Market Segmentation for a Specific Consumer Product - Literature review Example

Market Segmentation Report Student’s Name Institution: Table of Contents Market Segmentation Report 1 Table of Contents 2 1.0 Executive summary 3 2.0 Introduction 3 3.0 Apparel enterprise 4 3.1 Product Description 4 3.2 Market Positioning 5 3.3 Customer Trends 5 4.0 Consumer Analysis 6 4.1 Needs and motivation of the customer 7 4.2 Means-end theory 8 5.0 Market segmentation 9 5.1 Apparel Market Segmentation 10 5.1.1 Gender-Related Segments 10 5.1.2 Geographic Segments 10 5.1.3 Age-Related segments 11 Behaviour related segments 12 5.1.4 Lifestyle segmentation 12 5.1.5 Sportswear segment 12 5.2 Customers in the apparel industry 13 5.2.1 Teens 13 5.2.2 College Students 14 5.2.3 Children 14 6.0 Customer purchase decisions 14 7.0 Recommendations 15 8.0 Conclusion 16 9.0 References 16 1.0 Executive summary Marketers understand that products cannot be ‘all products to all customers’. Consumers have different taste, lifestyle and interests. Consequently, the revelation of the marketing concepts and the acknowledgment of consumer needs have pushed marketers to reason in terms of marketing targeting. The aimed market should contain people with same preferences and needs. Therefore, selecting target markets should be the first priority for a company during the marketing strategy. Observed in the report is that to target a specific market, it requires market segmentation. In this regard market segmentation involves examination of consumer purchases in the market, most certainly purchasing behaviour, age, needs pattern or social economic position. The main objective of the paper is to divide the Apparel market into segments in each of which the consumers of same nature, taste and preferences are grouped in the same group. The segmentation will enhance a firm to specialize in a particular segment. Moreover, development of social media has enhanced companies to market their products widely across the globe; therefore, it was recommended that the apparel business take advantage of the social Medias to seduce many customers, in regarding with the available segments. 2.0 Introduction Market segmentation is a marketing term referring to the division of possible buyers into segments that have common requirements and reply alike to a marketing action (Daniels, 1996). Basically, market concepts calls for consumer satisfaction and understanding. Berry (1995) posited that, different customers have different needs. Therefore, it will be impossible to satisfy all consumers by treating them alike. According to Daniels (1996), market segmentation involves recognition of market parts, which are distinctive from one another. In this regard, Daniels (1996), noted that segmentation allows the organization to satisfy potential customer’s needs competently. Hunt and Arnett (2004) argued that, the primary objective of segmentation should be to win and maintain the customers in, which the firm wants to serve. Nevertheless, customers segment themselves bearing no clue on how firms fragment their markets. Most customers as observed by Hunt and Arnett (2004), when selecting between competing products, they prefer selecting products that satisfy their needs excellently than any other. Therefore, to win market share Park and Sullivan (2009), recommended that companies should ensure that their products meet the needs of the customers. Basically, market can be too big for a company to satisfy the needs of the customers. Therefore, Park and Sullivan (2009), recommended that a company should breakdown the whole demand into segments; thereafter choose segments that the firm is best furnished to handle. 3.0 Apparel enterprise 3.1 Product Description According to Munoz (2008), clothing enterprise is a profitable venture. The key to success in this venture is deciding types of products to sell and targeting a specific group of customers such as 40 years and below. The enterprise main products are western wear brands, which are nationally recognized. The selection ranges from the fashionable western style of western ethics to the basics of Panhandle Slim. The enterprise does manufacture the clothes instead; it procures them from manufactures and sales representatives. In addition, the clothes are in varieties in term of sizes, colours and style. The greatest part of the enterprise merchandise is accessories, apparel gifts and hats. Nevertheless, the enterprise offers labels from the sophisticated southwestern styles to the hard-core western wear. Some of the products include Lawman jeans, Wrangler, Panhandle Slim, Urgent Gear, Cowboy Hardcore and Silver Strike Buckles. 3.2 Market Positioning According to Kim and Hoon-Young (2011), market positioning involves targeting the customers, and learning their purchasing behaviour. Daniels (2006) posited that poor location and lack of personality, to the consumers is lack of inward pull. Therefore, a coherent market positioning can foster strengths, becomes conductive to the competitors and circumvent weakness. The enterprise through its operating strengths manages to identify change in customers’ demands, thus it is flexible to reposition, depending on the customer change. As a result, its ability has enhanced market adaptability and discovering of new opportunities in the market. The enterprise selects the targeted customers through subdivision of the market scale and developing latent force. In addition, the competitors in the market are evaluated to determine market segments. The product positioning in the market enhanced market segmentation, which in turn created market space for the products. As a result, the competition in the market reduced offering enough strength for the business to enter. Before positioning the products, the enterprise selected the location factors, which were identified by their characteristics. In addition, the needs of the customers attributes were highly considered during the market positioning process. 