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Consumer Behavior (Mkt530) Spring 2014
Due Date: 18 May 2014
Marks: 10 Marks
Learning Objectives: The basic objective of this assignment is making students familiar with
the concept of segmentation.
After attempting this assignment, the students will be able:
To comprehend the significance of segmentation.
To comprehend the practical implications of segmentation.
It is not possible for all companies to connect with all customers in large or diverse markets.
Companies can segregate such markets into cluster of consumers or segments with distinctive
needs and wants. Companies then require identifying which segments they can serve more
efficiently. Marketers need to completely understand each segment requirements and uniqueness;
such decisions require deep understanding of selected segments of consumers.
L’Oreal is famous for its beauty products in the world, its headquarter is located in Paris, France.
It has developed different cosmetic products such as hair color, skin care, sun protection,
makeup, perfume and hair care. This company is running in 103 countries with 18 brands
through two major divisions Cosmetic and dermatology. Further the cosmetic division has four
categories which are professional products, consumer’s products, luxury products and active
products. Like many other top companies L'Oreal did segmentation to cover its national as well
as international consumer markets. Instead of scattering marketing efforts L’Oreal marketers are
targeting those consumers where chances of satisfying them are high.
You are advised to read out the L’Oreal in detail on internet while attempting this assignment. It
will give you good idea about the product but do not copy any material from the websites.
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Please see the attached file for the Assignment No 1, Spring 2014.
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I conclude that following few bases are mostly considered for market segmentation.
Geographic bases allows us to segment a market that is spread over a large geographic area into sub-markets that cover smaller geographic areas. Geographic segmentation usually involves dividing up geographic markets by using existing political boundaries, natural climatic zones, or population boundaries.
Demographic segmentation occurs when one or more demographic traits are employed to divide a market. Typical demographic traits that are used include age, gender, race, ethnicity, marital status, family size and stage of the family life cycle.
Social class segmentation employs a combination of demographic traits that are commonly believed to reflect membership in different social class strata. Occupation, education, and income are the primary demographic traits that reflect social class membership.
Psychographic segmentation bases divide markets based on differences in lifestyles or differences in personality traits. Lifestyle segmentation is one of the most popular and effective ways to create segments for consumer products.
Consumer Shopping Behavior patterns include such things as the type of store shopped in, timing of purchases (i.e. time of day, week, or year), how much of a product is purchased on a given visit to the store, and how often the individual frequents a particular type of retail establishment or shopping mall.
Product consumption behaviors include product consumption or usage rates base (as discussed earlier). Other segmentation bases included in this category are product usage occasion, product use versus non-use, and loyalties to specific brands.
Segmenting markets according to Consumer Predispositions essentially entails creating segments based on differences in consumers' wants, needs, and attitudes. We talked at length about creating market segments based on differences in consumers' wants and needs (i.e. creating benefit segments). Sometimes it is useful to segment markets based on how knowledgeable people are of a particular product category, or whether they've experienced problems with specific products or brands. And, finally, we also include consumers' media viewing habits in this category. When segmenting markets using this latter base, we are looking for differences in the types of media consumers prefer i.e. preferences for specific television shows, radio stations, magazines, newspapers, and the like.
Please comment either its a right path or not.?
geo graphivcal segmentation would be apply here
Miss Parishey the question is "what might be the possible basis of
segmentation in typical south Asian countries for L'Oreal?" so i think we have to discuss all the basis that can be possible for market segmentation as mentioned above.
They have divided the South Asia market under three segmentation bases, Geographic as the all south Asia countries people have same buying behavior and regions are near to each other and Demographic base as the people income, life status, consumer base, professional business products base, and fairness conscious and gender base also. the third base is Psycho graphic segmentation under this they use the similar interests thoughts of peoples, and health and skin care consciousness. how people to be looked, their self image. usually ladies of Pakistan India like heavy make ups and color shades as instance.
yr assignment ka last day aagya koi solution upload e nhi hua so apni madad aap kro
Target Market Strategies
There are several different target-market strategies that may be followed. Targeting
strategies usually can be categorized as one of the following:
Single-segment strategy - also known as a concentrated strategy. One market
segment (not the entire market) is served with one marketing mix. A single-
segment approach often is the strategy of choice for smaller companies with
Selective specialization- this is a multiple-segment strategy, also known as a
differentiated strategy. Different marketing mixes are offered to different
segments. The product itself may or may not be different - in many cases only
the promotional message or distribution channels vary.
Product specialization- the firm specializes in a particular product and tailors
it to different market segments.
Market specialization- the firm specializes in serving a particular market
segment and offers that segment an array of different products.
