Segmentation and Targeting Strategies for Companies - Term Paper Example

Describe each company's target market. Do NOT include definitions of target market or segmentation. The target market for Timex watches is much wider than for Rolex watches. The Timex is a product that targets people of all ages that have low to middle income. Timex has watches for both female and male users. The Rolex watch targets a different target market. The target market for Rolex products are people that have income above $100,000 a year. This target market is based on the introductory level Rolex products. A Rolex customer is a person that is accustomed to buying luxury items. A lot of Rolex watches have target market of people that are millionaires (Rolexforums, 2011). (2) How does the choice of target market influence the company's pricing and promotion (from what you know so far)? The target market of Timex of targeting people of all ages is achieved by the firm’s pricing strategy of selling watches at the low end of the market. Most Timex watches are sold at a price point between $25 and $50. Timex utilizes various promotional strategies to increase the sales of the firm. Some of the stunts include the use of customized watches for incentive awards, sales incentives, corporate promotions, business gifts, safety programs, and recognition awards (Timex, 2011). The retailer that sell Timex watches on many occasions sell the watches on special since the target customer of Timex watches are price sensitive. The demand of products that are priced low goes up by further decreasing the price of the product. The Rolex uses different promotional strategies to attract customers. The use of celebrities sponsoring the product can help increase the appeal of the product. Rolex watches are sold at jewelry stores and in luxury department stores. There is a lot of competition in the luxury watch marketplace and many online vendors offer attractive discounts off the retail price to persuade people to buy Rolex products. For instance Melrose Jewelers is currently offering the Presidential Rolex at $9,825 (Melrose Jewelers, 2011). This price is 36% below retail price. (3) Now imagine one of the companies you chose wants to introduce a new target market. For instance, suppose Hilton or Four Seasons wanted to offer a budget option for the target market sought by Motel 6. How would this strategy affect consumer perceptions? Rolex could introduce a cheap version of its watches to attract the younger demographic between the ages of 18-25 years of age. The new product could attract a lot of new customers and the sales of that product might be excellent. The problem with that strategy is that it can dilute the brand name of the company. The wealthy people that are accustomed to the prestige of owning a Rolex will not be very happy with the masses buying cheap Rolexes sold at hundreds of dollar a piece instead of thousands. The company could lose a lot of customers that are enabling the firm to make a nice profit margin from each unit sold. The second scenario involves Timex introducing an expensive model to target a different segment. A good way to achieve such a strategy is by including implicit value in the construction of the watch such building the watch with some or all its parts in gold. I think adding a line of luxury watches would be beneficial for the company. (4) Do you think these customers will be influenced by changes in the economy? Why or why not? Timex is better suited to accept negative changes in the economy than Rolex. Timex sells a cheap product. During bad economic times people look for bargains. Many users of mid level brands might switch to cheap brands such as Timex to serve their watch needs. During good economic times the Timex brand will do better, but the firm might lose a portion of its recurrent customers who might switch to more expensive brands because they can afford them now. The low price point of Timex makes the watch an excellent gift and during good economic times people are more generous. A Rolex is a luxury item. Luxury items do not have good sales during bad economic times. A lot of the Rolex products target millionaires. A millionaire will continue to be rich during a recession since recessions affect the poor more that the high class. During good economic times Rolex watches sell much better as there is more disposable income available. (5) Do you think these customers are influenced by social environment? For instance, do people buy these products or services in response to peer pressure? Keeping up with the Joneses (a/k/a aspirational reference groups)? Why or why not? I do not think that Timex customers are influenced by their social environment. The customers of Timex are practical watch users that look for features and the utility of the watch. Peer pressure does not affect Timex customers. The customer profile of Rolex is much different. Rolex customers care about the prestige of owning and using a Rolex watch. Many Rolex customers are from affluent families and in their inner social circles peer pressure exists to own the best clothes, cars, and accessories such as watches. (6) Do product brand and store name play a role in the purchase decision? I.e., Do they buy a Coach bag because it's a Coach? or would they buy the same bag at Wal-Mart if it appeared to be the same? Would they prefer to buy this bag at a Saks Fifth Ave rather than at Joe's Discount Shop? Why do you think so? I think many customers prefer to buy luxury items such as Rolexes at high end stores. It is all about the shopping experience. This customer would not feel comfortable going to a Wal-Mart and paying $10,000 in front of people that could feed their entire family for a couple of years with that type of money. Rich people might think that lower end stores might be selling counterfeit merchandise. The Timex customers behave much differently. The cheaper the prices of Timex watches the more satisfied they are with their purchase. (6) Do you think this target market shops for bargains? Or do they actually seem ready to pay a higher price? Why do you think so? The target shoppers of both products are interested in getting a good price. Good prices and high quality are attributes everyone looks for when purchasing consumer products (Moncon, 2011). Purchasing a Rolex is an investment since the watches retain very good resale value in the open market. Some people that cannot afford to buy a new Rolex buy used Rolexes that can be bought at much lower prices. Since Rolex buyers purchase the item for the prestige on many occurrences they don’t care as much about price. Timex buyers are extremely price conscious. They are willing to pay a little extra for a watch, but the model must have more features, greater quality, and it must be more aesthetically appealing. References Melrosejewelers.com (2011). Luxury Watches. Retrieved August 31, 2011 from http://www.melrosejewelers.com/ Moncom.net (2011). Everyone love low price high quality products. Retrieved August 31, 2011 from http://moncom.net/moncomclothingmsgs.asp?topictoview=36&title=everyone+love+low+price+and+high+quality+products Rolexforums.com (2011). Rolex. Retrieved August 31, 2011 from http://www.rolexforums.com/showthread.php?t=74929 Timex.com (2011). Corporate Markets. Retrieved August 31, 2011 f rom http://www.timex.com/info/Corporate_Markets Read More