Market Segmentation
  1. What is the most important reason for a firm to segment?

Market segmentation is a division of the market into segments: groups of customers with similar needs and expectations relating to particular product or service. Such groups should differ from each other, as it ensures the implementation of specific marketing tools appropriate for each segment. Market segmentation allows the company to differentiate its customers and obtain more specific information about them according to various criteria such as main features, purchasing power, wants and likes, social and cultural background for a better promotion of its products. Since one company is not able to master the whole market, market segmentation allows the company to emphasize one or few segments where it will be more successful and will be able to demonstrate its competitive advantages.

It is necessary to point out that segmentation provides the company with the uniform features of each segment with the company’s aim of addressing its scarce resources and marketing efforts to satisfy the needs and interests of the customers related to this targeted segment, as well as applying suitable marketing mix for sales promoting (Dibb, Stern & Wensley, 2002).

  1. When we segment what changes if any does this mean for our strategy?

After identifying the market segments the company assesses its capacity, the availability to the company, the viability, and profitability. The target segments are selected then and marketing strategy is defined. Thus, market segmentation is an effective tool for making the best marketing solutions, and its purpose is to provide qualitative characteristics of the customers for the company with the aim such a product will match views and needs of the customers (Dibb, Stern & Wensley, 2002).

It should be stated that market segmentation influences the choice of marketing strategy directly whereas segmentation helps the company to understand its target customer better, his/her tastes, feelings, his needs and desires. Psychographic, behavioral and geographic segmentation is used to divide larger market into the segments and the marketing strategy is chosen according to the obtained results correspondingly.

  1. Give an example of a successful positioning strategy (or re-positioning effort) for a firm you know?

The example of a successful positioning strategy is the Unilever positioning strategy with its Dove line. “Dove is committed to helping women realize their personal potential for beauty by engaging them with products that deliver real care” (Unilever Official Website, 2013). The success of the Unilever marketer’s efforts is a result of positioning the products of the Dove line as unique products with an exceptional quality for women.

Specialists have created a unique formula of Dove cream soap - a cleansing Bar for the skin, which consists of a ¼ moisturizer and does not contain alkali. In its advertisement Dove marketers underlined that it is a revolutionary soap that will make a woman happier whereas it gives a feeling not only of cleanness but also the effect of softness and smoothness of the face. Thus, they place the beauty cleansing Bar higher than the ordinary soaps attracting more female customers. It is an example of the successful positioning strategy by the product class (Unilever Official Website, 2013).

  1. If a person knows nothing about a brand, what is its brand equity? Discuss.

Brand equity comprises of customers awareness of a brand, their familiarity with its advantages, associations that are created when the customers hear about a brand. It is also measured as the customers’ preferences to choose the brand when making a purchasing decision as well as the level of loyalty to the brand.

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Therefore, if a person knows nothing about a brand, its brand equity is equal to zero. With the aim to make the company’s brand strong, it is a core task of a brand marketer to shape the perception of the customers related to the brands that is to shape how the customer feels about the company’s products or services. Creation of the strong brand requires completing of four stages: brand identity (awareness of a brand), brand meaning (performance and imagery), brand response (quality, credibility, consideration, superiority) and brand resonance (behavioral loyalty, attitudinal attachment, sense of community and active engagement) (Kotler & Keller, 2011).

  1. Choose three major firms and try to determine what strategy they are following right now.

The first company to be evaluated is Southwest Airlines. This company positions itself as a low-cost carrier that provides high level of quality to its customers. Southwest Airlines chose a segment of the market where customers with low- and middle income prefer to refuse from luxuries in the comfort but to be able to fly cheaper. Moreover, Southwest Airlines positions itself as a unique company with a special “fun LUVing” attitude to each customer applying to the unforgettable experience after the flight and positive feedback as well as word-of-mouth. This positioning strategy is very successful, whereas Southwest Airlines remains profitable year after year, and receives the rewards for customers’ service excellence each year (Southwest Airlines One Report, 2011).

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BMW is another company that successfully implemented its positioning strategy oriented to the narrow market segment that is characterized by the high income of customers, high level of their perception and requirements to the quality of product and service expectations, as well as desire to have a unique social status. BMW positions itself as a luxury brand and follows this path strictly (Buss, 2012).

Calvin Klein Jeans positions itself as an aggressive brand for confident and courageous men and women who are not afraid to challenge the society. Its target segment is narrow applying to the customers with high income who are ready to pay extra for the world famous brand. This brand is always associated with passion, thus, marketers often call its advertisements “sex sells.” However, this luxury clothes brand should be more conscious in its positioning whereas more and more aggression and violence in its advertisements discourage its customers (Fuchs & Diamantopoulos, 2010).

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