3.3 Customer Trends Minner (2012) posited that, fashion trends have an enormous impact on clothing enterprise. This is because most customers’ desires to in the latest trends on the fashion front with no one willing to remain unchanged. This fast fashion changing demands has brought about change in the business culture (Lahiri & Samanta, 2010). Therefore, the enterprise responds rapidly to the consumer needs by planning new market strategies. It is worth noting that people are exposed to different lifestyles and the fashion trends changing seasonally. Therefore, as a clothing enterprise, the investors should bear the knowledge that customer’s focus is in the trends. In this regard, the enterprise should facilitate the main flow consumers to purchase the fashionable apparels, which match with the current trends and should be at a reasonable price. In the present scenario, clothing industry, especially fashion clothing segments have proven to be naturally volatile (Park & Sullivan, 2009). This is because the new trends, which keep springing up every season, have made customers preferences to change just by a wink of an eye. In this regard, the business environment keeps going through unparallel phase of change. Basically, enterprises have to respond to market changes, and consumer preference change in order to successfully remain in the market and keep their share in the market pie. According to Park and Sullivan (2009), majority of customers in the clothing, business belongs to the upper and middle-income category. However, Daniels (1996) posited that, the low-income earners should also be taken into consideration, because they can have a positive impact to the business. In this time of generation, customers are fashion awake, and at the same time, they need affordable price. Moreover, Customers want to adapt to the changing trends, but they concomitantly fear to feel heat on their finances. 4.0 Consumer Analysis Customer analysis is the evaluation and collection of information related with market trends and customer needs, through dimensioning customer satisfaction, field experiments and customer focus groups (Hunt & Arnett, 2004). Lim, et al. (2012) posited that, the crux of customer analysis is customers should be treated likewise. There are customers whose weight is worth gold, these customers spend a lot and are frequent buyers. Some customers can make life more miserable, they inundate the company asking about certain products, which they cannot afford, and in breif, they go for cheap things and are infrequent buyers. Lim, et al. (2012) argues that, 20% of top consumers are the lifeblood of a clothing enterprise and are 80% contributors of the business profit. Whilst the remaining 20% contribute nothing at the bottom line, instead they are costly than what they actually contribute. 4.1 Needs and motivation of the customer Once a business oriented investor steps in the city, he may feel the clothing industry is crowded. The reality is, there is always a room for another clothing store, especially if the products offered is unique to the customers and new in the area. According to Lim, et al. (2012), the key to success on any business venture is observing keenly the trends in the local market. According to Daniels (1996), motivation is an internal state that ferries an enterprise to satisfy the customer needs. Furthermore, motivation is the invigorating torque that activates the consumer behaviour. When the need arises, the tension that exists pushes the customer to the goal, in order to reduce tension and eliminate the need. Consequently, Lim, et al. (2012) observed that, only inapt needs motivate. To motivate its customers the enterprise leverages the different factors that affect the consumer buying behaviour in order to maximise sales. In this regard, the enterprise keenly considers the factors that influence customer buying behaviour. This includes social factors, personal factors, cultural factors and psychological factors. To attract more customers the enterprise overlooks its pricing strategy by selling a bit cheaper than the competitors sell. Berry (1995) posited that, retaining customers enhances the business to maximize its profits. Through their purchasing experience, the customer should be satisfied with the products being sold. Therefore, the enterprise goal is customer satisfaction. In this regard, the business should explorer out the customer endures. According to Lim, et al. (2012), a company that is worried about sales should formulate ideas on how to solve the issue. In this regard, it should find out customers needs; through customer feedback. The feedback enables the business to know if their meet the customer requirements efficiently. After exploration, the business should make improvements at any possible level so that the customer does not find an opportunity to shift to the business competitors (Hunt & Arnett, 2004). 4.2 Means-end theory The theory sustains the way consumers associate with the products can be illustrated in a hierarchical model of personal values, products attributes and consequence of using the product (Jesse, 2010). The theory is based on a hypothesis that consumers observe products in a way to substantial ends. The further illustrates how selection of the product can enhance the attainment of desired objectives. The enterprise uses different tastes of clothes to illustrate the hierarchical classification of the products in relation to the customer value. Consequently, the enterprise has applied this theory to enhance analysing of consumer perceptions on products. In addition, enterprise use the model to comprehend how these perceptions go beyond the practical properties in order to create relevancy in the consumer’s life. Finally the enterprise uses means end theory to gain a better understanding of the customers through explanation on why consequences are crucial. The means-end-chain created by Gutman (1982) is used to sustain the assumption that the dominating factors in the customer-purchasing pattern are values. As a result, the products consideration are based on satisfying requital functions. According to Lim, et al. (2012, all actions have consequences whether desired or not. Therefore, there is a link between products attribute and consequences. In this regard the enterprise uses means end chain theory to tackle contemporary marketing problems. Ultimately, means end theory is based on core suppositions, ‘consumers do not purchase products for the sake of the product but for ultimate reasons, such as benefits the product offers them. Moreover, the enterprise utilises MEC to identify and visualize consumer’s relation toward the apparels by creating a structure for these relations. Berry (1995) posited that, MEC could be used as a cognitive structures identifier in the minds of the consumers. 