Principles of Marketing and Features of Segmentation - Essay Example

? Principles of Marketing Table of Contents 0 Introduction 4 2.0Features of Segmentation 5 1Measurable 6 2Accessible 6 3Substantial 7 4Homogenous 7 3.0 Segmentation Failures 7 3.1 Improper Market Research 7 3.2 Improper Communication 8 3.3 Small Market Size 8 3.4 Low Buying Power 8 3.5 Improper Marketing Mix 8 4.0 Overcoming Failures 9 4.1 Better Brand Visibility 9 4.2 Better Communication 9 4.3 Market Research 9 4.4 Right Combination of the 4P’s 10 4.5 Integrating Features 10 Conclusion 10 References 12 1.0 Introduction This study seeks to examine the significance and implication of segmentation for a company. In doing so, the report will underline the features of segmentation, the major reasons behind segmentation failure and also the way by which a company can overcome segmentation failures. Sprite has been chosen as the product in order to make reference with the subject of study. Sprite is a product of Coca Cola, and therefore, it is necessary to introduce the company briefly. The Coca Cola Company came into existence in 1886 in Atlanta, Georgia. Since then it has grown to become one of the most popular names in the beverage market around the world. Presently, Coca Cola operates in more than 195 countries around the world. It has more than 30,000 employees working for its different SBU’s worldwide. One of the greatest strength of Coca Cola is its worldwide presence and excellent planning. The unique feature of Coca Cola is that they do not act like a MNC; they do business locally (The Coca Cola Company, 2012). Coca Cola have standardised their core product. They focus on the fact that the drink should taste the same in all the parts of the world. The statistics clearly signifies that Coca Cola’s strategies are following the right path leading to their production and licensing of about 3,500 drinks in more than 200 countries. Sprite is one of the highly acclaimed products of the company. However, in this study, the focus would be on Coca Cola’s operations in the Middle-East countries (Kotler, Armstrong, and Wong, 2008). This report will contain some of the important keywords, and those are defined below. Segmentation: - Segmentation is a strategy or process by which companies define and subdivide a large market into small and identifiable market segments having identical wants, needs and demand characteristics (McDonald and Dunbar, 1995). Marketing Mix: - Marketing Mix is defined as the premeditated mix of the marketing elements, which are commonly the product, price, place and promotion. These four elements of the marketing mix are tailored until the right combination is discovered that fulfils the demands of consumers and generates optimum profit for the company. 2.0 Features of Segmentation Market segmentation is often referred to as a marketing strategy which involves division or dissection of the broader market into small segments of market. The division is done on the basis of the common needs of consumers. Once the intended market is segmented, companies generally formulate and implement strategies to fulfil the needs and desires of each segment. Market segmentation also encourages companies to make product differentiation and employ different media channels to target the different segment of customers. Furthermore, it greatly helps companies to design appropriate marketing mix for each segment (Jobber and Fay, 2006). In this muddled and tumultuous business environment, organisations are compelled to make market segmentation, as it is difficult to target the entire market with the same strategy. Furthermore, the shifting need of consumers is also another driver for the companies to employ segmentation strategy. Similarly, these factors also forced Coca Cola to segment their market for Sprite. Since the product is soft drinks, the company made the segmentation of the market very intelligently. Sprite was intended for the mass and not for any particular segment of customers. It was displayed as a brand which was in the business of quenching thirst and refreshing people around the world. Sprite was positioned as a local brand of the people so that people accept the new brand as a local product and not something alien. Another reason for doing so was because 7UP, the major competitor of Sprite, was holding the major market share in most of the countries (Alshorbagy and Elsaman, 2011). Some of the reports even suggest that Sprite pursues "Multisegment" targeting strategy. This clearly points out that the product has more than one, well-defined market segments. There are several ways by which a company segments its market for a product. Some of the common ones are demographic segmentation, need-based segmentation, geographic segmentation, psychographic segmentation and behavioural segmentation. In the meantime, it is also necessary to discuss the features of market segmentation. It is because a company segments its market on the basis of the below mentioned desirable characteristics. Some of the evident features of market segmentation are that the segmented market is measurable, accessible, substantial and also homogenous in nature. Therefore, it is apparent that companies need to put in deep thoughts and consider several factors before segmenting the market for a product. 