Question

Marketing Segmentation & Targeting

The Why

Discuss the “Why” it is important for companies to segment markets. What is the rationale behind this?

Specific Company

Pick a company’s product/brand that you either like or are familiar with enough to know about their segmentation and targeting strategies. If you don't have a company that you are familiar with enough, pick one that you are familiar enough through the advertisements and general marketing you see them conducting.

1. Name the company/product/brand and discuss what you think their marketing strategy seems to be, in general.

2. How does your company choice go about segmenting markets? What segmentation criteria do they use?

3. Should they be using any other (additional) segmentation criteria? Why?

In general, how do you think advances in technology have made it possible for smaller segments to be profitable?

Answer 1

1. The company that I chose is Amazon. Amazon is the largest E-Commerce giant. They have a strong presence in the online platform. They have all brands. In general they use digital sales as the marketing strategy for their business.
2. Amazon use demographic, psychographic and situational segmentation.

- Demographic segment- Age group between 25-50 years and people who use internet often.

- Situational segment- Convenience shopping from their place, liking to new products, preference for deals and offers every day.

- Psychographic segment- loyal customers, customers who value customer service, people who prefer ‘Recommended and suggested products’ option in the website.

3. I personally recommend Amazon to segment markets based on the search criteria. This sub segment should be included in psychographic segmentation because it shows who the customer is and what the customer wants. Amazon can then cater to these customers after sourcing the required inventory.

In general, advances in technology have made it possible for smaller segments to be profitable too because though they are small they are high revenue generating segment. They are mostly preferred by the customers. For example, in most B2B business model, a small segment of key customers are the highest revenue generating segmentation. This is because the products use advanced technology and innovation to cater to the customer’s needs.