Market Segmentation and Target Marketing - Essay Example

Marketing Assignment Introduction: The Porsche 911 is a 2 door, 4 passenger luxury sports car (www.allautoreviews.com). It is geared to achieve 18 miles per gallon during city driving and 25 miles per gallon while driving on the highway (www.autos.yahoo.com). The car incorporates the requirements for speed racing in terms of agile performance and handling because of its lightweight design which ensures an overall low weight, thereby making it an excellent choice for those customers who are looking for speed and style in their cars. At the same time it is also practical and suitable for everyday city driving because its McPherson front axle offers high levels of driving safety, making it an excellent choice for everyday drivers as well who can enjoy the driving experience with relative safety ensured. The car is priced above $100,000. Market Segmentation and Target Marketing In devising an effective marketing plan for the Porsche, the market must be segmented so that target marketing can be directed at the appropriate segment that is most likely to purchase the new cars. Smith originally defined market segmentation as follows: “…..viewing a heterogeneous market as a number of smaller homogenous markets, in response to differing preferences, attributable to the desires of customers for precise satisfaction of their varying wants.” (Smith, 1965:5). In effectively marketing a sports car such as the Porsche, which is priced in the luxury car range, it may be necessary to direct marketing efforts towards a cosmopolitan, city area where there would be an adequate number of customers in the high income ranges. The city of Melbourne offers excellent potential for the Porsche 91 Turbo car, since it is experiencing rapid growth – for example, between 2000 to 2002, employment grew by 5.4%, while between 2002 and 2004, it grew by an additional 2%. (Profile, 2005). Segmentation is one of the essential ideas in marketing discipline, however it has evolved over time from purely descriptive factors of customers to benefit segmentation as a tool to identify factors that may influence future purchasing behavior.(Haley, 1968). According to Baker (1988), if market segmentation is to prove to be viable, then the following tools should apply: (a) viability (b) sustainability (c) responsiveness (d) stability (e) accessibility and (f) actionability. Benefit segmentation is a method that aids in the development of products and services that are of actual benefit to customers, therefore firstly, it is necessary to identify the kind of customers who may be benefited by the Porsche 911 Turbo car. For this effort, it is recommended that while Melbourne overall can be subjected to some marketing efforts, the major thrust of the marketing effort should be concentrated and targeted in the Docklands area in Melbourne. This is located on prime waterfront land and is projected to be an area where there will be considerable growth in the future. 90% of the population is between the ages of 16 to 59 and 53.4% of the residents earn a weekly income of over 1000$ (Profile, 2005:23). Therefore, it appears very likely that this is the kind of customer base that can afford the Porsche car, making it a viable market. It is one of the most affluent areas in Melbourne with 62% of the residents earning more than 800$ a week (Profile, 2005:25), therefore such a clientele is likely to respond favorably to the Porsche which is a luxury car. With the project growth in the area, the stability and sustainability of future sales may also be assured. In terms of age, the Docklands has the highest proportion of residents in the following two age groups (a) 20-35 and (b) 46-60. The population of the Docklands overall comprises couple only families or sole person households. The fact that the Porsche is a racing car is likely to appeal to the former age group, since young, single income people who have high disposable incomes may enjoy and want the image of speed and luxury associated with the brand identity of Porsche. The older age group on the other hand would also be attracted to the Porsche Turbo 911 car because of the element of quality and efficiency of mileage, together with the safety factor associated with the car. This group of older persons with higher disposable incomes may in fact, prefer the quality associated with a luxury car like the Porsche. Therefore, these two groups appear to be the best segments for the Porsche marketing campaign to concentrate on, since it may yield the best results. Consumer Behavior: Positivism regards the consumer behavior discipline as an applied marketing science, while interpretivism is a post modernist approach that tends to focus on the act of consuming rather than the act of buying, which also includes several non psychological facets into the complex portrait of the consumer towards a consumer society. (Solomon 2006). Buying decisions may be very complex and carried out after a lot of thought; on the other hand they may also be very simple, as in the case of buying on impulse. A customer’s attitude towards a particular brand or product is actually a multi dimensional construct, which relies upon three separate components – affective, cognitive as well as a conative component.