Market Segmentation As A Tool Of Achieving Organizational Sales Objective (A Case Study Of Nigeria Bottling Company, Owerri Imo State)
This research work is dedicated to God Almighty for his protection, guidance, and for giving me the inspiration to become what I am today.
It is also dedicated to my loving and wonderful parents Mr. and Mrs. A.O. for their support and prayers.
No person ever built his or her future success alone. In the course of writing this research work. Certain contributed immensely and valuable in one way or the other to me.
My special appreciation goes to God Almighty with him all things work for good in completion of this project. I am most grateful to my amiable supervisor, Mr. Godwin Okwudiri Nebo, whose particular suggestion and intellectual ability and personal encouragement has made this project work to see the light of the day, not withstanding the numerous duties carried out by him.
My appreciation goes to the staffs and management of Nigeria Bottling Company (NBC) Plc. Owerri for making it available the conformation necessary for this project.
A special thanks goes to my hardworking, loving and dedicated parents Mr. and Mrs. Mordi for their care, love and prayers during my sky in the prestigious and high relate institution Federal Polytechnic Nekede, Right from my ND to HND final.
Not left are my cheering sisters and a brother Mrs. Nkem Chukwuma, Presca, Lilian, Uche, Lizzy Chioma and my only loving brother Ifeanyichukwu Mordi.
My gratitude equally goes to loving and cheering friend Eke Gideon for his love, care and numerous supports.
My thanks goes to all the lecturers in marketing department.
My regards also goes to my amiable friends Uchenna, Chinyere, Rita, Ijay, Joy, Dearie, Jovita, Esther, Chioma and Christy for their love.
And to all my room mates for their understanding and love.
It has been stated that production is not complete until the product reaches the hands of the final consumer. Consumption is the sole purpose of production. Therefore, it will only be beneficial for a company not only to produce but to do so at a profit margin. One of the ways of ensuring sales of manufactured goods is through market segmentation.
This research work was therefore undertaken to study market segmentation as a tool of achieving organizational sales objectives as Nigerian bottling company (NBC) Plc. Owerri, Imo State. It was motivated by the desire to study the basic different ways a company can its market with the aim of discovering the causes of downward shift on the market share of the company.
Two sources of data were used. They primary and secondary data. Questionnaire was used as a research instrument to make up for the available data from other two sources. Chi-square (X2) test was used for the hypothesis testing. Based on the analysis we saw that market segmentation is positively related to sales turnover. Although the company has a problem of importing some of its materials, this does not reduce their sales turnover rather what reduces the firm sales and sales turnover was the breakdown of their production machine. Since the company records little or not customer returns of purchased goods, it could be deducted that reduction in sales and sales turnover of the firm was not caused by the quality of the drink they produced, it was also found that the company does serve the entire country from one central plant but rather they serve through the establishment of plants in every states of the federation and depot were it becomes impossible for production plant.
Respondents also indicated that they employ segmentation variable in its market. Based on the findings, the following recommendation was made. The researcher recommended that the firm NBC Plc. in particular and Nigeria organizations in general should adopt market segmentation and use its strategies effectively to ensure increase sales turnover and satisfy any chosen segment well. The research also recommends that the company should appeal to the different market segments with different promotional strategies in order to fully tap the potentials of each segment very well and satisfy the consumer in the chosen segments.
Table Of Contents
- Title page i
- Approval page ii
- Dedication iii
- Acknowledgment iv
- Abstract v
- Table of contents ix
- 1.0 Introduction 1
- 1.1 Background of the study 1
- 1.2 Statement of problem 6
- 1.3 Purpose and objectives of study 7
- 1.4 Research question 8
- 1.5 Statement of hypothesis 8
- 1.6 Significance of the study 9
- 1.7 Scope and limitation of the study 10
- 1.8 Definition of terms 11
- 2.0 Literature review 14
- 2.1 The concept of market segmentation 14
- 2.2 Rational for segmentation market 20
- 2.3 Criteria for segmentation 25
- 2.4 The process of segmentation 30
- references 35
- 3.0 Research methodology 36
- 3.1 Design of the study 4
- 3.2 Sources of data 36
- 3.3 Population of the study 37
- 3.4 Sampling techniques 38
- 3.5 Determination of sample size 38
- 3.6 Method of questionnaire 40
- 3.7 Method of data analysis 41
- 4.1 Data presentation and analysis 43
- 4.2 Testing hypothesis 57
- 5.1 Summary of findings 61
- 5.2 Conclusion 62
- 5.3 Recommendation 63
1.1 Background Of The Study
Stanton (1981:65) defined market as people with needs to satisfy, money to spend and willingness to spend it. In market demand, we have three factors to consider- people with needs their purchasing power, and their buying behaviour.
