Introduction
Market segmentation refers to the process of dividing and subdividing the market into similar identifiable segments or groups (McDonald & Dunbar 37).
The marketer needs to segment the market in order to develop a marketing mix that will meet identified customer needs in an efficient and effective manner. A marketer should always understand the importance of prioritizing the customer by meeting the customers’ needs and wants first. If customers are unsatisfied, the life of the firm will be doomed since it cannot survive without the customers.
An organization will only be able to achieve its goals and objectives if it offers products and services that meet what the customers are looking for. In order to serve the customers better, the firm must understand that different customer groups have different needs and wants and therefore it is important to group customers with similar characteristics together and design a marketing mix that will serve them.
According to Lamb, et al (213) successful market segmentation requires that the segments to be served by the marketer have four very vital characteristics. First, the market should be substantial implying that the target market segment should be large enough to justify development and maintenance of marketing mix. Secondly, the target market segment should be identifiable and measurable meaning the marketer should at least know the number of people interested in the marketing mix.
Thirdly, accessibility of the target market should be considered since it would not make sense to develop a marketing mix that will never get to the customers. Finally yet importantly, the market should be responsive to the particular mix designed. This paper will discuss how Tervis Tumbler can segment the market in order to identify the target market.
Market segmentation is not a one-step process but rather a six-step process that entails product identification, choosing a basis for segmentation, profiling and analyzing the segments, selection of target market and finally design, implement and maintain desirable market mixes.
Bases for Market Segmentation
Tervis tumbler has tumbler as its product that it needs to segment the market for. Therefore, the next step would be to come with bases for market segmentation.
Geographic segmentation
The markets are segmented based on the physical geographical location such as different countries to be served, regions within a country, climate, market density, or market size (Stevens 32). Market density refers to the number of people in a unit piece of land while climate can be used considering that customers needs and wants are at times affected by climatical changes.
Foe example, during the cold season, the demand for the tumblers can be in high demand for purposes of keeping drinks hot. Geographic segmentation therefore focuses on segmentation based on where potential customers are found. Tervis Tumbler can therefore decide whether to target regions within the country, or international market or any other geographical location that may seem to have potential customers.
Demographic segmentation
Demographic data or information is also used in market segmentation since it influences consumer-buying behavior. Examples of demographics include age, family life cycle, gender, ethnic background, and income among others (croft 24).
If age is used as a base for segmentation, various age groups that may arise are newborns, infants, teens, youths, adults and elderly among others. Tervis Tumbler must therefore know the exact age bracket that it has an interest in, and if interested in more than one segment, what should be done to differentiate the product and make it fit well in each age bracket.
Segmentation based on income requires the firm to know whether its target market is the high-income earners, middle income, or low-income earners in order to design a mix that will be affordable. In connection to that, tumblers can be designed in such a way that the ones targeting high-income earners have more benefits and uses as compared to the ones designed for other income levels.
On the other hand, the firm can decide to target all income levels or combine at least two by modifying the product to fit each income level. An organization needs to understand the ethnic background and cultural values that are important to the target market segment. This is because, some products are not allowed in some communities and are seen as a taboo or an abomination. Tervis Tumbler must therefore understand how the tumblers affect the cultural values of the targeted users.
The reason behind that is, if the commodity is viewed to contradict or violate the cultural values, it will not succeed in the market. Family life cycles take into consideration a number of factors such as age, availability of children and marital status. For example, a couple without children may have a small size tumbler but when the children increase to about four, there is a high probability that a bigger tumbler will be required.
Psychographic segmentation
This segmentation approach is based on personality, motives, lifestyle, and geodemographics (Mouncey & wimmer 310). Personality defines who a person is in terms of behavior, attitude towards the product i.e. if a potential customer harbors negative attitude towards the product, it is highly probable he cannot buy the product; on the other hand, those with a positive attitude will buy. A person’s traits also define his or her personality and most people buy products and services they believe to rhyme with their personalities.
Segmentation based on geodemorgraphics integrates some geographical aspects with demographic aspects. Geodemographic segmentation is based on the assumption that people tend to move to locations in which their classes fit, and with those that they share occupation.
Geodemographic segmentation may use either acorn or Mosaic methods to segment the market. Acorn method categorize people with identical socioeconomic characteristics together while mosaic method analyze information obtained from different sources (beamish & Ashford 65). Lifestyle is also another important base for segmenting the market. It takes a more subjective approach and classifies markets based on factors such as opinions, social activities and interests.
Under social activities, emphasis is on activities or functions that bring people together such as shopping and sports. Interests refers to what people like or enjoy doing and especially during their free time and this would include music, internet etc. such factors are then interlinked with demographics to form a better foundation for market segmentation (beamish & Ashford 65).
Bahavioristic segmentation
This approach segments the market in terms of usage rate, occasions, benefit sought, loyalty status of the potential customers. In terms of users, there are heavy users, medium users, and non-users. Heavy users are those who use the product so much and therefore they tend to purchase it very often. Medium users are those who use the product occasionally. non users are those who never use the product. If the firm intends to target all these groups, it must know the campaign that will be used for each group.
