieve increased brand recognition in hope they can boost their sales and profit stream, giving them an increased market share.
In conclusion, the use of social media can be incredibly effective and increase sales when well executed. However, there are many factors which determine how successful a campaign is.
A business must have a good understanding of their target market, as without this the advertisement may not have the impact on customers that the business once hoped for, and they require a good understanding of current social trends, thus giving them an understanding of what their customers want to see and will engage with. If social media marketing is understood and pulled off, it can increase a business’s presence and brand recognition, encourage positive word of mouth and give them an edge over their competitors. This will lead to increased sales and thus profit, potentially expanding a company’s market share and giving them the opportunity for expansion.
Why is Branding Important to consumers and organisations?
The decade we’re in is an advancing one. The business industry is growing by the day and it’s more difficult than ever to come up with a unique, never been done before idea that will be new to its market. So what’s one of the main influences that can give your business a competitive advantage over all others? –Its branding. Branding goes way beyond just a logo or a graphic element, it considers a business’s vision, mission, language and many other factors, which when successfully combined together, can create a perception of your business that to consumers and organizations will give it that important edge over all others.
Branding promotes recognition. In an article published By Forbes in 2019, Apple topped the list of branding behemoths for the ninth year running, amassing an eye-watering brand value of $205.5 billion, a figure that had increased by 12% over the past year (Forbes, 2019). Although their branding may look simple, it takes a lot for a company to make their brand that recognizable to consumers. It isn’t just about the logo or slogan; a brand image encompasses both visual elements and brand associations like speed, reliability, ethics and quality. If a business doesn’t put the effort into maintaining a consistent brand image throughout every interaction a consumer has with their brand, they’ll find it very difficult to develop an easily recognizable one.
In addition to this, a company’s branding can help them to set themselves apart from the competition. In today’s global market, it is critical to stand out in the crowd. A business is no longer competing on a local stage; every organization now competes in the global economy. By having a strong and recognized brand image, a business is more likely to be purchased by both consumers and organizations. Take Coca Cola for example. Coca Cola are veterans in this area, and they have shown the world how consistent quality and outstanding marketing strategies can keep one and the same product on the throne for decades. This does however go without saying they have faced their fair share of competition. In 2017, Coca Cola achieved net operating revenue of $35.41 billion, and a gross profit of $22.15 Billion (NotesMatic, 2018). With this knowledge in mind, Coca Cola has become one of the most replicated grocery items in the UK. Thriving UK supermarket chains such as Tesco, Morrison’s and Sainsbury’s have all created their ‘knock-off’ version of the drink, but despite being sold at 1/3 of the Coca Cola price, it doesn’t achieve anywhere near the sales volume of the real thing. This can be put down to Coca Cola’s strong brand image, setting them apart from any competitors. Their objective is to sell an experience, not just a product, and their $59.2 billion brand value in 2019 (Forbes, 2019) suggests that this is paying off.
Finally, a strong brand image creates a good first impression. In business, a positive first impression is everything. Whether it be in regards to the way employees are dressed, the businesses website, and the aesthetics of the business cards or the cleanliness of the store. It may seem superficial, but these minor details are the points of contact a business will have with potential customers. In this case, presentation is everything. Although these things alone don't make a sale, they do create a good impression about the expected brand promise, and this may be the USP that gives one business the edge over another. Once a business has this strong brand image established, they have the ability to charge premium prices as their product is recognized, well associated and potentially considered the ‘go-to’ product within the market. A strong brand identity creates an image of an established business that’s been around long enough to become well-known. A branded business is far more likely to be seen as experienced, and generally be viewed as more reliable and trustworthy than an unbranded business.
To conclude, brand image is important for any business. When consumers or organizations choose to buy or invest in a product or service, they aren't just buying the product or service; they're buying what the brand itself stands for. That's why it is important for every business, big or small, to establish a brand image that will convey exactly what they want it to say, and how it will be perceived throughout their business cycle.
References:
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- Forbes Stats. (2019). Coca-Cola (KO). Available: https://www.forbes.com/companies/coca-cola/#561b2fe1438c. Last accessed 20th April 2020.
- Forbes. (2019). The World's Most Valuable Brands. Available: https://www.forbes.com/powerful-brands/list/#tab:rank. Last accessed 20th April 2020.
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- Nicholson, B. (2018 ). How Missguided won at e-commerce. Available: https://www.newswhip.com/2018/08/missguided-innovated-ecommerce-marketing/. Last accessed 20th April 2020.
- Nivea. (2020). The History of Nivea. Available: https://www.nivea.co.uk/about-us/nivea-history. Last accessed 20th April 2020.
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