Master in Business Administration (MBA)

Title assignment: Portfolio activity1: Essay: Marketing Analysis

Name module: .......................................................................................................

Name lecturer: .......................................................................................................

Name student: Marzieh Malekynezhad..................................................................

Greenwich student nr: 000649054

Course year: 2010/2011

Date: 10/02/2011

Coursework is receipted on the understanding that it is the student’s own work that is has not,
in whole or part, been presented elsewhere for assessment. Where material has been used
from other resources it has been properly acknowledged in accordance with the University’s
Regulations regarding Cheating and Plagiarism.

Tutor’s comment:
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Grade Awarded ________

''Critically analyse and evaluate the importance of market segmentation,
and customer focused strategies for effective Value Chain Management''
Introduction
The needs of customers are progressively various and mass marketing is no longer
able to satisfied theses various needs, hence companies for handle these needs should
breakdown the market into different segments, each segment has special characteristics
related to the needs of customers within that segment . The process of segmenting a market is
called market segmentation (Dibb, 1984). Market segmentation by analysing the customer
information and by focusing on customer needs, makes it possible for companies to produce
what exactly customers want. therefore, market segmentation helps companies to add the
value to their products and maximize customer satisfaction.
Market segmentation over the years, has evolved based on customer information that
has been accessible in different terms, for example in 1950, market was segmented based on
demographic information such as age and gender, in 1970 with the advent of information
technology, the marketers achieved more depth information from customers' trait and
customers attitude towards using a product. In this period segmentation was based on
psychographic data as well as demographic data. Today marketers, beside of psychographic
data and demographic data, analyse the respond of the customer to a product, for segmenting
a market (Ulwick, 2002).
The importance of market segmentation
Since segments of a market are derived from the customers' wants and customer's
desires, so companies by using their unique competencies and capabilities in a special
segment can add value to their products and fulfil the customer needs precisely. This
approach brings the competitive advantages for companies and a high level of satisfaction for
customers (Pires et al., 2010)
In addition, according to limitations of resources, companies are eager to decrease the
use of their recourses and increase their profit, hence they go toward implementing market
segmentation, market segmentation makes it possible for them to tailor the marketing
methods for fitting customers needs exactly (special advertisements) and to investigate the
new sales chances (cyberessays, 2010). Market segmentation also makes it easier for
companies to select ''the distribution and communication channels'' easily. (kotler, 1994,
p.257).
Furthermore, market segmentation is not only a kind of marketing approach but also
is a strategy lens for companies (Freytag & Clarke, 2001), traditional market research was
only about investigating the existence market and only was used by marketing manager but
market segmentation by analysing the data of different segments is related to finding the
potential market and even creating new market. These applications of the market
segmentation drive companies to set strategies according to different segments of a market
that whether the company should enter in new market and offer new product or not (Market
Segmentation Partners, 2010). Therefore it can be seen that the market segmentation can be
played a main role in planning the strategies of companies.

