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Segmentation and Targeting - Term Paper Example

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Segmentation and Targeting

A Rolex customer is a person that is accustomed to buying luxury items. A lot of Rolex watches have target market of people that are millionaires (Rolexforums, 2011). (2) How does the choice of target market influence the company's pricing and promotion (from what you know so far)? The target market of Timex of targeting people of all ages is achieved by the firm’s pricing strategy of selling watches at the low end of the market. Most Timex watches are sold at a price point between $25 and $50. Timex utilizes various promotional strategies to increase the sales of the firm. Some of the stunts include the use of customized watches for incentive awards, sales incentives, corporate promotions, business gifts, safety programs, and recognition awards (Timex, 2011). The retailer that sell Timex watches on many occasions sell the watches on special since the target customer of Timex watches are price sensitive. The demand of products that are priced low goes up by further decreasing the price of the product. The Rolex uses different promotional strategies to attract customers. The use of celebrities sponsoring the product can help increase the appeal of the product. Rolex watches are sold at jewelry stores and in luxury department stores. There is a lot of competition in the luxury watch marketplace and many online vendors offer attractive discounts off the retail price to persuade people to buy Rolex products. For instance Melrose Jewelers is currently offering the Presidential Rolex at $9,825 (Melrose Jewelers, 2011). This price is 36% below retail price. (3) Now imagine one of the companies you chose wants to introduce a new target market. For instance, suppose Hilton or Four Seasons wanted to offer a budget option for the target market sought by Motel 6. How would this strategy affect consumer perceptions? Rolex could introduce a cheap version of its watches to attract the younger demographic between the ages of 18-25 years of age. The new product could attract a lot of new customers and the sales of that product might be excellent. The problem with that strategy is that it can dilute the brand name of the company. The wealthy people that are accustomed to the prestige of owning a Rolex will not be very happy with the masses buying cheap Rolexes sold at hundreds of dollar a piece instead of thousands. The company could lose a lot of customers that are enabling the firm to make a nice profit margin from each unit sold. The second scenario involves Timex introducing an expensive model to target a different segment. A good way to achieve such a strategy is by including implicit value in the construction of the watch such building the watch with some or all its parts in gold. I think adding a line of luxury watches would be beneficial for the company. (4) Do you think these customers will be influenced by changes in the economy? Why or why not? Timex is better suited to accept negative changes in the economy than Rolex. Timex sells a cheap product. During bad economic times people look for bargains. Many users of mid level brands might switch to cheap brands such as Timex to serve their watch needs. During good economic times the Timex brand will do better, but the firm might lose a portion of its recurrent customers who might switch to more expensive brands because they can afford them now. The low price point of Timex makes the watch an excellent gift and during good economic times people are more generous. A Rolex is a luxury item. Luxury items do not have good sales during bad economic ...Show more

Summary

(1) Describe each company's target market. Do NOT include definitions of target market or segmentation. The target market for Timex watches is much wider than for Rolex watches. The Timex is a product that targets people of all ages that have low to middle income…
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