The Cooperative Group - Essay Example

?The Co-Operative Group (Food, Funeral Care, Banking Group, Pharmacy, Travel) Table of Contents Table of Contents 2 Introduction 3 2.0 Features of Segmentation 4 2.1 Defining the Target Market 4 2.2 Rationalising Policies for an Existing Product 5 2.3 Positioning a Brand or Services 5 2.4 Searching of Opportunities by Introducing a New Brand 5 3.0 Market Segmentation of the Co-Operative Group Ltd 6 4.0 Segmentation Failures 7 5.0 Overcoming Failures 8 6.0 Conclusion 10 References 11 Appendices 13 1. Introduction With the continuous observation and a through marketing analysis, marketers have recognised that the target audience or consumers for a certain product are not similar in nature due to the differences prevailing in the parameters such as social affiliations, demographics, needs, attitudes and locations. Marketers have started to make different market segments for ensuring an easy access to their target customers. It ensures proper delivering of the products as demanded by the target customers (Wedel & et. al., 2000). Source: (Gelb Consulting Group, n.d.) In relation to the study of market segmentation, The Co-operative Group Ltd has been chosen to demonstrate the features, failures and overcoming of the failures in different market segmentation in terms of this company. The Co-operative Group Ltd is a consumer cooperative based company headquartered in the United Kingdom with having its diverse retain chains including business relating to food, funeral care, banking group, pharmacy and travel. There are many cooperative businesses in the world. Among them The Co-operative Group is one of the largest. It is the biggest mutual business of the United Kingdom. It has been operating with more than 4800 retail outlets and it also employs above 100,000 individuals in its chain organisation. Its annual turnover in over 13billion Pounds a year. It is a kind of consumer cooperative (Co-operative Group Limited, n.d.). For the proper utilisation of the market segmentation process, there should be certain factors which need to be maintained by the marketers. Segmentation should be homogeneous, accessible, measurable and substantial. Homogeneous is a kind of group where same kind of customers’ demand for the same kind of product qualities. In addition to this, accessibility should be there in terms of economy and geography. The reason behind this is that marketing strategies made for a group completely differ by its accessibility to another group. Target markets are actually quantifiable through factors related to their income, age bracket and population. Characteristics should be recognisable in a well defined manner and in measurable format. Substantial indicates that the segment should be large enough to stand as a group and also large enough to become profitable (Gelb Consulting Group, n.d.). 2.0 Features of Segmentation Market segmentation plays a very crucial role for formulating marketing strategy of a majority of successful organisations. Contextually, all markets embrace a different kind of groups of people with different needs along with preferences (Lamb & et. al., 2008). It helps the marketer to define the marketing objectives more accurately. In addition to this, better allocation of resources also should be there. On the other side, performance of the market can be evaluated more preciously when the marketers have the precise objectives for the specific segment of markets. Each and every firm cannot serve its potential customers in the same way as it does not have abundant resources (Blyth & Zimmerman, 2005). 2.1 Defining the Target Market Market is a very complex phenomenon from the viewpoint of a company. It constitutes different sets of consumers, leads to different tastes and demands for different products. Thus, from a company perspective, it is quite tough to position products to a specific market as the demand for that particular is distinct with reference to a varied set of consumers. Market segmentation techniques help an organisation to differentiate a market into different target groups so that the customers needs and requirements can be satisfied appropriately (Blyth & Zimmerman, 2005). 2.2 Rationalising Policies for an Existing Product With the basis of target market groups, a company formulates its strategies and policies regarding a product for a specific market. With the process of continuous research and development towards a product, any brand cannot survive amid the competition in the market. Policies help an organisation to attract a new customer or to retain the old one. It also helps to increase the market share of a company (Croft, 1994). 2.3 Positioning a Brand or Services A market constitutes of different brands of a company. Some of them are made for high end customers and a few of them for medium or low range customers. Market segmentation facilitates a company for the positioning of their brands and services. 2.4 Searching of Opportunities by Introducing a New Brand Segmentation leads to market research, by which any company can find the opportunities through the identification of gaps for which demand has not been fulfilled yet. Moreover, for alleviating the said gaps by introducing a new product it can finally increase its market share entirely (Tynan & Drayton, 1987). 