1.1 Measurable The market size, profile and other consumer characteristics should be measurable or obtainable in terms of data. On the contrary, without knowing this data set, it becomes impossible for the companies to segment the market. The measurable characteristics such as population size, income, age group, education level etc. greatly help companies to identify a market segment. Moreover, this also allow companies to determine the particular segment in which a consumer belongs. However, it should be also noted that it is impossible to measure all the buying characteristics (psychological factors) of a consumer group. For instance, if a company discovers that a consumer who perspires profusely liked a certain brand. However, this information will be hardly useful in measuring the different factors of segment. Despite that the importance of certain characteristics of a group cannot be denied. This feature is significant for Sprite as well because it will help in delivering valuable information to the company pertaining to the buying behaviour of the consumers. 1.2 Accessible Accessibility is another vital feature of a market segment. Companies around the world want their intended market segment to be readily reachable and accessible with the existing marketing programs of the company (Rao, 2009). Apart from that, it is also essential that the segment must be easily accessible with the existing network of the company and that too at an affordable cost. There are certain segments of customers which are inaccessible due to certain limitation or legal restrictions. For example, a liquor manufacturing company is unable to access the teenage market segments. Apart from that, it is often observed that a company has accurately manufactured a product for a particular segment of customers, but due to improper communication tool a company may fail to access the market. Hence, it is important for Sprite to ensure that the segmented market is accessible with ease. Therefore, the accessibility feature of market segmentation is highly essential for a company. 1.3 Substantial This feature is about the fact that the target segment must have enough buyers and high purchasing power in order to ensure company remains profitable. Sprite is a product targeted for mass, and hence, there are no concerns over the presence of adequate number of buyers. On the contrary, if the market segment has fewer customers, there will be strong doubts over the profitability of the product. Hence, this characteristic is also significant for Sprite in making effective segmentation. 1.4 Homogenous Homogeneity is probably the most important characteristic of market segmentation. Each of the segments of the market must exhibit different characteristics, but within the group it should portray similar characteristics. Homogeneity is important because it allows companies to formulate different marketing campaigns for different groups and also ensures each of the groups gets effectively targeted and reached. The company makes separate advertisement campaigns for Sprite, and as a result of that, it succeeds to target the customers effectively. 3.0 Segmentation Failures A number of companies or products have failed to sustain in the market due to ineffective segmentation strategy or segmentation failures. Some of the common causes of segmentation failure are enlisted below: 3.1 Improper Market Research One of the biggest causes of the failure of segmentation is the improper market research. The segmentation strategy fails for a company if it does not succeed to target or reach out to the intended population (Dibb, 1998). 3.2 Improper Communication It has been observed that a company or a product has failed miserably in the market as it did not used the proper communication medium or used proper communication message. Hence, improper communication can be a cause of segmentation failure. Sprite is positioned as a refreshing drink, and as a result, it sometimes fails to tap energy drink market. 3.3 Small Market Size Another way by which the segmentation strategy of a company may fail is the small market size. If a certain segment of market does not have enough customers, the return on investment can be extremely low. In this context, Sprite has managed to do well as the product is intended for masses. 3.4 Low Buying Power It has been also observed that the segmentation strategy of a company has failed due to the low buying power of the customers. Although the market size is large, low consumer buying power may severely affect the company’s profitability. The product is available in different volumes and can satisfy the buying power of each group. 3.5 Improper Marketing Mix One of pragmatic causes of segmentation failure is the unsupportive marketing mix. A company may accurately segment the market on the basis of its offerings, but may fail if unable to offer the right combination of product, price, place and promotion. In the context of Sprite, it is available in different sizes and is priced well. However, there are concerns over the availability of the product in rural places. 