Answer to Question #255203 in Marketing for karlien

Question

For Unilever to effectively segment the market at which it aims the Rajah range of products, customer satisfaction and an increase in profitability would be essential. Name the five prerequisites of market segmentation that would make this possible.

Answer 1

Discussion

Market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers based on some type of shared characteristics. Market segmentation is a marketing technique that almost all companies practice. The process provides marketing strategists with data for a better understanding of their market, allowing them to create more personalized and profitable strategies. This practice is important for companies because it minimizes the amount of time, money, and effort marketing strategists put in certain campaigns.  

 

Identifying the requirements for effective market segmentation allows companies to create marketing campaigns that are essential for their growth and development. When a company has segmented their market accordingly, there is a higher chance that it will become more profitable and successful in the long run. Below are criteria for effective market segmentation;

• Measurable

The size and purchasing power profiles of a market should be measurable, meaning there is quantifiable data available about it. A consumer’s profiles and data provides marketing strategists with the necessary information on how to carry out their campaigns. It would be difficult to create advertisements for markets that have little to no data or for audiences that can’t be measured. Always ask whether there is a market for the kind of product or service that the business wants to produce then define how many possible customers and consumers are in that market. 

• Accessible

Accessibility means that customers and consumers are easily reached at an affordable cost. This helps determine how certain ads can reach different target markets and how to make ads more profitable. It is important for companies to gather data on the websites a specific target market usually visits so they can place more advertisements on those websites instead. 

• Substantial

The market a brand should want to penetrate should be a substantial number. A company should clearly define a consumer’s profiles by gathering data on their age, gender, job, socio-economic status, and purchasing power.  It doesn’t make sense to try and reach an unjustifiable number of people because it is a wastage of resources.

• Differentiable

When segmenting the market, businesses should make sure that different target markets respond differently to different marketing strategies. If a business is only targeting one segment, then this might not be as much of an issue. 

• Actionable

Market segments need to be actionable, meaning that they have practical value. A market segment should be able to respond to a certain marketing strategy or program and have outcomes that are easily quantifiable. As a business owner, it’s important to identify what kind of marketing strategies work for a certain segment. Once those strategies have been identified, assess if the business is capable of carrying out that strategy. 

Reference

Ulaga, W., & Chacour, S. (2001). Measuring customer-perceived value in business markets: a prerequisite for marketing strategy development and implementation. Industrial marketing management, 30(6), 525-540.