(1) Businesses look for ways to connect with current and potential customers. The surest way to make that connection is to know them well. This means knowing where they live, their income level, age, ethnic background, activities, values, and what interests them. When a company looks at its customers this way, it can identify groups of people who have many things in common.
(2) A marketer must determine what customers’ needs are. Marketing experts have developed techniques for determining the needs of prospective customers. It is done by means of market segmentation. Market segmentation or slicing up the market occurs within different types of markets such as consumer product markets, industrial product markets, institutional product markets, military and government markets. Every market can be divided into segments or, in other words, into separate groups of consumers. Marketers analyze groups of customers to see if any of them can be further broken down into smaller, more precise clusters. The process of dividing a market into segments and classifying people who form a given market into even smaller groups is called market segmentation.
(3) Market segmentation is based on a variety of criteria. First, there are geographical factors – region, population density (urban, suburban, rural), size of town, and climate; demographic factors such as age, sex, family size, or stage in the family life cycle; and other factors including income, occupation, education, social class (working, middle, upper), lifestyle, type of home, neighbourhood and personality. Then there are psychographic factors such as the customers’ opinions and interests, hobbies, favourite sports and so on. And what benefits does the target look for in the product (comfort, safety, esteem, luxury).
(4) Target market is a set of customers whose needs a company plans to satisfy. It is the target market for whom a firm develops and maintains its marketing mix suitable for specific needs and preferences of that group.
(5) So, a market segment or a market sector is division of the market which contains customers who require a certain class of product or who are prepared to pay a certain price. In other words, a market segment is a group of customers or potential customers within a market that share one or more similar characteristics, needs and requirements. For example, a motor-car manufacturer may produce a range of motor-cars which satisfy a number of different market segments such as family motorists, sports car enthusiasts, taxi drivers, police, armed force and etc. Here segment is used to refer to a particular category of customers.
(6) Companies segment markets to be able to sell to each group the products that are most suitable for it. When companies try to identify or appeal to specific groups of customers, they talk about segmenting a market in the process of segmentation. Market segmentation means economical marketing since products and sales can be concentrated on those categories of buyers who are most likely to buy. Segmentation allows marketers to identify and differentiate between the needs of the target groups of customers that make up a particular market. They may offer different products to different segments, or the same product, marketing it in different ways.
(7) Although some fast-moving consumer goods have no particular segment (e.g. everyone buys soap or toilet rolls), some products will only appeal to a section of the market. For example, power tools are designed and marketed differently for professional users and do-it-yourself enthusiasts. A firm using market segmentation approach directs its marketing mix at a segment and not at the total market.
(8) The holiday market is the story of segmentation. A tour company can sell holidays to exotic places by selling bed and breakfast only. It saves people expensive hotel dinners and makes them look for cheap cafes. Thus, one of the arts of product or service planning is to find a gap in the market and plug it with a new product or service, satisfying an unsatisfied demand. And there are always gaps to fill and market segments that are crying out to be claimed.
4. Define the main idea of each paragraph.
5. Match the terms with their definitions. These are words connected with consumers and market segmentation.
1.The way people live, work and spend their leisure time.
2.The special orientation of a product towards a particular target group of consumers.
3.A part of the overall market.
4.A defined set of customers whose needs a company plans to satisfy.
5.The tendency for consumers to stay with one product or one producer, and not to use similar ones from competitors.
6.What a consumer feels or thinks.
7.The act of dividing a market into distinct groups of buyers who have different requirements or buying habits.
8.Considerations based on moral questions and moral judgments.
9.What consumers actually do.
10.Particular consumers at whom a producer directs promotional effort.
11.Part of a market; a group of customers with specific needs, defined in terms of geography, age, sex, income, occupation, life-style, etc.
6. State in what part of the text the following information is mentioned:
1.A market segment is a sub-set of a market made up of people or organizations with one or more common characteristics.
2.Improved segmentation can lead to significantly improved marketing effectiveness.
3.Common characteristics cause them to demand similar product and/or services based on qualities of those products such as price or function.
4.A niche is a more narrowly defined customer group who seek a distinct set of benefits. Identified by dividing a segment into subsegments, distinct and unique set of needs, requires specialization, and is not likely to attract too many competitors.
5.The term ‘market segment’ is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts for the services.
6.The people in a given segment are supposed to be similar in terms of criteria by which they are segmented and different from other segments in terms of these criteria.
7.Bases for segmenting consumer markets are geography, demography, psychology and behaviour.
8.Every organization engaged in a market will develop different ways of imagining market segments, and create product differentiation strategies to exploit these segments.
9.Segmentation makes it possible for firms to tailor the marketing mix for specific target markets, thus better satisfying customer needs.
10.The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage.
11.A true market segment is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention.
12.A market can be segmented by various bases, and industrial markets are segmented somewhat differently from consumer markets.
13.One can identify four primary bases on which to segment a consumer market.
7. Answer the questions:
1.What is the main technique of determining the needs of potential buyers?
2.What are the main factors of market segmentation?
3.What is target market?
4.What is market segment?
5.Give the definition of market segmentation.
6.What is market share?
7.What is the story of segmentation?
8. Translate into Russian:
1.Companies must determine which market would be most likely to buy a certain product and aim all their marketing activities at this target.
2.The firm would direct its attention toward a particular portion or segment of the total market.
3.A group of customers (individuals or organizations) who share similar characteristics such as age, sex, education, common interests, needs or desires is called a market segment.
4.Marketers use a wide variety of segmentation bases.
5.When choosing a basis for segmentation, it is important to select a characteristic that relates to differences in people’s needs for a product.
6.Market leader is the company or product with the largest market share.
7.Market share is the percentage of a market that a company has, e.g. 25% market share.
8.One of the equal parts into which capital of a company is divided is called a share.
9.Niche marketing or concentrated segmentation is the selection of a small, specialized part of a market that is unlikely to interest competitors.
10.We are delighted to be working with a company of such high standing.
11.General Motors trucks have helped the ¹1 auto maker raise its share of this market segment by one point to 38.9%.
12.One approach is to use occasion for which the product is used. Air travel, for example, can be segmented as holiday, business, or visiting friends or relations. Another approach is to segment people by the major benefit they seek from a particular product.
13.Once children become teenagers, parental consumption of chocolate declines as their children’s declines. Additional segmentation was based on tourism and exports.
14.The growth of the market sector will be fuelled by many new entries into the business.
15.As in so many Japanese industries, the market leader at home, Toyota, is not the strongest exporter.
16.For all its other businesses, Gillette means one thing to consumers world-wide: shaving. Gillette dominates the business in the USA, with a market share of about 64%.
17.In situations of market growth an organization might expect to achieve its own growth in the market place; this is clearly different from situations where markets are mature and where market growth has plateau.
9. Fill in the gaps with the most suitable words from the box:
target breaking down market customers key convince
similar classifying strategies focus identify offer
Target Market and Market Segmentation
Businesses know they cannot ….. everybody to buy their product or service. They look for ways to ….. their product or service to the people who are most likely to be interested. This involves segmenting, or ….. the market into smaller groups that have ….. needs. Market segmentation is the process of ….. customers by needs and wants.
A market can be segmented into a consumer and an industrial ….. . Within those markets, further segmentation is possible. The goal of market segmentation is to ….. the group of people most likely to become ….. . The group that is identified for a specific marketing program is the ….. market.
Target markets are very important because all marketing ….. are directed to them. When a business does not identify a target market, its marketing plan has no …... Identifying the target market correctly is a ….. to success.