The tumblers can also be designed in a way that heavy users will have an advantage over the light users hence try to convert light users to heavy users and non users into users.. In order to determine usage rate, research may first be conducted to obtain data about three categories of users such as users and non users, heavy users and light users as well as non users, light users and heavy users (Crisp 403).
Consumers will at times by products depending on the benefits that they will obtain from the product thus making benefit seek bases for segmentation (Reid & Bojanic 2). Tervis tumbler can therefore design the tumblers in such a way that they will meet what the customer is looking for.
Under behaviorist segmentation, the market may also be segmented depending on the occasions when a product or service is used. Occasions determine when customers decide to make a purchase and when they use the product purchased. In the case of tumblers, the marketing department need to know on what occasions are they bought so much and the reason behind d that and then create a more appropriate mix to serve the customers satisfactorily.
Profiling and analyzing the market segment
According to Havalder (94), each group of customers identified after marketing segmentation requires that a profile be created based on their different characteristics such as use, geographic location, and buyers purchase behavior among other characteristics. The profile will serve as a guide to Tervis Tumbler in creating a mix that will serve the clients effectively.
After creating the profiles, a thorough analysis of the market segment. Analysis is done in terms of size of the potential market and probability for growth, ability to make profits, ability to meet company objectives while utilizing available resources in an effective and efficient manner as well as competitiveness.
In the case of Tumblers, an analysis of market size will help in determining how large the potential market is and then use the information to forecast growth. To forecast demand, different methods such as regression analysis, sales force estimates, time series analysis, econometric models, as well as opinions from experts may be used. This information will help the firm decide whether directing efforts and resources to serve the segments will be viable.
Analyzing profitability implies comparing expected sales with the expected costs of designing and delivering the product to the consumers or rather the potential customers. If the sales forecast exceeds all the expected costs associated with the product, then there is potential for profitability. If the opposite is true, then Tervis Tumbler will incur losses or just breakeven and can therefore at this point go back to the drawing board and see what can be rectified.
Competitive analysis looks at other competitors in the industry in terms of their strengths and weaknesses as compared to the strengths and weaknesses of Tervis Tumbler. This analysis should be carried out in all departments be it research and development, marketing, finance, management, product quality, manufacturing in terms of technology and ability to meet the market demand.
Tervis Tumbler should therefore identify the weaknesses of the rivals or competitors and try to turn them into their own strength. They should also know what strategies are used by the competitors and know how to counter attack them or improve them to favor Tervis Tumbler.
A thorough analysis of company’s objectives and resources implies that Tervis Tumbler should ascertain that each market segment identified concurs with the firm’s objectives. Ideally, this means that organizational objectives should not be comprised by taking on any market segments that is not in line with the overall objectives.
Concerning the resources, Tervis Tumbler should only focus on segments that can be served in an effective and efficient manner with the available company resources. Therefore, segments that cannot be served with available resources should be dropped since their viability is wanting.
Select Target Market
Target market selection requires investment of time and energy in trying to come up with the right target market to be served from all the identified potential market. The selection should be one that the firm can develop strategy to serve the market. Tervis tumbler should make sure that they get the target market right the first time to avoid reallocation of resources since it is very expensive to abandon a target market in the middle merely because a strategy to serve the market can be designed.
The bases for selecting a target market are attractiveness and the relative ability. Attractiveness is evaluated in terms of target market significance to the organization. Tervis Tumbler ought to look at the market size, costs and market stability among other considerations. Relative ability refers to the probability that the organization can penetrate the market considering its capabilities and capacity to do so (Sexton 88).
Design, Implement and Maintain Desirable Market Mixes
This is the last stage and it involves creating of a marketing mix commonly known as the 4p’s of marketing. These include product, place, price, and promotion (Prenzel 32). A product is a good or service that is developed by a firm to meet the needs and wants of customers and consumers in a satisfactorily manner.
Incase of goods, products are categorized into industrial goods that refer to products used to make or develop other goods (clemente 241). Consumer goods are those used by the end user. Tumblers are consumer durable consumer goods, which Tervis Tumbler should now develop and design how they will get to the users since it has already selected the market to be served.
Price refers to the monetary value attributed to the product and it is the only that generates revenue to the firm. As such, the firm should be very careful while setting the price since it should cover all the costs and leave some revenue to the company. This may sound very easy but practically it is not since competition within the industry may drive the prices downwards leaving the firm to operate at a loss. The firm should therefore try to minimize the cost as much as possible in order to remain competitive.
Place refers to availing the product to the customers at right place and at the right time. The firm must come up with distribution channels that will effectively deliver the product to the target customers. Aggressive promotion campaigns should also be designed to create awareness about tumblers and educate people on their importance and use. This will help in boosting the sales.
Conclusion
Market segmentation and proper identification of the key targets market are important when planning to launch a product. Irrespective of the product in question, all firms should consider the needs and wants of customers before designing any product. Only then will they be able come up with a marketing mix that is effective and efficient.
When considering to segment and select key target market, an organization must first identify the product market, decide on bases for segmentation, create profiles and analyze the target segments, select key target market and finally create a suitable marketing mix.
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