Full market coverage - the firm attempts to serve the entire market. This
coverage can be achieved by means of either a mass market strategy in which a
single undifferentiated marketing mix is offered to the entire market, or by a
differentiated strategy in which a separate marketing mix is offered to each
The following diagrams show examples of the five market selection patterns given
three market segments S 1 , S 2 , and S 3 , and three products P 1 , P 2 , and P 3
A firm that is seeking to enter a market and grow should first target the most
attractive segment that matches its capabilities. Once it gains a foothold, it can
expand by pursuing a product specialization strategy, tailoring the product for
different segments, or by pursuing a market specialization strategy and offering new
products to its existing market segment.
Another strategy whose use is increasing is individual marketing, in which the
marketing mix is tailored on an individual consumer basis. While in the past
impractical, individual marketing is becoming more viable thanks to advances in
Author: Jim Riley Last updated: Sunday 23 September, 2012
After segmenting the market, businesses must select those segments that it aims to target.
Five main factors influence the attractiveness of a segment:
Segment size - It must be big enough to be worth targeting. Many larger businesses ignore small segments on the basis that, even if they were to dominate the market, it would have an insignificant effect on their overall sales and profits. This creates opportunities for smaller, more flexible businesses to exploit the segment. Don’t forget – it is not always easy to measure the size (and growth) of a segment. Often a business has to make a judgement based on estimates.]
Segment growth - Segments with good long-term growth prospects are, by definition, the most attractive. However, businesses should be aware that segment growth may vary – particularly if the segment is based on the “life-cycle” of one or a limited number of products. Also, faster growth segments are likely to attract more competition.
Segment profitability - The segment should be capable of delivering profits of the right value, assuming it can be marketed to effectively. Otherwise, why bother? The required “return on investment” will be a key factor in determining whether a business invests in the segment. It is important to work out which businesses are earning profits in the segment. It might be that there is a dominant market leader – who also dominates the segment profit - leaving little for existing operators or potential new market entrants.
Current and potential competition - The strength of existing and potential competition is a key issue in deciding whether to target and enter a segment.
Business capabilities - Does the business have the capabilities (e.g. brands, product knowledge) to succeed in a segment? Marketing history is littered with examples of businesses that entered segments with little or no knowledge or resources – and came unstuck!.
• Demographics - different groups of consumers behave differently (factors relate to age, gender, etc). Demographic differences relevant to NIVEA Sun include different buying behaviours between men/women and adults with children. There is a stark contrast between awareness and usage of sun care products between men (who prefer convenience) and women (who enjoy more luxurious sun care products). Similarly, adults with children are another broad segment with differing needs.
Demographic segments are broad. As research shows, the level of awareness of sun care transcends income and social class.
Attitudinal this is the most important segmentation variable. Consumers' attitudes towards sun care influences their purchases. NIVEA Sun conducts market research to understand user attitudes. This involves questionnaires using a nationally representative sample, and more intensive research with small groups, to discuss individual skin protection habits and preferences. This has identified 5 distinct groups for protection and after sun:
• Concerned Consumers 'a good tan is not important'. These consumers are conscious of the harmful effects of the sun and purchase sun protection products that are most likely to offer high sun protection factors
• Sun Avoiders - avoid sunbathing and using sun protection when in the sun - it is seen as a chore. These are unlikely to purchase a sun care product. Through education, this segment may be convinced to protect using more easy-to apply products such as sprays.
• Conscientious Sun Lovers - adore sunshine and like to use a trustworthy brand with suitable protection factors. They know about sun care and use this knowledge to purchase suitable products for their skin.
• Careless Tanners - adore the sun but don't protect against harmful dangers. Tanning is important to this group, not protection. They don't worry about the long-term damage to their skin and may purchase a low SPF product, if any at all.
• Naive Beauty Conscious - like to have a good sun tan. They recognise that sun protection is important but fail to understand about Sun Protection Factors (SPFs). These consumers may still be interested in the core features of a sun protection product (e.g. SPF) and be more inclined to purchase an added-value offering such as a mousse.
The two main aspects of attitudes relate to:
• Usage occasion (when) e.g. holiday, outdoor sports, gardening, working etc. This relates to the Sun Protection Factor (SPF) required, e.g. the SPF required for a holiday in Egypt differs greatly to outdoor work in the UK. This is one of the reasons why NIVEA Sun produce a wide range of sun protection from SPF 4 to 50 . Research has shown that consumers often purchase a variety of SPF's for differing needs and occasions. This factor alone however is not an accurate means of segmenting markets.
• Benefit sought - protection is the primary benefit but the preference by which this is delivered will vary by segment, e.g. convenience is important to men (so they choose spray applicators). Parents want to provide maximum protection for children (high SPFs and coloured products are therefore important).
The benefit sought differs across the attitudinal segments. Whilst 'Concerned Consumers' want a very functional product providing 'adequate protection' (e.g. SPF 30), 'Naive Beauty Conscious' may want a more luxurious sun protection product (e.g. mousse). This also applies to consumers with special skin types, who require a more specialised product. Recognising that this is a separate segment, NIVEA Sun has formulated sensitive skin products.
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