Business Studies 2.6

Quick Write

What is market research?

What is the purpose of doing market research?

MARKET SEGMENTATION

Business Studies 2.6

Goal for today

That you can both define and describe market segmentation and consumer profiles.

Market Segmentation

Sort of like “heat-seeking missile”.

Companies try and divide the market up into sub-groups based on key defining characteristics.

This allows them to be more targeted in its marketing efforts.

Can you name some market segments that businesses might deal with?

Market Segments

Geographical regionAgeIncome level

EX: Volkswagen-Audi group.

They own a number of brands that are targeted at specific types of consumers.

It’s about consolidation

Segmentation is essentially the identification of subsets of buyers within a market who share similar needs and who demonstrate similar buyer behaviour / characteristics

The world is made up from billions of buyers with their own sets of needs / wants and behaviour.

Segmentation aims to match groups of purchasers with the same set of needs and buyer behaviour. Such a group is known as a 'segment'.

Audi

What type of consumer are we targeting?

VW

What type of consumer are we targeting?

Seat and Skoda

What types of consumers are we targeting?

Niche marketing

This type of approach is known as niche marketing (target marketing).

Can you think of other businesses who take similar approaches?

The Gap Inc.

The alternative to niche marketing

The other option is to look at the market as a whole rather than segmenting.

Businesses can generate profits by reducing costs through huge volumes of sales.

This is known as mass marketing.

EX: Burger King

The menu around the globe is pretty much the same.

This saves them money in promotional activity, product development, packaging, etc.

In this way they can generate more profit per whopper sold.

Minor changes do exist though (dietary needs such as lamb for beef)

Consumer profiles

In order to know who to target, businesses try to figure out who consumers are.

To do this, they create consumer profiles (detailed breakdowns of the demographics of consumers).

A good consumer profile should include Age Gender Income Social group

Consumer profiles

Once a business knows who the key consumers are, it can target marketing activity specifically at them.

Real-world example:

Consider Sony Playstation. What does the consumer profile look like for their products?

Sony’s use of consumer profiles

No coincidence that Sony deliberately chooses certain events to sponsor.