Market Segmentation Essay Example
Market segmentation is a process business use to target customers. Businesses select a bunch of people who they think will be most interested in their product or service, this dividing of people into groups is known as segmentation, the groups of people they target are age, gender, occupation, income, geographic and lifestyle.
Why is market segmentation useful for a business?
Segmenting their market means a business could increase their market share so what exactly is a market share, well it is the portion of a market controlled by a particular company or product. If sales increase, profits are also likely to increase they could do this by advertising in places they think they customer will see it.
Why segment?
It can help the business with making a profit and it can help with learning about they customers and see what they like. This if you try and sell to everyone Hershey’s Bites have been discontinued due to the customers not buying them and having low sales which means the business wasn’t making a profit. So, they have chosen to discontinued them
Lifestyle
People’s hobbies and interest if they like spending money on items related to the hobbies and interest for example Go Outdoors is a shop for people that like the outdoors. E.g. camping they shop in Go Outdoors because it has good camping stuff and cooker’s for outdoors use, they like Go Outdoors because it has what they want for a reasonable price.
Age
A business will produce products for sale that will appeal to individuals of different ages for example lol dolls are targeted at ages 5 and up. Research shows that between November 30 to December 30 the profits will grow by 25% as of 2020 they achieved 450% over the same period a year ago.
Gender
Some goods are aimed at women and others are aimed men. Some businesses only produce products that target a particular gender, some target both genders for example Zara makeup is aimed at girls/woman because that is what they would like to wear makeup. The makeup packaging is design with girls in mind. Whereas boys would like aftershave.
Occupation
Businesses know that individuals from certain jobs are more likely to purchase certain goods and services for example if you work in morrisons you would where green top with the logo to show you worked there and not somewhere else but whereas if you were a butcher you would wear a stripe top and pant over your clothes so you do not get blood on your clothes and you keep clean.
Income
If an individual’s income affects their habits this is often noticed when buying a car so someone with a low income (10K-15K) will have a cheap car if at all. Whereas people with a good income (60K-80K) they can have fast cars like Lambos and Ferrari’s.
Geographic
These markets are segmented according to where people live. So, people who live in Russia will have big woolly coats to keep them self-warm whereas people in Nigeria will not have this because it is hotter than Russia. So, selling big woolly coats in Russa will increase the profits for a company.
James Norton
age: 35
gender: male
job: computing teacher
Income: £600 weekly
Yearly income: 28,800
Ethnicity: white British male
Hobbies and interest
• Coding
• Gaming
• Drums
• Flying
• Road trips
James’s life revolves around teaching he save a lot of money to spend on the latest phones and tech.
He also uses snapchat, Instagram to show off his latest tech and phones and show what they can do. His saved income which is around £15,000. he spends 45% on laptops and 15% go to a new phone every year and he uses the 40% on general stuff like food and clothes. He loves to travel but he has to save for 3 months and goes on holiday at least 2 times in a year he loves this because he what his sons to see different cultures in the world and try new food from around the world his favour place to visits is New York and also France. He loves to ware casual clothes like hats when he goes abroad to get away from work and spend time with his family.
Family
His family of 2 sons aged 11 and 13 and his wife called Jo. The boys love tech as well, so James must be careful on how much he spends his savings. Around £900 goes to car insurance and health insurance and only buys second-hand cars which cost about £2000 to £3000. Doing this helps pays for the holidays.
Style
He like to wear a tie and shirts for work to look formal, in summer he loves to wear caps and brightly coloured shorts, in winter James loves to wrap up in worm clothes like hats, big fluffy coats.
I have chosen this customer profile because he has a good income so my hat will be made out of more expensive material and better quality to attracted him to the produced and he might buy the hat because it is not cheap and cheap hat can be made out of cheap material. The more expensive hat he is more likely to buy not just because of his income but because he like the better quality and the material used to make the product aimed at people with the same lifestyle and occupation as James. It could be good for James because he worked in a school so for break he could where it on clod day to keep his head worm.
