Question

Company LL bean. You are to present a discussion of Demographic market segments and all 4 marketing mix appropriate to the segment. How you choose to present your recommendations is one of the choices your group should make, and it will depend a great deal on your product choice and all the other variables. However, your report should include: • Why you are focusing on demographic? You will have already described your selection criteria, but why have you chosen this specific target. What advantages does demographic has that are superior to what the firm is already using? • What are the dimensions? You should have some specific information about the size of the market segment, the market as a whole and any additional information you can locate about the segment. How will this segment satisfy the criteria for an effective segment? You will use your textbook here, but consider the demographics, location and other facts about the people in the segment. • For each segment, describe the elements of the marketing mix and why that specific mix is appropriate for that segment. • What do you expect will be the competitive reaction? What then will your firm do? • What needs to happen within the firm to make this scheme work well? Marketers need to coordinate their campaigns across production, sales, finance, customer service, etc. • How will you monitor the effectiveness of the choice? Do you see a need to develop a contingency plan due to a high level of risk?

Answer 1

Segmentation generally divides a population based on variables. Thus demographic segmentation too has its own variables such as Age, gender, family size, income, occupation, religion, race and nationality.

The 5 main types of variables used for Demographic segmentation are as below.

• Age
• Life cycle stage
• Gender
• income
• Religion race and nationality

Each of the above variable is discussed in detail below. Demographic segmentation is one of the most commonly used forms of segmentation amongst the 4 types of segmentation. The variables used for Demographic segmentation help divide a large population into specific customer groups. Each and every individual has an age, gender, income etc. Thus for mass marketing, this becomes one of the best ways to diversify individuals. This also helps in analyzing lots of data in shorter time for market research as well as for promotions.

1) Age - One of the first variable of demographic segmentation is age. This is because consumer needs and wants change with their age. A youngster might want a mobile phone but an earning professional will want a communicator with lots of extra features such as email and file editing support. Thus even though the basic functionality of the product is same, the wants are different. This is the primary reason for using age as a variable in demographic segmentation.

2) Life cycle stage - Closely connected to age, the life cycle stage of a consumer group defines what will be the need of that particular customer. Example – a toddler will need infant food, a child will need dolls and toys, a middle age customer will need insurance and investment plans and finally an old age person might need retirement plans. This demographic segment cannot be said as an “Age” segment because these customers are in specific phase of their “Life”.

3) Gender - Men are from mars and women are from Venus. So naturally their preferences differ. Where men might want the latest in technology, women might desire the latest in Fashion (point is debatable nowadays) There are several products which are gender focused such as deodorants, clothing, accessories, footwear and even automobiles. Women are gaining acceptance even in under developed economies and this has seen an increasing focus on women along with men as customers.

4) Income - BMW, Mercedes, Ferrari, these cars have customers who are much more quality and luxury conscious then others. So what would be the target group of such products? The high income customer. Similarly, in FMCG, you will see many brands and products which are targeted towards the Sec B and Sec C customers. Thus, income too can be used to define a customer group from a population. These customers are generally divided as Sec, Sec B and Sec C customers depending on their income and purchasing power.

5) Religion, Race, Nationality - Ever seen the advertising of a mass brand like Coca cola or Pepsi. Although these two brands have their own global advertising, but they also have specific advertising in each country which they enter. The messages of these advertisements are completely different and are based on the local customs, religions as well as nationality. With the tremendous increase in international business, there is also an increase in the usage of demographic segmentation on the basis of religion, race and nationality.

The marketing mix is a business tool used in marketing and by marketers. The marketing mix is often crucial when determining a product or brand ‘s offer, and is often associated with the four P’s: price, product, promotion, and place.

Product - A product is seen as an item that satisfies what a consumer in the target market needs or wants. It is a tangible good or an intangible service. Intangible products are service-based like products in the tourism industry, the hotel industry and the financial industry. Tangible products are those that have an independent, physical existence. Typical examples of mass-produced, tangible objects are the car and the disposable razor. Every product is subject to a life-cycle including a growth phase, followed by a maturity phase, and finally an eventual period of decline as sales falls. Marketers must do careful research on how long the life-cycle of the product they are marketing is likely to be and focus their attention on different challenges that arise as the product moves through each stage. The marketer must also consider the product mix. Marketers can expand the current product mix by increasing a certain product line ‘s depth or by increasing the number of product lines. Marketers should consider how to position the product, how to exploit the brand, how to exploit the company’s resources, and how to configure the product mix so that each product complements others. The marketer must also consider product development strategies.

Price - The price is the amount a customer pays for the product. The price is very important as it determines the company’s profit and hence, survival. Adjusting the price has a profound impact on the marketing strategy, as it will often affect the demand and sales as well. The marketer should set a price that complements the other elements of the marketing mix. When setting a price, the marketer must be aware of the customer’s perceived value for the product. There are various strategies that can be applied when pricing a product like skimming and penetration pricing. Skimming means to price the product highly to increase profits. For example if you invent a new software which no one else has, you can skim the market because the customers are forced to buy from you until there is more competition. Penetration pricing can be applied when you want to enter a market and price your product lower than the perceived market price so that more people will buy it and this will increase your market share.

Promotion - Promotion represents all of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as advertising, public relations, personal selling and sales promotion. Advertising covers any communication that is paid for. This can be in the form of television commercials, radio and Internet advertisements or through print media and billboards. Public relations is where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word-of-mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word-of-mouth momentum. Sales staff often play an important role in word-of-mouth and public relations.

Place - Place refers to providing the product at a place or places which is convenient for consumers to access it. Place is synonymous with distribution. Various strategies such as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of the marketing mix.