The Customer Analysis and Market Segmentation - Essay Example

The Customer Analysis and Market Segmentation Marketing 1) Given that absolute market potential almost always exceeds actual industry sales, why do marketers bother to make potential estimates? Discuss 4 decisions that a marketer of industrial grinding machinery might make based on such potential estimates The business world today has become diverse, and with increased availability of technology, many people are able to open up their own businesses. Others also partner to form companies or large organizations. The result of all this innovation is that, competition in the market is increased and thus, the businesses have to market their products to gain customer loyalty. To ensure that they gain the desired results, marketers have to make predictions of the outcome of their marketing (Davenport & Harris, 2009). Study shows that producers need to create commodities on high demand thus, the need to make potential estimates. While marketing industrial grinding machinery, a marketer will have to make four decisions, which include; the pricing decisions, the product decisions, the placing decisions and the promotion decisions. Under the product decisions, the marketer will first have to decide on the quality, brand name and functionality of the machinery. Depending on the potential estimates made and the potential customers being targeted, the standards set can be high or low. Marketers need to consider this because for instance; some brand names will appeal to some customers while to others they may not make any sense at all. The pricing decisions are highly critical since they determine the profit making of the organization. The marketer should ensure that the price set is in accordance with the potential estimates made. Prices should not be exceptionally high since this may cause customers to shift to the competitors. In making this decision, marketers should evaluate the prices of other grinders in the market. The marketer also has to decide whether discounts will be issued on the machinery or not (Pride & Ferrell, 2011). Under the placing decisions, the marketer has to decide on the distribution of the grinding machinery. Depending on the potential estimates made concerning the market available, the marketer has to decide which places to distribute the product and which to be left idle. Transportation decisions also have to be considered, and the number of distribution channels. However, most distribution centers should be placed where a wide potential market has been identified. Promotion decisions include the various ways in which the marketer can market the product. Different marketers will use different strategies of marketing a product depending on its type. For instance, marketing grinding machinery would need a method such as personal selling to ensure that the customer is totally made aware of the product and its functioning. However, other methods of marketing such as advertising might leave some information about the product. 2) What is the relationship among market segmentation, target marketing, and positioning? What will happen to a company’s target marketing and positioning efforts if markets are incorrectly or not effectively/insightfully segmented? Market segmentation refers to the division of the customers of a product into different groups. Customers will mainly be divided depending on their needs, their characteristics and their financial ability. While segmenting the market, the marketer also has to consider the organization’s ability to satisfy all the segments and the competitive advantage of each segment. Other factors that have to be considered in evaluating the segmentation includes; the costs of the product and the sales estimates (Pride & Ferrell, 2011). Once the business has divided its market into different segments, it then evaluates the potential gains of each market and then chooses which to concentrate on. This process is referred to as target marketing. The market chosen is then referred to as the target market. This is usually the market that has a large number of buyers and a high possibility of achieving the set goals and objectives (Pride & Ferrell, 2011). In choosing the target market, the company should not only consider the current benefits obtained but also the future effects. After the target market has been chosen, the organization then has to define and shape the way that the product is seen or appears in the minds of consumers. This is referred to as market positioning. It mainly involves differentiating of products to make them desirable to customers and ensure that customers have a clear perceptive concerning the products. This will usually give rise to consumer’s loyalty and thus increased sales. Poor market segmentation usually leads to targeting of the wrong market. The organization will also be making unusually low sales since the consumers being pursued are not interested in the product being sold. Taking for instance, choosing to sell electronics to a community where use of electricity is prohibited, would just lead to losses. Ineffective market segmentation also leads to the inability of positioning. The organization will not be able create customer loyalty since the customers have not even been acquired. 3) Discuss your organization’s primary customer segments and their differences. Some questions that may guide you in your posting: How does your organization define and identify its market segments? What positioning strategy does your organization use with those segments? How do other Main Topics discussed this week apply to your organization? Different criterions can be used in segmenting of markets depending on the potential estimates made by the marketer. In my organization for instance, the markets are segmented based on a variety of factors such as; the economy of the customers, the cultural factors, the geographic factors and the political factors. Under the economic factors, the organization mainly considers the financial ability of customers in order to segment them. On the other hand, the cultural factors are used in segmentation by the organization dividing the consumers on the basis of their cultures (Davenport & Harris, 2009). Different individuals in different geographic regions also demand different products and thus the basis of segmentations. The organization uses the positioning strategy of high product class compared to that of the competitors. It ensures that its products are of a high quality and that they have unique characteristics and attributes. With my organization being large and diverse, it applies the four marketing decisions to ensure that it obtains a wide market for its products. This is also to ensure that the market selected is the right one. The organization is thus able to monitor the consumer needs and behaviour over a large area. The organization has also managed to create a strong, competitive position for itself through the right market segmentation and positioning. References Davenport, T. H., & Harris, J. G. (2009). What people Want and How to predict it. MIT Sloan Management, 50(2), RR. Pride, W. M., & Ferrell, O. C. (2011). Marketing (16th ed.). Mason, USA: Cengage Learning. Read More