An Evaluation Of Market Segmentation And Its Significance

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An Evaluation Of Market Segmentation And Its Significance


Chapter One


Introduction

1.1 Background Of The Study

Market segmentation can be defined as the process of dividing a market into district subsets of consumers with common needs or characteristics and selecting one or more segments to target with a district marketing mix. Before the widespread acceptance of market segmentation, the prevailing way of doing business with consumers was through mass marketing- that is offering the same product and marketing mix to all consumers. The strategy of segmentation allows producers to avoid head on competition in the market place by differentiating their offerings, not only on the basis of price but also through styling packaging, promotional appeal method of distribution and superior service marketers have found that the cost of consumer segmentation research shorter production runs and differentiated promotional campaigns are usually more than offset by increased sales.

In most cases, consumers readily accept the pass-through cost increase for products that more closely satisfy their specific needs. Market segmentation remains one of the most appropriate tools for effective strategic marketing. It gives marketers sense of purpose and guide them in the right direction that are likely to yield profitable returns through offerings, continuous offerings of superior quality product and services to consumer in the targeted market more than its competitors. Market segmentation and diversity are complementary concepts. Without a diverse market place composed of many different people with different backgrounds, interest, needs and wants, there really would be little reason to segment markets. A decision to use a market segmentation strategy should rest on consideration of four important criteria that affect its profitability. These conditions include the fact that target market for segmentation must be identifiable and measurable, accessible, substantial and above all responsive.


1.2 Statement Of The Problem

Market segmentation involve the process of dividing a market into different smaller units of consumers with common needs or characteristics and selecting one or more segment to target with a distinct marketing mix. However the effectiveness of market segmentation lies on the proper understanding of basic conditions such as defining the market problem, determining the basis of segmentation, choosing a set of descriptors that define, characterize or relates to the segmentation basis. Select a sample of consumers that is a representative of the larger population of interest, collect data on segment descriptors from the sample of consumers; from segments based on chosen consumer descriptors. Establish profiles of segments; translate the results into marketing strategy. Many organization do not segment their market neither understand their basic criteria. As a result no appropriate marketing mix is adopted to target a market segment. The resultant effect is exposure to still competition, low sales, low consumer patronage and loyalty. Therefore the problem confronting this research is to evaluate market segmentation and its significance with a case study of Unilever plc.


1.3 Research Questions

  1. What is the nature of market segmentation?
  2. What is the significance of market segmentation?
  3. What is the nature and significance of market segmentation in Unilever plc?

1.4 Objectives Of The Study

  1. To determine the nature and significance of market segmentation
  2. To determine the nature and significance of market segmentation in Unilever plc.

1.5 Significance Of The Study

The study shall provide a structural appraisal of the significance and nature of market segmentation. It shall also provide a case appraisal of market segmentation and significance in Unilever Plc.


1.6 Research Hypotheses

Hypothesis 1.
  • Ho: market segmentation is not given significant attention in Unilever Plc.
  • Hi: market segmentation is given significant attention in Unilever Plc.
Hypothesis 2.
  • Ho: marketing effectiveness in Unilever Plc is low.
  • Hi: marketing effectiveness in Unilever Plc is high.
Hypothesis 3.
  • Ho: the impact of marketing segmentation in Unilever is low.
  • Hi: the impact of market segmentation in Unilever is high.

1.7 Scope Of The Study

The study proffers an evaluation of market segmentation and its significance with a case study of Unilever Plc.


1.8 Definition Of Terms

Market Segmentation Defined:

Market segmentation is the process of dividing a market into different smaller units of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix.

Psychological Segmentation:

Consumer segmentation strategies are often based on specific psychological variables. Psychological characteristics refer to the inner or intrinsic qualities of the individual consumer for instance; consumers may be segmented in terms of their motivations, personality, perceptions, learning and attitudes.

Psychographic Segmentation:

Marketing practitioners have heartily embraced psychographic research which is closely aligned with psychological research, especially personality and attitude measurement. This form of applied consumer research commonly referred to as lifestyle analysis has proven to be a valuable marketing tool that helps identify promising consumer segments that are likely to be responsive to specific marketing messages.

Socio-Cultural Segmentation:

This consists of market segment based on family life cycle, social class, core cultural, sub-cultural membership and cross-cultural affiliation.

Demographic Segmentation:

Demographic refers to the vital and measurable statistic of a population. Demographic characteristic such as age, sex, marital status, income, occupation and education are most often used as basis for market segmentation.

Geographic Segmentation:

In geographic segmentation, the market is divided by location which can be reaching through local media including newspapers, TV and radio.


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