Chapter 10: Identifying the target market Flashcards
Segmentation
- Segmentation is the division of the market place into distinct subgroups or segments, each characterised by particular tastes and requiring a specific marketing strategy. The target market for any given product may be one or more of these segments.
- Segmentation is often based on four sets of variables:
- Geographic,
- Demographic,
- Psychographic
- Behavioural.
- A segment will usually be defined as a combination of variables.
Identifying the target market
Most products will not appeal equally to all consumers and therefore it is important to identify the type of consumer that the product is aimed at (the target market) so that the marketing strategy can be tailored to their wants and needs.
Segmentation Difficulties
- Because everyone is different, the consumers in a particular segment will never be identical. The aim is to choose a group who have sufficiently similar preferences and needs to create a meaningful segment that can be targeted by companies.
- On the other hand, the segment should not be so small, with so few potential customers, as to make it unprofitable.
Geographic Variables
- These relate simply to where the consumers live (e.g. a country, region or city) and whether they live in an urban or rural area. Usually, these are too broad and cover too wide a range of people to be meaningful on their own
Demographic Variables
- age
- gender
- ethnicity
- family status (e.g. are they single? do they have children?)
- income
- level of education (e.g. are they university-educated?)
- occupation
- socioeconomic status; an individual’s or family’s position in society relative to others
based on their income, level of education and occupation.
Psychographic Variables
- Lifestyle (e.g. people who like to go out to eat and drink, the health-conscious)
- Personality (e.g. people who like to show off their wealth or knowledge of wine)
- Values and beliefs (e.g. vegetarians, people who prefer products that are organic, environmentally friendly or Fairtrade)
- Interests (e.g. people interested in wines from a particular country or region).
Behaviorial Variables
These are variables based on consumers’ observable behaviour:
- What benefit do they want from wine (e.g. quality, value for money, prestige)? When do they buy wine (e.g. regularly, only on special occasions)?
- Where do they buy wine (e.g. supermarkets, specialist wine retailers)? How often do they buy wine and in what volume?
- What is their level of brand loyalty?
- What is their level of interest in wine (e.g. enthusiast, moderate interest, indifferent)?
- Are they early adopters (i.e. people who are keen to buy new products when they come on to the market) or late adopters?
Psychological + Behavioural Characteristics
People who share psychological or behavioural characteristics are more likely to behave in a similar way than those who live in the same area or are in the same age group.
Consumer Segmentation Globally
- There is no global model of consumer segmentation; each country is different
- The closest the wine industry has got to creating global segments is to separate high- and low-involvement consumers, although even this division is not valid in all countries and the grouping is too broad to be useful without further segmentation
Consumer Segmentation (Narrower Segments)
There have been several attempts to divide wine consumers into narrower segments An early attempt was made by Hall, who split wine consumers into three groups:
- wine lovers – those with a great interest in and knowledge of wine, high income and high level of education;
- wine-interested – those with a great interest in wine, moderate wine knowledge, university-educated with moderate income;
- wine curious – those with a moderate interest in wine but limited knowledge, moderate income and medium level of education; they see wine as an opportunity to maintain social relations.
While level of interest and knowledge is a useful way to separate wine consumers, it is too simplistic to link this to income and level of education.
Wine Consumer Segmentation Disadvantages
Because these models tend to be the result of academic studies with a relatively small sample size, they do not readily extend to the market as a whole.
Wine Consumer Segmentation ( Specialist Market Research Companies)
- a number of specialist market research companies have created their own consumer segmentation models based on much more detailed data. For example, Wine Intelligence has created a series of models (known as ‘Portraits’) for various markets.
- Although companies have to pay to access this information, it can be invaluable in helping them work out how to target specific types of wine consumer successfully.
Wine consumer segmentation conclusion
- With such a sophisticated segmentation model, there will still be plenty of consumers who do not fit into any one particular segment. Nevertheless, a successful segmentation exercise will help to identify the type of consumer who might buy a particular product.
- Armed with that information, a company can make a realistic estimate of how much that consumer may be willing to pay for it, where the product is likely to sell and how best to market it.
Market Research
- Market research is the gathering and analysis of data about a particular market segment in order to understand what that segment wants or needs.
- Market research can be useful at all stages of the marketing process. Prior to starting work on a new product, a company can use market research to understand whether there is a demand in the market for that product and, if so, what features people would like it to have and how much they might pay for it.
Market Research to Marketing Strategies
- Market research is especially important in creating the market strategy as it can confirm whether the approach suggested by the segmentation exercise is accurate or not before the company embarks on a potentially expensive and time-consuming marketing campaign.