5.0 Market segmentation According to Lim, et al. (2012, the purpose of segmenting the market is to allow the sales programme to focus on the smaller groups of prospects that most likely purchase the apparels. Munoz (2008) asserted that, segmentation drive the business into maximum profits. Basically, the key factor to prosperity for most businesses in the present market place is discovering subtle differences to offer a business a cutting edge. According to berry (1995), businesses that aim speciality markets efficiently promote its products and services as compared to a business aiming at a average customer. Lahiri and Samanta (2010) argues that, an opportunity in marketing heightens when customers and groups with different needs are segmented. Nevertheless, market can be segmented using a variety of factors, which include demographic bases, geographical bases, behavioural bases and psychographic bases. In addition, the business should analyze the needs of different segments before deciding their own recess (Kim & Hoon-Young, 2011). According to Lahiri and Samanta (2010), to be efficient in market segmentation the company should bear the following in mind, the segmented markets should be open to the enterprise, and each segmented parts must be large to furnish a solid base for the customers. In addition, the business should be in a position to separate the segmented group from the marketing plan. 5.1 Apparel Market Segmentation There are several market segments in the apparel market as shown below 5.1.1 Gender-Related Segments Most clothing enterprise use gender segments to sell their products. In the clothing lines casual and business attire are made available for both genders. In this regard, the women needs do not match the men needs. Therefore, the company should decide which line to specialize in, either the men attire or the women attire and in some cases both. For instance, during the summer and spring seasons the men purchases more shorts. In addition, the company can benefit if it specializes in women lingerie and men’s suits. 5.1.2 Geographic Segments Competent marketers and retailers understand that customer’s apparel preferences vary depending on geographical factors and regions. In this segment, the most determining factor is the weather. For instance, people living in the hotter climates wear swimwear and shorts. Contrarily, heavy apparels such as coats and jackets is suitable in cold regions. Apparels trends vary by geographical factor such like a designer in of the most extreme fashion clothing sell their apparels in exclusive markets such as Texas and New York 5.1.3 Age-Related segments Age is a demographic factor that enhances apparel retailers to distinguish their buying audiences (Kim & Hoon-Young, 2011). Many apparel manufacturers target teenagers especially girls. This is because, of their new varying fashion lines such as blouses and jeans. These clothing lines are mostly promoted during July and August before commencement of schools. In addition, the children sector illustrates another viable purchasing group in clothing sales. According to Lahiri and Samanta (2010), children clothing’s retailers may additionally sell other accessories related to children and their parents. Toddlers and infants offer an additional age –related segments. The final segment in this age-related segment is the old aged customers. Even though most apparel stores have ignored this group of persons, their significance in the apparel industry is substantial. When people grow old, their preference never grows old. Some old people have taste and love expensive clothes, because they believe that an expensive item is of high quality. Figure 1. Market analysis Behaviour related segments Reference posited that, consumer selection in products. Including clothing can be behaviour-related. For instance, customers may purchase a certain clothing line for prestige purpose. They may also purchase at certain apparel stores for quality service and products. To attract such customers the business can seduce them with holiday-related products, which entails classic colours and style beat for a holiday season 5.1.4 Lifestyle segmentation This group offers another a group of market segment. In this segment, the company base its product selections. Whereby a company can sell clothes for hunters or sell camouflage fatigues. In order to meet the needs of the customers the company can sell faux far coats to replace the fur ones for customers who are sensitive to the welfare of animals. 