Market Segmentation for the Coffee Market - Research Paper Example

? Market Segmentation for the Coffee Market Introduction Market segmentation is a process of forming sub-set of a market that contains people or organizations with one or more similar characteristics that would influence them to demand same kinds of products and services on the ground product/service qualities and price. The concept of market segmentation helps a firm to effectively market its products or services without exerting much effort. This paper will analyze the scope of market segmentation for a coffee market in Baton Rouge, Louisiana area. Market Segmentation While analyzing the demographics of Baton Rouge, it seems that income based market segmentation would the most effective strategy for the proposed coffee market. The following diagram shows the income distribution (media per capita income in 2009) of Baton Rouge, Louisiana area. (Source: “Baton Rouge..”) As per the media per capita income distribution in Baton Rouge in 2009, the Whites have high inflow of income as compared to other groups. The chart indicates that the Hispanic is ranked just below Whites in case of media per capita income distribution. The 2010 census reflects that the Baton Rouge’s population comprises of 50.02% African American, 45.7% Whites, 2.62% Asian, 0.18% Native American, and 0.49% other races (Louisiana’s report…). The historical trend figures point that the percentage of Whites in the city’s population gradually increases over the last two decades. The White’s population growth together with improvements in living standards offers potential advantages for the coffee market. This type of market segmentation assists the coffee industry to easily identify the purchase power of consumers and to design cost-effective promotional tactics for different market segments. A number of surveys have indicated that as compared to blacks, whites like coffee more. Hence, the Whites may turn out to be the potential market segment for the company. However, majority of the African Americans and Asians are also regular users of coffee. Targeting strategy While developing a targeting strategy for the coffee market, it is necessary to analyze the coffee consumption culture of the population. (Source: “2008 National Cofee Drinking…”) The given figure indicates the graphical representation of the outcomes of the “2008 National Coffee Drinking Trends Study”. This study focused on the coffee consumption trends in different age groups and published a comprehensive report detailing coffee trends over the last eight years. From the above chart, it is clear that the percent of coffee drinking in the United States is directly proportional to the age of the population. The graph clearly illustrates that people over the age 60 are more likely to drink a lot of coffee as compared to other age groups. Likewise, youngsters between the age of 18 and 24 are less likely to drink coffee as they are heavily attracted to modern beverages. It is advisable for the company to target people over the age 30, because the trends study shows that youngsters very rarely take coffee. However, a growing coffee consumption trends is seen among the age group 25-39; therefore, it is also advisable for the company to give more focus on this group of consumers as potential prospects. Target segment descriptions As we discussed earlier, a major proportion of the Baton Rouge’s population represents Whites and African Americans even though the city is an agglomeration of different cultures. The demographical information show that the city’s 35.8% of the total households are married couples whereas 40.8% are non-families (“Private hard money…”). The 2010 census data reveal that the Baton Rouge’s average household size is 2.42 while its average family size is 3.12. The percent of people living under the age groups of below 18 is; 18-24; 25-44; 45-64 and 65 and above is 24.4%, 17.5%, 27.2%, 19.4%, and 11.4% respectively (BatonRouge). The population trend indicates that there are only 90.5 males for every 100 females. While analyzing the psychographic information of the city, it seems that the people are interested in arts, sports, event, and other recreational activities. Mardi Gras is the biggest event of the Bator Rouge and the city host many Mardi Gras parades every year. Most of the people belong to upper class of the society, and the people’s lifestyle has dramatically improved over the last decade. However, some of the African American people still constitute a struggling class in the society. These people greatly value religious beliefs and ceremonies. Analysis on target consumers As Dam points out, excessive coffee consumption may lead to cardiovascular diseases including heart failures. Such study outcomes have negatively affected the growth of coffee industry in Baton Rouge because nowadays people are more concerned about their health. Therefore, many of the city’s people have a negative attitude towards coffee industry in general. In addition, many people have recently changed their preference from coffee to cool drinks attributed to modern lifestyle variations. These adverse external market changes may threaten the long term sustainability of the proposed coffee firm. However, the general trend of the US indicates that the population over 60 age and above demands more coffee products as compared to other segments of the population. Market surveys show that the people’s needs and requirements are changing everyday and they are searching for more quality products at cheaper rates. At the same time, they would not switch their demand to other companies as long as the current products/services are sufficient to meet their needs. It is interesting to note that teenagers of the Baton Rouge frequently buy a lot of coffee products regardless of the common trends in the country. How to reach target consumers? The 2010 census reports that the population of the Baton Rouge city is 229,553 whereas the city has a density of 1,144.8/km2 (Baton Rouge restaurant). The city is situated in the southeast portion of the Louisiana state. Although the population growth of the city dramatically increased from 1950s to 1980s, currently it has been stabilized. The Baton Rouge city is the central point of South America’s industrial, petrochemical, and medical operations. Using the above discussed statistical data, it is obvious that nearly 58% of the country’s population is of the age 25 and above; and this population segment is observed to be the potential market segment for the proposed coffee company. The geographical structure of the Baton Rouge indicates that most of the city’s population is concentrated in urban areas; therefore, it would be easy for the company to effectively market its products, and thereby it can take advantages of economic operations. In order to meet consumer interests and to launch its products in the market successfully, the company must convince the target consumer groups that its coffee products do not contain any harmful ingredient. Since the Baton Rouge is one of the highly industrially developed cities in the United States, the company may confront with a number of established competitors while operating in this market. Hence, it is recommendable for the company to formulate well thought promotional policies as well as marketing strategies to effectively vie with competitors. For this purpose, the company may make use of the infinite scope of internet, because the internet has already become an integral part of product/service promotion. Furthermore, direct sale to households is also advisable for the company as this is the best strategy to promote consumer products. Conclusion Evidently, there is a potential market for a specialty coffee brand in Baton Rouge, Louisiana. An income based market segmentation strategy would be recommendable for the company because notable difference exists with regard to income distribution between Whites and other groups. Similarly, it is recommendable for the company to focus on consumers over the age group 30 as statistical data show that young generation is less likely to drink coffee. Finally, the company needs to rely on modern market strategies to effectively reach the targeted consumer segments. Works Cited Baton Rouge, Louisiana (LA) income, earnings, and wages data. Web 14 Dec 2011 Baton Rouge restaurant. Web 14 Dec 2011 BatonRouge. Web 14 Dec 2011 Dam, Rob M. Coffee Consumption and Coronary Heart Disease: Paradoxical Effects on Biological Risk Factors versus Disease Incidence. Clinical Chemistry. Web 14 Dec 2011 Louisiana’s Report on Establishing a Childhood Asthma. Surveillance System, (September 30, 2007). Web 14 Dec 2011 2008 National Cofee Drinking Trends Study.The National Coffee Association of USA, Inc. web 14 Dec 2011 Private hard money lenders in baton rouge Louisiana. Web 14 Dec 2011 Read More