3.0 Market Segmentation of the Co-Operative Group Ltd The Co-operative Group Ltd. has segmented its business in many ways. It has diverse business segments starting from banking group to food, funeral care and pharmacy to travel among others. Due to its unique behaviour, each customer acts as a different market. There can be no segmentation (mass), full segmentation (micro) or a specific segmentation (niche marketing) between them (Kotler, 2005). It follows micro marketing segmentation rather than the implementation of the mass segmentation. In micro marketing segmentation, The Co-Operative Group Ltd needs to target products and services for its business as per the tastes and preferences of the individual customers. Consumer market segmentation may be performed on the basis of its behavioral, psychographic, geographic and demographic differences. The Co-Operative Group Ltd mainly focuses on the demographic and psychological segmentation. Through the demographic segmentation, it targets to address the varying needs based on the personalities, social classes and the lifestyles of the customers of the target market. On the other hand, psychological segmentation of the respective company mainly focuses on the usage rate, loyalty and the attitude of the consumers towards its services and products (The Co-operative Financial Services, 2010). As regards to its food services, its commercial team has undertaken a project to develop its customers offer by segmenting its stores in five difference formats. With the introduction of this segmentation, it can serve its customers by providing what they want and when they want. In addition to this, its post office counters were also introduced to offer extra services to its customers. In financial services, the acquisition of The Somerfield has allowed the organization to perform in a root-branch level which can be seen in the implementation of new management system of workforce and its rolling out will better serve its customers by providing a better segmentation. Segmentation regarding its financial services is performed in accordance with the operations of its business. The activities of the company are segmented into retail, markets and corporate aspects. It also segmented its market in the sector of funeral care, travel and pharmacy (The Co-operative Financial Services, 2010). 4.0 Segmentation Failures There are many firms, in which market segmentation fails. The reason behind this is not the absence in terms of finding appropriate techniques but there is an inability which translates within the segments definitions to ascertain proper customer database. This failure actually happens when the respective company does not have enough predictive knowledge and information regarding the existing customers in its database system to make an appropriate predictor model. Even if those companies make the segmentation models, they at times fail to apply those models properly because the quality of information in their database is not rich enough as compared to the data collected from primary sources. Thus, the relevancy and the accuracy of that particular database are quite low. Although there is great acceptance of market segmentation in the marketing of a company but it also faces failure because there is a strong evidence that the marketers face trouble while implement them in the real circumstances. The reason behind the failure in the market segmentation may be the lack of quantifiable data of the market characteristics and measurable business performances. Failure happens mainly due to the uncertainty regarding the target market, occurrence of analytical biasness and misreading the market condition (Yankelovich & Meer, 2006). The Co-operative Group Ltd has mainly segmented its market by demographic and psychographic perspectives. Failures mainly happen in case of demographic segmentation due to differences in thinking. For instance, not all 30 years-old people think or demand in the same manner. In psychographic segmentation, a thoroughly conducted proper research is required, which is mainly possible by a large organisation. Due to the financial downturn, the financial sector also got affected. In the travel and tourism sector, segmentation does not work in case of natural calamities. Year 2010 was quite challenging for the company as heavy snowfall resulted in creating a downfall in its sales by 6.6% and profit by 70%. In this regard, it can be ascertained that financial markets are subject to market risks. A lack of stability creates difficulty for an organisation to segment its market appropriately. However, the main failure in cooperative business is the aspect of making delays in decision making. In the year of 2011, a survey was conducted by a British media named ‘Which?’ claiming that The Co-operative Group Limited was the least preferred grocer with merely 46% customer satisfaction as compared to 85% of its competitor Waitrose. This was one of the failures of this company. The reason behind this failure may be improper demographic segmentation, as customer satisfaction is a part it. Thus, there is a need to ascertain better segmentation for the well prepared strategies to address the needs of the target market. Proper segmented market includes customers having same tastes and preferences and it will really be easy for a company to allocate the same kind of products and services so that the customers can be satisfied easily (Yankelovich & Meer, 2006). 