“Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics. The segments created are composed of consumers who will respond similarly to marketing strategies and who share traits such as similar interests, needs, or locations.”
Trackmavencom, D. 2018. TrackMaven | The Marketing Insights Company. [Online]. [12 December 2018]. Available from: https://trackmaven.com/marketing-dictionary/market-segmentation/
Market segmentation is a strategy where a business splits the market into small sections with specific needs, behaviours and or characteristics that may need different marketing strategies. The main ways to segment an audience are demographics, geographic location, psychographics and finally, behavioural differences.
“Demographic segmentation is market segmentation according to age, race, religion, gender, family size, ethnicity, income, and education. Demographics can be segmented into several markets to help an organization target its consumers more accurately. With this type of segmentation, an organization can categorize the needs of consumers.”
Study.com. 2018, M.Gigli. What is demographic segmentation. [ONLINE] Available at: https://study.com/academy/lesson/what-is-demographic-segmentation-in-marketing-definition-advantages-disadvantages.html . [Accessed 12 December 2018].
In the case of furniture and decorations shop IKEA, the customer base would mostly involve people between the ages of 21 to 36 years old, with stable jobs and salaries, who can afford themselves a new piece of furniture every once in a while. However, the IKEA store that I focused on is in London, England, which is one of the largest student countries in the world, with 106 universities (wikipedia.org/List_of_universities_in_England, 4th November 2018). Another thing to consider is that many students come to IKEA due to it having such cheap and fashionable items that students can buy for their apartments and their accommodation rooms.
“Psychographic segmentation involves dividing your market into segments based upon different personality traits, values, attitudes, interests, and lifestyles of consumers. This segmentation is advantageous because it allows you to engage in product design and marketing in a focused manner.”
Study.com. S.Grimsley 2018. Psychographic Segmentation in Marketing: Definition & Examples. [ONLINE] Available at: https://study.com/academy/lesson/psychographic-segmentation-in-marketing-definition-examples-quiz.html . [Accessed 12 December 2018].
Most of IKEA's target market (for all their products, not just furniture) is aimed at middle-class people. So, when putting together a product for a similar target market, businesses will also have to follow these guidelines to make the sales successful. Customers also found that their choice of furniture usually comes down to a storage unit being able to save space, a good quality product and finally the storage unit is aesthetically pleasing. (Thomas, S. (Mintel 2017) These three decisions usually come down to the lifestyle and personality of consumers.
“Behavioural segmentation is defined as the process of dividing the total market into smaller homogeneous groups based on customer buying behaviour. Behavioural segmentation is done by organizations on the basis of buying patterns of customers like usage frequency, brand loyalty, benefits needed, during any occasion etc.”
Monika Baranowska. 2016. Behavioral Segmentation. [ONLINE] Available at: https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/2542-behavioral-segmentation.html . [Accessed 12 December 2018].
There are many occasions when the consumers would buy furniture, and in this situation, there is no specific occasion. People also tend to buy new furniture when another breaks, for re-decorating or when old furniture should be replaced. However, decorations around the house can be changed as a result of specific holidays and so consumers buy Christmas, Halloween and other seasonal or themed decorations to lift their spirits for that time of year. In terms of the benefits, the buyers will choose items based on how aesthetically pleasing they are and the value for money of those items. Shops are always looking to expand their market, and to do that they have to not only rely on regular customers, but also new ones, potential ones and they should find ways to remind old customers of their services/products. This is why the user loyalty status is important. It means that customers are segmented into groups according to their loyalty as a user and labels them as heavy, medium or light users which depends on how much they have purchased from the company.
The favoured targeting strategy for a small business that sells furniture is Micromarketing, this is when companies create their marketing strategy to the wants and needs of geographic, demographic, psychographic and behavioural segments. If a company uses micromarketing then it allows the business to have a wider range of people they can reach out to which then starts the domino effect of people being interested in the business then their products and finally purchasing a product. This will also encourage loyal customers because the chosen segmentation for age group is 21-36 year olds, which mostly are people who are first time buyers for property and they would be purchasing for their new homes. While people older than 36 years old could be looking at refurbishing their homes so they will be able to have an open mind or a change in what they are looking for which could push them away from their currently loyalty company and into another.
DIFFERENTIATION AND POSITIONING
The placement of the company on the map displays how consumers perceive it and its features compared to competitors on the basis of aspects like price, quality, etc. To have competitive advantage is to have an advantage over your competitors' products such as value for money. Also, in this circumstance, if the products are unique to others, exported from the country priced reasonably compared to the quality, the company booms in sales in its country of origin and has a large number of loyal customers, the retailer would have the competitive advantage.
Hello Unit, will attempt to make their storage unit slightly lower in the quality and price in order to compete with the dominant market share company, who is IKEA and have 39% of the furniture market share.
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