Segmentation and Target Market - Coursework Example

Segmentation and Target Market Segmentation and Target Market Introduction Apple is one of the leading companies in the consumer electronics industry. The industry has many product categories. For example, Apple has four product lines including the iPod, iPad, iPhone and Mac computers (Rollins & Perri, 2014). An evaluation of consumer feedback and revenue generation shows that the company has pursued a successful albeit unconventional segmentation and target marketing strategy. Market segmentation involves several steps. Firstly, the organization needs to define its market. Secondly, it needs to break down the market into small categories that it can focus on given its budgetary constraints and expertise. The process is guided by several factors including behavioral, demographic, psychographic, and geographic factors (Reid & Bojanic, 2010). Apple has used behavioral segmentation with impressive effectiveness. It refers to the division of the market based on the actions of consumers. In addition, the process involves an evaluation of the consumer information available to the organization (Rollins & Perri, 2014). The release of new iPhone models is informed by the knowledge that consumers will be attracted by the possibility of upgrading their mobile phones. In addition, the iPod was released to meet the need for a portable and convenient device that can allow users to listen to music on the go. The need to create a platform from which users can access music led to the creation of the iTunes store. Apple has created a culture of brand switching due to the disruptive technology that they have consistently pioneered. Consequently, it has enabled it to create a perception as an innovative company, something that most consumers find attractive. The organization understands consumer behavior. Although consumers are willing to acquire new technologies, they also value the existing ones. As a result, they need products that integrate the two technologies. In addition, it has features that support the integration of features of other organizations. For example, it has made it possible for consumers to access Microsoft Exchange e-mail. Consumers are attracted to technologies that enable them to retain the features they had before. It is evident that the organization considers demographic factors as it develops its products. Firstly, products such as the iPhone have so many features that make it suitable for people of all ages from children to adults. Children can play the games that are available in its App store. Teenagers can listen to a lot of music from the iTunes store. In addition, the iPhone has email and a suite of features that make it convenient for adults who may need a phone for their professional purposes. Secondly, its sleek design makes it look attractive to the female consumers. Thirdly, the numerous features make Apple’s products fascinating for males. The high price of Apple products as compared to its competitors means that the organization is targeting the middle and high-end market (Hughes, 2014). In addition, it has many services that have to be purchased. Targeting the high end market enables the company to invest heavily on quality products and design as compared to how it would otherwise have been able to. Apple used psychographic segmentation in identifying the market segment for the iPhone. Psychographic segmentation refers to the division of a market according to social class, personalities and lifestyle behaviors. The social class of a person plays an integral role in their consumption habits. Instead of pursuing the mass market, the organization has emphasized the need to rule a category. Although this strategy limits the size of their market, it has enabled it to create an elite brand (Hughes, 2014). Consumers are buying its products not just for their utility, but also for the pride of owning an exclusive product. Furthermore, its religious focus on the quality of design has made it a fashion statement. Apple products are snob products whose brand would be hurt if their price were lowered. Its ability to create a closed ecosystem has enabled it to monetize on its niche market segment. Some consumers buy Apple products for the same reason they would buy a Louis Vuitton handbag: to demonstrate their sophistication. Geographic segmentation refers to the division of markets according to the region, size of the city, the density and climate of an area (Reid & Rojanic, 2010). Apple is either the number one or two-consumer electronics retailer in the market that it operates in (Hughes, 2014). It has impressive market share in North America and Europe (Hughes, 2014). In contrast, the organization has a minimal presence in Africa as compared to the two market segments. The reason for the disparity can be explained by the differences in income and educational levels between the two markets. Market segmentation within the market The consumer electronics industry is divided into different categories. There is the mobile phone category, computing devices and tablets. The market is segmented into the high end, middle end and the mass market. Its competitors such as Samsung and Nokia create devices for all the three categories. For example, Nokia and Samsung produce feature phones for the very low-end market category. In addition, the Android Operating system that is used by Samsung and other mobile phone manufacturer’s focus on the mass market while the iOS focuses on the niche high-end market only. Apple products such as the iPhone have created a cult like following that would buy any new product by the organization because they identify with the product rather than due to a pressing need for its functionality. The selection of that market The process of market segmentation is informed by the values and goals of an organization. According to Mohr et al (2010) in making this determination, the size of the targeted market and its purchasing power are evaluated. The focus on the high-end market by Apple demonstrates that it considered the purchasing power of the market as opposed to its size. The segmentation of markets into many categories undermines the ability to dominate any category (Reid & Bojanic, 2010). The Apple brand could have been hit if it decided to produce products for the different markets. In addition, the fact that it has numerous features enables it to address the behavioral and psychographic segmentation factors. The target marketing strategy is driven by the purchasing power of the market. Market segmentation involves a three-step process. Firstly, the kinds of customers that are available are evaluated. For example, there is a ready market for technologies that enable consumers to perform communication and computing functions. Secondly, the organization has to select which kind of customers it will be best served serving. The history of Apple and the iconic design of its products mean that the production of its products requires a lot of investment. As a result, for the organization to remain an innovative trendsetter then it needs to focus on the high-end market that can pay a premium for the products. Thirdly, the chosen segmentation and target marketing strategy is implemented by optimizing the products to suit the needs of that market and communicating that the organization has made the choice to distinguish itself in that manner. For example, Apple has gone to great lengths to demonstrate that it is a cool and innovative organization. The iPhone has many features that make it an ideal phone for a designer or a programmer. Its sophistication is appealing for designers and programmers who are impressed by fancy gadgets. Similarly, designers prefer the iMac due to its powerful graphics and editing features. The lifestyle of a person is revealed in their activities, interests and opinions. People have different lifestyles depending on their age, social-economic background, culture and life experiences. The iPhone have fast browsing capabilities that make it useful for professionals while its touch screen makes it attractive for teenagers. The iPad product released by Apple created a new category. It has most of the features that are available in an iPhone. Its large size makes it suitable for professional use in work environments. Similarly, any future product releases or categories that it may choose to pursue will no doubt be aimed at the high-end market and the geographical areas where it is readily available. Brand Positioning Apple has managed to position itself as a high-end brand that not only offers a beautiful hardware design but also an extraordinary user experience. The company targets consumers from their teenage hood to their prime adulthood who are interested in a product that not only serves its basic utility but also offers an opportunity to maximize the technology in their hands. In addition, its different products have similar features to prevent cannibalization. For example, both the iPhone and the ipad have the Apple play store. Finally, Apple has an unconventional segmentation and target marketing strategy. Its focus on exceptional consumer experience and beautiful hardware has seen it focus on the high-end market as opposed to the mass market. Although it has very low market share, the technology giant has an outstanding share of the profits in the mobile handsets category. In addition, other products are doing well in the other categories. References Hughes, N. (2014). Apples iPhone led 2013 US consumer Smartphone sales with 45% share – NPD. Retrieved fromhttp://appleinsider.com/articles/14/02/20/apples-iphone-led-2013-us-consumer-smartphone-sales-with-45-share---npd Reid, R. D., & Bojanic, D. C. (2010). Hospitality marketing management. Hoboken, N.J: John Wiley & Sons. Rollins, B. L., & Perri, M. (2014). Pharmaceutical marketing. Burlington, MA: Jones & Bartlett Learning. Mohr, J. J., Sengupta, S., & Slater, S. F. (2010). Marketing of high-technology products and innovations. Upper Saddle River, NJ: Prentice Hall. Read More