5.0 Overcoming Failures To overcome the market segmentation barriers, managers or marketers need to conduct a dynamic research on systematic segment. The research will assess the conditions of the possible target markets, whether the launch of a new product on that particular segment will be profitable or not. Decision making perspectives and processes can be utilised with a combination of ungraded technologies. To overcome the analytical bias related aspect there is a need to modify the rules for the quantification of the target market. This can be done by bringing new well ordered techniques for the research process. Additional solution for this problem may be the involvement of perspectives of various stakeholders on conducting a research design program. The Co-operative Group Limited has already rolled out a consumer segmentation plan in the year of 2010 which will change the stock in the store to ensure that the customers get the right kind of products in the right place. Another change has been made in the year of 2011, when all the stocks of the store were managed by the store managers separately, causing a difference to the inventory. However, not all the stocks are being managed centrally to ensure the better allocation of resources to the customers (Hulfactor, 2006). It will be advisable for The Co-operative Group Ltd to focus on all the factors of the demographic segmentation to gather more knowledge regarding the consumer behaviour. To know more about the consumer behaviour, it can conduct certain analysis on the basis of primary data collected by the questionnaire interviews or by any kind of interview methods. After the collection of the true facts from the survey, processing of those data needs to be done accurately to gather the right information. 6.0 Conclusion The aspect of segmentation can facilitate a marketer to address the varying needs of the target market efficiently. It mainly deals with the customer satisfaction of an organisation regarding a particular target market. If organisations implement market analysis successfully and segment their target markets as per their demands, it will ensure satisfaction of its customers. In collecting, handling and managing the data collected by a research program there should be a comprehensive and well structured database. Better resource allocation, clear identification of opportunities in the market, along with improving the ways of customer understanding can facilitate marketers by a considerable extent. The Co-operative Group Ltd needs to select best segmentation approach, ensure proper collection and management of data and finally use those data to increase the marketing effort for a successful market segmentation campaign. This company serves its consumers in many forms. It has proven its presence in many sectors like food bank, insurance, electrical, pharmacy, travel, funeral care and legal service. Market segmentation is done for the sub-division of the controlling power. This is because for a single controlling authority it may not be possible to manage all its businesses carefully and properly, thus the organisation can open up different segments to capture more and more of the market share. Segmentation is an utmost important factor for the survival of an organisation but without the proper use of it there may be downward shift for a company’s product lifecycle or there may be the winding up of a business unit. References Blyth, J. & Zimmerman, A. S., 2005. Business-to-Business Marketing Management: A Global Perspective. Cengage Learning EMEA. Co-operative Group Limited, No Date. About Us. The Co-operative. [Online] Available at: http://www.co-operative.coop/about-us/ [Accessed May 20, 2013]. Co-operative Group Limited, 2012.The Cooperative Here For You For Life. The Co-operative Group Annual Review 2012.pp.1-28 Croft, M. J., 1994. Market Segmentation: A Step by Step Guide to Profitable New Business. Routledge. Douglas, N., No Date. Quick Overview & History. MN4203 Logbook on the Cooperative Group.pp.1-8. Gelb Consulting Group, No Date. Segmentation: Foundation of Marketing Strategy. Segmentation: Foundation of Marketing Strategy. [Online] Available at: http://endeavormgmt.com/wp-content/uploads/2012/01/Segmentation-Foundation-of-Marketing-Strategy.pdf [Accessed May 20, 2013]. Hulfactor, M., 2006. Overcoming Barriers to Market Understanding: Achieving Innovative Technology Product and Service Success. Decision Trend Research, pp.1-5. Kotler, C., 2005. Principles of Marketing. Pearson Education Ltd. Lamb, C. W. & et. al., 2008. Essentials of Marketing. Cengage Learning. The Co-operative Financial Services, 2010. Building a better society. Financial Statements 2010, pp.1-60. Tynan, A. C. & Drayton, J., 1987. Market Segmentation. Journal of Marketing Management.Vol.2, No.3, pp. 301-335. Wedel, M. A. & et. al., 2000. Market Segmentation: Conceptual And Methodological Foundations. Springer. Yankelovich, D. & Meer, D. 2006. Rediscovering Market Segmentation. Harvard Business Review, pp.1-11. Appendices Source: (Douglas, n.d.) Source: (Co-operative Group Limited, 2012) Financial Data of the Co-Operative Group Ltd Read More