Market segmentation is defined as the subdivision of a heterogeneous market into homogenous subset of customer where any subset may conceivably be selected as a market to be reached with distinct marketing mix. In the case of Inyanga, (1998:339), market segmentation is the process of dividing the heterogeneous (mass or divergent) into homogeneous sub-units so that each sub-market could be satisfactorily and profitably be served by the business enterprise through the application of its marketing resources that could reach these separate segment as desired by both parties
The market segmentation induces a company to introduce product differentiation strategies to serve the needs and wants of each segment and sub-segment. NBC plc uses this strategy to serve its customers- it uses the product features and advertising to convince the prospective buyers that its product are not different in outlook but better satisfying that the existing ones in the market. The product differentiation can be physical attributes like packaging, color size, weight etc. It can also be non-physical attributes like product image, price, quality, durability and dependability.
At this junction, it will be vital to discuss the sector that influences market segmentation policy they are:
In more precise terms, it deals with dividing the buyers into regions states, nations, climate etc.
In demographical factors, different groups are distinguished on the basis of age, sex, family life cycle, religion, nationality or social class.
The psychographics form of segmentation takes into account difference in life styles or personalities line.
It consists of metropolitan or urban, semi-urban and rural areas.
However, market consists of customers and customers are likely to differ in size, resources, geography, product requirement, buying attitude and practices. Organization attempting to develop and select their market, relate their resources to these areas of customers’ differences and use them as bases to subdivide the large market into distinct subsets and select the subset which it has distinctive resources potentials to effectively satisfy.
Meanwhile, organization undertakes this process of sub-dividing large market into subset to achieve the following benefits;
- It allows small firms with limited resources to compete effectively in one or few segment of the larger market with its limited resources.
- It enables firms develop specific product that really match the market demands.
- It helps organizations develop specific marketing programmes for each segment.
It must have to be emphasized here that markets can only be segmented if sufficient information exists in the buyers and their characteristics.
Through better satisfaction of customers need and more focuses decision making, organization achieve their sales objective by the application of market segmentation concept.
The Nigerian Bottling Company Plc is the largest bottling company in Nigeria today.
It bottles and markets the following range of coca-cola product; Coca-cola, Fanta, Sprite, crest Schweppes and five alive. The Nigerian bottling company plc operates under the franchise of coca-cola international. Coca-cola international has its home office in Nigeria since the year 1953, (source coca-cola yearly preview vol. 17, 1989 pg. 24), and at this inception of production, the company started with only one flavor and that was coca-cola but now there are altogether seven flavors namely; Coca-cola, Fanta, Sprite, crest Schweppes and five alive.
As previously mentioned, coca-cola international having one flavor at the inception of production makes use of undifferentiated marketing strategy, offering the same product and promotional images and method to the whole world in general. But because of the entrance of competitors in the soft drink industry, they now segment their market by having different kinds of flavors and bottling sizes. They have reached level of income earners and got their actual and potential customers world wide.
The final basis for segmentation take into account benefits the buyers may be seeking from a particular product. The company can therefore, choose the benefit it wants to emphasize to create a product that diverse and direct a message to the group seeking that benefit. This study enables us to find out the impact of segmentation to NBC towards the achievement of its sales objectives. And also, to know whether they have competitors in the industry and know how they cope with their marketing programmes. We will also, consider whether NBC uses product features and advertising to convince their prospective buyers.