(Oliver, 1997). The affective component is concerned with the positive or negative emotions that a customer may experience towards a particular brand. The cognitive component refers to the degree of knowledge that the customer has and the conative component refers to the behavioral disposition of consumers to purchase a particular brand. Therefore it is a combination of all the three aspects that will influence the consumer’s buying decisions. The Porsche has an inherent advantage in that it is an internationally branded product and its racing car, luxury image is likely to generate primarily positive, with potential for self promotional emotions in affluent Docklands customers. Personal factors will play the most important role in the decision to buy the Porsche, the desire to accentuate one’s personal image and status in the community. Since most of the residents are highly educated and live in single person or couple only households, they have a high disposable income and the image of both speed and security associated with the product, as well as its brand identity would appeal to the largely materialistic community living in an area of high growth. Positioning: Park et al (1986) have suggested that a brand be positioned to appeal to either the utilitarian needs of customers or promote it a symbolic brand that enhances self and social image. In view of the high income of the Docklands area, a utilitarian approach for a luxury car may not be successful. The turbo car can therefore be positioned as a symbolic brand that spells success and an upwardly mobile social status; thereby it is likely to appeal to both the specific income groups identified above. For the younger generation, it will be a product to have because it spells success, while for the older generation, it will be a symbol of class and enhance self image. Product and Marketing Strategy: In targeting the two specific groups identified above, it may be noted that the younger group of individuals are smart, educated and competitive. Therefore promoting the Porsche 911 as a racing car and a status symbol that will garner the envy of peers is likely to be very effective with this group. The powerful horsepower engine and the design of the body can also appeal to the desire of this group to possess products that appear stylish and expensive, especially among young males. The image of the Porsche that can be generated among this group is that of a technologically innovative product which provides the speed of the racing car in a city driving environment. Promotional campaigns directed towards this group must therefore focus on the needs of this group for status and brand image, especially among those individuals from minority groups such as those from the UK, Malaysia and Taiwan. One of the benefits that this materialistic group may avidly seek is the desire to possess branded products linked to status and class, while also providing the element of speed and risk characteristic of the racing car arena. In designing a marketing campaign for the older group however, it may be necessary to focus on the quality and safety aspects of the car, while also promoting it as a brand of class. This is a group of people who are more interested in quality and luxury and in possessing products that also spell value. This group is also likely to be more concerned about environmental effects and fuel efficiency, therefore promotional campaigns need to focus on mileages, as well as the quality and value associated with the car. Television advertisements are likely to be effective in the Docklands area, however the Internet also offers enormous potential in providing a cost effective advertising method, since 80.4% of residents have Internet access at home. (Profile, 2005:24). The promotion of the Porsche as a quality status symbol that offers quality and value is likely to be very successful in garnering sales. Conclusions and Recommendations: Based on the above, it is recommended that Porsche initially target the Docklands area in Melbourne, with a special focus on the two target groups identified earlier. A mix of two kinds of promotional campaigns can be directed towards these groups, using both television and radio advertising as well as the Internet. (1560 words) References: * Baker, M.J. (1988), Marketing Strategy and Management, Macmillan Education, New York, NY. * “2008 Porsche 911 Turbo” [online] Retrieved September 12, 2007 from: http://www.allautoreviews.com/auto_reviews/porsche/porsche-911-turbo.htm * Haley, R.I. (1968), "Benefit segmentation: a decision-oriented research tool", Journal of Marketing, Vol. 32, pp. 30-5. * Melbourne City suburbs Economic and Demographic Profile” [online] Retrieved September 12, 2007 from: http://www.melbourne.vic.gov.au/rsrc/PDFs/Research/MelbourneCitySuburbsEconomicandDemographicProfile.pdf * Oliver, R.L., 1997. “Satisfaction: A behavioral perspective on the Consumer.” New York: McGraw Hill * Park, C.W., Jaworski, B.J. and MacInnis, D.J, 1986, "Strategic brand concept image management", Journal of Marketing, 50: 135-45. * Smith, W. (1956), "Product differentiation and market segmentation as alternative marketing strategies", Journal of Marketing, Vol. 21, pp. 3-8. * Solomon, M. et al 3rd Ed, 2006. “Consumer Behaviour: European perspective” Prentice-Hall. * “The 2007 911 Turbo is all new for 2007.” [online] Retrieved September 12, 2007 from: http://autos.yahoo.com/porsche_911_turbo/ Read More