4.0 Overcoming Failures 4.1 Better Brand Visibility Coca Cola was successful enough to make its place in different countries because it was already a well-known brand. The customers bought Sprite not because it is known as the best beverage in the country, but because it is a well-known brand which is preferred by people around the world. For example, Sprite is targeting people in Egypt by telling them to make a better tomorrow (The Wall Street Journal, 2011). Therefore, it is evident that better brand visibility can be a way to overcome segmentation failure. In order to make the brand more visible, the product is endorsed with the help of celebrities. 4.2 Better Communication Various media vehicles or communication tools are utilised by companies to communicate their message to the customers. Companies now depend on the electronic sources such as the internet, electronic hoardings, magazines, mobile applications, social media, etc. The company knows this fact, and it has skillfully utilised social media in case of Middle-Eastern companies too (Buono, and Savall, 2007). In addition, Sprite utilises the green color to communicate the message of festivity, warmth and joy, and in such situations suggesting Sprite to enjoy it even more (International Public Relations, 2011). Therefore, with better communication, segmentation failures can be surmounted. 4.3 Market Research Another common way to address segmentation failure is that companies should carry out in depth market research. In the similar way, the company also does in-depth market research in order to identify the needs of the consumers and formulate strategies accordingly. There is a huge section of customers who likes] drinking lime flavored and carbonated soft drinks, and hence the market size is large. 4.4 Right Combination of the 4P’s In order to get success in the market place, companies are required to develop the right combination of the 4p’s of marketing. The company needs to ensure Sprite gets distributed intensely and stays available for customers. In addition, the company can also consider newspaper advertisements for Sprite. 4.5 Integrating Features While segmenting the market, companies should test identifiable and measurable, accessible, substantial, homogenous and actionable features of the intended segment. This will give greater chances of success for the product. In addition, assessment of the market size and buying power will offer additional benefits. Conclusion The study was based on the theme of market segmentation, and the aim was to identify the benefits, and features of segmentation strategies. In addition, this study was also aimed at underpinning the reasons of segmentation failure and the ways by which it can be surmounted. The study has chosen Sprite as the product to make reference with the area of concern. The study revealed that segmentation is one of the vital marketing tools by which companies can effectively target their customer base. Moreover, a company also succeeds to develop the most fitting marketing mix. The study also made evident that all the features of segmentation, mentioned in this study are extremely important for companies. In the context of Sprite, it pursues “Multisegment" targeting strategy, and as a result of that, the company targets several customer segments. Despite pursuing this strategy, the product has witnessed and experienced segmentation failure. However, reports have suggested that the product has been able to successfully deal with those challenges. In general, some of the causes of segmentation failures are due to improper communication, inadequate market research, low market size and buying powers. However, in order to deal with this, Sprite maintains high brand visibility, better communication and in-depth market research among others. Hence, it can be concluded that segmentation of the market is one of the vital tasks of a company and is also a key factor towards achieving success. Hence, it is recommended that companies should effectively segment their market and must ensure the segmented market to be measurable, accessible, substantial and homogenous in nature. References Alshorbagy, A. A., and Elsaman, R. S., 2011. Doing Business in Egypt after the January Revolution: Capital market and Investment laws. [Pdf]. Available at: [Accessed 24 May 2013]. Buono, A. F., and Savall, H., 2007. Socio-economic interventions in organizations: The intervener-researcher and the SEAM approach to organizational analysis. New York: IAP. Dibb, S., 1998. Market Segmentation: Strategies for Success. Marketing Intelligence & Planning, 16 (7), pp. 394-406. International Public Relations, 2011. How marketing messages change post revolution - lessons from Egypt. [Pdf]. Available at: [Accessed 24 May 2013]. Jobber, D., and Fay, J., 2006. Foundations of marketing. 2nd ed. London McGraw-Hill. Kotler, P, .Armstrong, G, and Wong, V., 2008. Principles of marketing. 5th, New York: Prentice Hall. McDonald, M. and Dunbar, I., 1995. Market Segmentation. Basingstoke: Macmillan Press. Rao, S. R., 2009. Market Criteria for effective Segmentation. [online] Available at: < http://www.citeman.com/7492-market-criteria-for-effective-segmentation.html> [Accessed 24 May 2013]. The Coca Cola Company, 2012. Heritage. [Pdf]. Available at: [Accessed 24 May 2013]. The Wall Street Journal, 2011. Revolution sells in Egypt. [Online]. Available at: [Accessed 22 May 2013]. Read More