Customer focused strategies in market segmentation

For explaining the different strategies of Market segmentation, we should consider
mass marketing as a start point. In mass marketing one product is proposed to all customers
without any segmentation, mass marketing focuses on what is common in the customer needs
and doesn’t focus on what is different in customer needs, coca cola is a good example of
mass marketing. in spite of the fact that mass marketing is a successful strategy for some
companies but many critics believe that mass marketing leads to many problems for company
in different fields such advertisement and distribution, they believe that it is hard work to fit
one product for all customer (Rampur & goyal, 2009; kotler, 1994).
Segment marketing, niche marketing, local marketing and individual marketing are
the main strategies of market segmentation. Segment marketing focuses on large group of
customers with similar needs, good example of segment marketing is separating the market of
airline into two segments; business class tickets and economy class tickets (Rampur& goyal,
2009). Segment marketing can be divided into different niche marketing, in niche marketing,
more specific needs of customers are considered. for example if a segment is related to heavy
smokers, the segment can be separated into two different niche groups; one group, heavy
smokers who want to quit smoking and another group, heavy smokers who don’t want to quit
smoking. In this example it can be seen how niche marketing has focused on customers need
more than segment marketing.
Local marketing is another strategy that applied for local customer groups and
focuses on local needs of customers, the scale of local marketing is small and this is one of
the problems of this model. And finally individual Marketing is considered as a strategy to
focus on the needs of each customer (kotler, 1994).in this strategy companies customized
their products, based on the taste of each individual so the highest level of focus on customer
needs can be seen in this strategy(Rampur& goyal, 2009).
There are two models for market segmentation; Business to consumer (B2C) model
and business to business model (B2B). in business to consumer model, there are two methods
for segmenting market, first one is based on characteristics of consumers with consideration
to some variables such as geographic, demographic and psychographic, second method is
about consumer response to a product with consideration to some variables such as benefits,
occasion and brand loyalty. In business to business model, for segmenting business markets,
all above variables along with operating variables, purchasing approaches and situational
factors are implemented (kotler, 1994).
Criticisms about market segmentation
In spite of the fact that market segmentation can bring many advantages for
companies but it should be considered that whether market segmentation all the time brings
the high satisfaction for customers or not. Assume customers want to buy something, if this
merchandise is customized for their own segment, the customers will be satisfied with this
segmentation, because the merchandise is exactly fitted with customers' needs, but if the
merchandise is customized for other segments so customers are force to buy something which
is not matched with their needs at all and will be unsatisfied with this segmentation. Hence it
is important to know that segmentation has two sides, positive side and negative side and
companies should consider this fact in the market segmentation strategy (Doraszelski &
Draganska, 2006). Some companies make their effort to do in supersegment which is a set of
segments with some similarities for solving this problem (kotler, 1994).
In addition, the ethical issue in marketing segmentation is also an important issue in a
society. Nowadays different communities are concerned about the disadvantages of targeting
a segment in wrong way (Macchiette & Abhijit, 1994). There are different examples that
show how targeting the special segments such as children and teenagers has caused bad
sequences for these segments, for example it was discovered that Brown and Williamson
Tobacco corporation targeted the segment of youths with age16-25 specially for menthol
brands(Meier,1998). So it is important for companies to regard to ethical issues beside of the
profits of a segment.
IKEA & market segmentation
Ingvar Kamprad, a Swedish man, established IKEA in 1947, the main goal of the
founder was providing affordable products with high quality in all parts of the world.
Nowadays Ikeas is a successful company in fulfilling different needs of the people about
home furnishing in different countries. IKEA claims that it is able to ''Offer а wide range of
home furnishing items with good designs, excellent quality and durability, at prices so low
that as many people as possible will be able to afford them (IKEA, 2010).
Kotler has mentioned the IKEA as a successful case in segmenting a market, he has explained
that Ikea identify a segment rightly and direct all resources for meeting the needs of that
segment and finally provide the high quality products with low price (Marshall, 2007).
One of the new market segments in IKEA is called ''enjoy work''; this segment has
been created for business people, who work in home and are in the middle class of society.
IKEA marketers segmented this kind of working people by demographic segmentation based
on the occupation and income. The marketers of IKEA found that for enjoying work, it is
necessary to have a good workspace. Hence IKEA has designed special furnishers that have
ability to bring the sense of flexibility, freedom and fun in mind for users, Some example of
products for this segment is computer tables, home office chairs, home office desks,
organisational tools, storage boxes and work lamps. Another market segment in IKEA is
called ''children IKEA'', IKEA believes that the children are the most important people in the
world and decorating their rooms is a crucial issue for their parents, So IKEA has customized
its products based on children taste and even create narrower segments by age and gender of
children (cyberessays, 2010).
Conclusion:
Market segmentation by focusing on customer desires leads to increasing of added
value to a product, and finally brings high satisfaction for customers as well as high profit for
companies. In spite of the fact that market segmentation has many advantages but it is
important that marketers while segmenting a market consider to negative aspect of market
segmentation as well as ethical issues of targeting a segment.
IKEA as a good example of market segmentation shows that how a company can
focus on customer needs rightly and identify the segments correctly with the aim of high
satisfaction for customers.

References:
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& Planning 16(7), pp.394–406.
- Doraszelski, U. & Draganska, M.,( 2006) Market segmentation strategies of multi
product firms, The journal of industrial economics (1)PP.125-149.
- Freytag, P. V., & Clarke, A. H. (2001) Business to business market segmentation.
Industrial Marketing Management, 30 (6) pp. 473−486.cited in : Market Segmentation
Partners (2010) Segmentation Strategy [online] available from:
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January 2011].
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4 February 2011].
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