Companies cannot connect with all customers in large, broad, or diverse markets. But they can divide such markets into groups of consumers or segments with distinct needs and wants. A company then needs to identify which market segments it can serve effectively. This decision requires a keen understanding of consumer behavior and careful strategic thinking. To develop the best marketing plans, managers need to understand what makes each segment unique and different. Identifying and satisfying the right market segments is often the key to marketing success.
One of the most famous leisure travel brands in the world, France’s ClubMéditerranée, better known as Club Med, has targeted several different customer groups through the years. Started in 1950 and long a pioneer in the concept of the all-inclusive resort, Club Med originally used exotic locations, bare-bones accommodations, and the advertising theme “The antidote to civilization” to target singles, young couples, and others seeking sea, sand, and a good time. Rooms did not have phones, TVs, fans, or locks on the doors. To transcend its hedonistic image and broaden its clientele, Club Med decided to add family-friendly resort locations and services in the 1970s. Depending on location, the resorts, known as villages, offer a wide range of activities, from flying-trapeze clinics to body building to snow skiing. Club Med staff are called “GOs,” or Gentil Organisateurs (“gracious/nice organizers”) ; clients are called “GMs,” or Gentils Membres (“gracious/nice guests/members”). An informal atmosphere has GOs and GMs dining, drinking, dancing, and playing together.
An attempt to
move outside the leisure-travel business to become a broader services company
proved ill-fated; a series of urban bar/restaurants flopped. Combined with a
post-9/11 economic recession and increased competition, the failure left Club Med
reeling in 2001–2002. Under the new leadership of Henri Giscard d’Estaing (son
of the former president of France), the company invested hundreds of millions
of dollars to move upscale and attract wealthier customers by crafting a more
sophisticated image. For the firm’s 60th anniversary in 2010, advertising
proclaimed that Club Med was “Where Happiness Means the World,” which was
backed by an extensive online marketing effort.
To compete more effectively, many companies are now embracing target marketing. Instead of scattering their marketing efforts, they’re focusing on those consumers they have the greatest chance of satisfying.
Effective target
marketing requires that marketers :
|
1. |
Identify and
profile distinct groups of buyers who differ in their needs and wants (market
segmentation). |
|
2. |
Select one or
more market segments to enter (market targeting). |
|
3. |
For each
target segment, establish and communicate the distinctive benefit(s) of the
company’s market offering (market positioning). |
Bases for Segmenting Consumer Markets
Market segmentation divides a market into well-defined slices. A market segment consists of a group of customers who share a similar set of needs and wants. The marketer’s task is to identify the appropriate number and nature of market segments and decide which one(s) to target.
We use two broad groups of variables to segment consumer markets. Some researchers try to define segments by looking at descriptive characteristics: geographic, demographic, and psychographic. Then they examine whether these customer segments exhibit different needs or product responses. For example, they might examine the differing attitudes of “professionals,”“blue collars,” and other groups toward, say, “safety” as a product benefit.
Other researchers try to define segments by looking at behavioral considerations, such as consumer responses to benefits, usage occasions, or brands. The researcher then sees whether different characteristics are associated with each consumer-response segment. For example, do people who want “quality” rather than “low price” in an automobile differ in their geographic, demographic, and psychographic makeup?
Regardless of which type of segmentation scheme we use, the key is adjusting the marketing program to recognize customer differences. The major segmentation variables—geographic, demographic, psychographic, and behavioral segmentation.
Geographic Segmentation
Geographic segmentation divides the market into geographical units such as nations, states, regions, counties, cities, or neighborhoods. The company can operate in one or a few areas, or it can operate in all but pay attention to local variations. In that way it can tailor marketing programs to the needs and wants of local customer groups in trading areas, neighborhoods, even individual stores. In a growing trend called grassroots marketing, such activities concentrate on getting as close and personally relevant to individual customers as possible.
Much of Nike’s initial success comes from engaging target consumers through grassroots marketing efforts such as sponsorship of local school teams, expert-conducted clinics, and provision of shoes, clothing, and equipment. Citibank provides different mixes of banking services in its branches depending on neighborhood demographics. Curves, an exercise chain aimed at middleaged women, places paper bags where consumers can place a form asking for more information about Curves in local businesses such as ice cream shops, pizza parlors, and other places where guilt can strike the weight-conscious shopper. Retail firms such as Starbucks, Costco, Trader Joe’s, and REI have all found great success emphasizing local marketing initiatives, but other types of firms have also jumped into action.
