Market Segementation & Targeting 2

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Market Segmentation and Targeting 2

Market segmentation and targeting are fundamental marketing strategies that involve dividing a broad consumer or business market into distinct subgroups, or segments, based on shared characteristics. The goal is to design and implement strategies that cater specifically to these segments, enhancing customer satisfaction and driving business growth.

Market Segmentation

Market segmentation is the process of breaking down a market into subsets of consumers who share common needs, characteristics, or behaviours. These segments can be categorised into four main types:

1. Demographic Segmentation—Based on factors such as:

   • Age
   • Gender
   • Income
   • Education
   • Occupation
   • Family size

2. Geographic Segmentation—Dividing the market based on location, including:

   • Region (e.g., North America, Asia, Europe)
   • City size (small, medium, large)
   • Urban vs. rural areas

3. Psychographic Segmentation—Focused on consumer lifestyles, values, and personalities, including:

   • Lifestyle choices
   • Values and beliefs
   • Personality traits
   • Social class

4. Behavioural Segmentation—Based on consumer interactions with products and brands, such as:

   • Purchase behavior
   • Brand loyalty
   • Usage rates (frequent vs. occasional users)
   • Benefits sought from the product

Targeting

Once the market is segmented, the next step is targeting, which involves evaluating and selecting the most attractive segments based on:

• Segment Size & Growth Potential—Whether the segment is large enough and growing.
• Competitive Landscape—The level of competition within the segment.
• Alignment with Company Objectives—Whether the segment fits the company’s mission, capabilities, and resources.

The chosen segments are then targeted with tailored marketing strategies, utilising the marketing mix:

• Product—Customising product features for different segments.
• Price—Setting competitive prices based on segment affordability.
• Place (Distribution)—Choosing the best channels to reach target customers.
• Promotion—Crafting messaging and campaigns suited to each segment.

Case Study: Coca-Cola’s Market Segmentation and Targeting

Coca-Cola effectively implements a multi-segment targeting strategy, adapting its products and marketing efforts based on different segmentation approaches:

• Geographic Segmentation:

  • Tailors product lines and pricing strategies to different regions.
  • Example: In India, Coca-Cola offers smaller, more affordable packaging to cater to price-sensitive consumers.

• Demographic Segmentation:

  • Offers different products to appeal to various consumer groups.
  • Example: Diet Coke and Coca-Cola Zero Sugar target health-conscious consumers, while classic Coca-Cola appeals more to younger demographics.

• Psychographic Segmentation:

  • Aligns its brand with happiness and social connection.
  • Example: Coca-Cola’s marketing campaigns emphasise themes of joy, togetherness, and celebration.

• Behavioural Segmentation:

  • Uses consumer purchase data to refine marketing efforts.
  • Example: Coca-Cola targets frequent buyers with loyalty programs and personalised promotions while designing specific campaigns for occasional consumers.

By leveraging market segmentation and targeting, Coca-Cola has sustained its global leadership in the beverage industry. This case study illustrates how businesses can optimise their market reach, allocate resources efficiently, and build strong customer relationships by understanding and catering to distinct consumer segments.