5.1.5 Sportswear segment According to reference, 43% of individuals under 20 wear the sport apparel compared to the individuals over 45 years who wear 25% of the market sport apparel. This widening age gap between old and youth wearers presents a multitude of setbacks in sportswear branding and designing. The growth of sports apparel has been noted among the female customers, who have seen themselves more athletic. This offers a suitable niche for apparel business to focus their sports clothing on women than men. For instance, it is hard to find a man jogging in the morning at a local park, but many women are observed running around with sports apparels. Figure 2. Expected sales per Year 5.2 Customers in the apparel industry Basically, there are three group of customers the business will focus on namely: 5.2.1 Teens This group of customers is widely represented by the young people. The group is crucial for the growth of the business. The most critical members of this group are ‘weekend worriers’ who dress certainly during parties and occasions. The majority in this group are money spenders and can spend much just for a single product 5.2.2 College Students This group of customers contains a majority of young people who are 19 years and above. Most of students in colleges like show-offs therefore they purchase unique apparels to show off. There is a huge growth in demand in the youth clothing industry. The youths especially the college students have managed to speedup economic growth. In addition, this group of customers go with trends, therefore the company should update itself with the present collections in order the necessary resources for the product visibility 5.2.3 Children Kids apparels is a basic family need, therefore their mothers ensures their children have latest fashion from the manufacturers. Therefore, to attract this group of customers, the business should sell latest apparels from the industry and unique ones that will attract the parents of these kids. 6.0 Customer purchase decisions A research-conducted by Lahiri & Samanta (2010), observed that the apparel purchase decisions are based on three –tiered events. When consumers were asked to rate their various attributes, they ranked easy care, fitness and durability as their main purchase needs. The second tier contained price/value, and fabric blend. The final tier included brand name. The third tier was found to be less influential to the consumer purchase decisions. However, the first two tiers were considered very crucial in apparel purchase decisions. In the study, it was observed that, five out of six customers look at the labels before purchasing and strictly follow instructions in the label before washing the clothing’s. In addition, the study confirmed that 83% of customers before deciding if to purchase the product read care labels. Finally the study indicated that, bleach-ability perpetrates the consumer perceptions the two of the three crucial purchase criterion (Jesse, 2010). 7.0 Recommendations Social Medias have disrupted the way marketing has functioned for decades (Tsai, 2009). This is an exciting development, which companies should take advantage. According to P ark and Sullivan (2009), consumers have rapidly adapted social media. In this regard, companies have changed their plans in order to engage with their customers effectively and efficiently Jessica (2009), observes that social media offers a marketing style that enables various brands to link with their aimed market through social media outlets such as facebook and EBay. According to Park and Sullivan (2009), apparel industry has been late to the social media party, this is because many industries refused to adapt it or merely adopted one-way communication. Companies can use engagement ads in social sites such as facebook to advertise their products to facebook users. Apparel companies should use social media to share crucial consumer information between sales and marketing. In this regard, sales will use this information to offer themselves a best chance of selling the products. In addition, through monitoring a firm can build a powerful profile on the customer interests and at the same time understand how customer relate to the company’s product. In addition, apparel companies can use social sites to brand their products. For instance, facebook has 900 million users (Tsai, 2009); this offers a best platform to advertise the product, which in turn will lead to building of the brand. In this regard, apparel enterprises can reach their potential customers easily and hence mange to plan for future marketing trends. 8.0 Conclusion In conclusion, market segmentation enables the company to focus for better returns. A company that strategizes on a particular segment heightens its profitability and focus. Once the company mange to focus on the market segments, its competiveness will be increased. For instance, focusing on the youngsters Apparels increase the market share and reduces the chance of competition. Therefore, market segmentation increases competiveness and leads to market expansion. 9.0 References Berry, A. I. (1995). Using market segmentation for corporate customers. Commercial Lending Review, 10(3), 36. Daniels, E. (1996). Market segmentation: Normative model versus business reality: An exploratory study of apparel retailing in Belgium. European Journal of Marketing, 30(6), 36-51. Hunt, S. D., & Arnett, D. B. (2004). Market Segmentation Strategy, Competitive Advantage, and Public Policy: Grounding Segmentation Strategy in Resource-Advantage Theory. Australasian Marketing Journa, 12(1), 7-25. Jesse, G. (2010). Social media and the Fortune 500: How the Fortune 500 uses, perceives and measures social media as a marketing tool. The University of North Carolina at Chapel Hil, 98. Kim, T., & Hoon-Young, L. (2011). External validity of market segmentation methods. European Journal of Marketing, 45(1/2), 153-169. Lahiri, I., & Samanta, P. K. (2010). Factors Influencing Purchase of Apparels from Organized Retail Outlets. IUP Journal of Marketing Management, 9(1/2), 73-87. Lim, W. M., Ting, D. H., Wong, W. Y., & Khoo, P. T. (2012). APPAREL ACQUISITION: WHY MORE IS LESS? Management & Marketing, 7(3), 437-448. Minner, R. (2012). Marketing of products for boosting profit margin of apparels and textile industries. The Financial Express, 2. Munoz, L. (2008). SMALL BUSINESS; Wearing pride on sleeve; A Chinese American entrepreneur celebrates his race with a high-end clothing line sporting 'wearable' tattoos. Los Angeles Times, C.1. Park, H.-H., & Sullivan, P. (2009). Market segmentation with respect to university students' clothing benefits sought: Shopping orientation, clothing attribute evaluation, and brand repatronage. International Journal of Retail & Distribution Management, 37(2), 189-201. Tsai, J. (2009). Marketing and Social Media: EVERYONE'S SOCIAL (ALREADY). Customer Relationship Management, 13(6), 34-38. Read More