1.2 Statement Of The Problems
Certain conditions or factors can make market segmentation of an organization to sell below expectation in the sales objectives; it can be the low income status of the customers or from the company.
Also, increase competition in the industry which has led to evaluation of marketing strategies used by the companies to outwit their competitors and adequately meet the needs and wants of their target market.
Changing and dynamic nature of the marketing environment is another problem that faces the organization in a bid to successfully segment the market in order to increase the sales objective.
The different marketing orientation in environment requires marketing approach and proper understanding of this, as required for market segmentation to be effective.
1.3 Purpose And Objective Of The Study
Generally, the purpose of this study is to evaluate market segmentation activities of Nigeria Bottling Company can help achieve the company’s sales objectives. They are:
- Find out if NBC apply segmentation in the marketing of its product and how it does it.
- Identify the problem militating against effective segmentation of its market.
- Determine how market segmentation should be carried out to attain higher level of sales turnover.
- To achieve increase sales volume
- Determine the causes of decline in sales turnover and market share.
1.4 Research Questions
For the researcher to really concentrate on its area of research work, there are some research question he will develop so as to effectively carryout the research successfully. They are:
- Does the problem emanate from the quality of drinks they produce or is it wrong quality of drinks they produce? Or is it wrong identification of target market?
- Has there been actually a reduction in the firm’s market share and sales turnover?
- Does the company use proper marketing programme to get to their customers?
1.5 Statement Of Hypothesis
This is a tentative answer to the problem questions before they are tasted and approved or disapproved. Here, we shall state the null hypothesis and the alternative hypothesis.
- (Hi) The essence of alternative hypotheses is to make provision for options.
- Ho: The Company does not make use of proper marketing programme to get their customers.
- Hi: The company makes use of proper marketing programme to get their customers.
- Ho: There is no need for improvement on the company’s market segmentation strategies.
- Hi: There is need for improvement on the company’s market segmentation strategies.
1.6 Significance Of The Study
Business in Nigeria presently is far from being an easy Endeavour meanly because of the prevailing economic crisis in Nigeria in particular and the world in general. This has prompted businessmen to be careful, that is, by making use of official figures gotten from research before investing in any venture.
The findings of this study go a long way in improving sales turnover and market share of the firm. This will invariably lead to an increase in general profit generation and better revenue position.
Moreover, the findings would help the firm in overcoming most of its constraints and problems like the firm’s poor competitive stand and high selling expenses. It is also, expected that most of the findings shall help the firm to reduce its target markets to suit the current need of the customers’ satisfaction and consequently lead to increase sales turnover.
1.7 Scope And Limitation Of The Study
The research work is restricted to Nigeria Bottling Company Plc, Owerri- manufacturers of Coca-cola, Fanta, Sprite, crest Schweppes and five alive and Eva water.
The problems that are envisaged in the course of the study are as follows:
- Managers indisposition to fully respond to the demand of the questionnaires and particularly no responses to some questions due to pressure of work and suspicious about the interior motive behind the research.
- Hoarding of some relevant information by some employers due to reprisals by management even after reiteration of the aim of the research.
- Lack of proximity and easy access to research libraries to augment the services of the Federal Polytechnic, Nekede Owerri library.
- Pressure of other academic commitments on the part of the researcher.
1.8 Definition Of Terms
It is subdivision of a heterogeneous market into homogeneous subset of market (segment) where each subset may conceivably be selected as a target market to be reached with a distinct market mix.
NBC Nigerian Bottling Company.
It represents the set of buyers of the firm’s product that commands the highest profitable sales.
Internal Market Environment Or Market Mix
It is the set of marketing controllable variables that firms uses to achieve a competitive position in the market place. The components of this variable include product, price, promotion and distribution.
External Marketing Environment
It deals with the set of a marketing uncontrollable factor in the environment that any organization has to deal with. They include; political, social, economic and technological forces that cannot be controlled but their threats can be reduced through the use of the marketing internal variables otherwise known as the four P’s of marketing.
These are individuals who purchase or have the capacity to purchase bar soap offered or sale in the market in order to satisfy personal or have needs, wants or desires.
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