How to analyze the market segmentation? Explain.
The aim of this essay is to understand and analyze the market segmentation, its characteristics. In this paper the target segment is the working women and the product chosen is the L’Oreal lipstick. This paper also discusses about the marketing mix and how the marketing mix reflects characteristics of the segment and the product chosen.
Segmentation splits the different buyers into clusters to make the best utilization of a firm’s predetermined resources through consumer based marketing. If market segmentation is not done, then it would be difficult to find whom to sell and what to sell (Wedel and Kamakura 2000). Market segmentation means to divide the potential customers into different categories and groups who have similar preferences and purchasing patterns. Whereas Mass marketing means the same product is offered to the entire market (Awan 2014).
The focus of the business is on getting better returns by targeting the specific customers by exactly understanding their wants. It is easier and more profitable to build and promote exact and tailored products. The new trend is target selling and to position in the market to create potential customers, and this lead to a generation of new ideas for innovation of new products and services and in turn the companies can increase their profits. Segmenting generates additional prospects for business augmentation. It also enables retaining the customers (Weinstein and Johnson 2016). Market segmentation is a flexible proposition. The following are the market segmentation strategies: Geographic, Demographic, Psychographic and, Behavioral. Marketers need to differentiate segmentation based on varying demographics, lifestyles, values and expectations of women and this paper targets the working women (Alves and Roberts 2012). Segmentation has its limitations if not employed properly. As segments are very small this can lead to a small turnover.
Woman decision makers contribute to of the consumer base and L’Oreal lipsticks focus on all age group of women in the corporate/working women. As being presentable at work, amongst friends and peers is very significant and they are the target customers who use the beauty products and Lipstick being one of them (Wu et al. 2015). This segment is the decision maker and also has the purchasing power, brand conscious and belong to the upper middle class and above. L’Oreal lipsticks market their product based on the demographic segmentation- working women and psychographic segmentation- where it tries to change the thought process of an average looking woman, where she can look even more beautiful by applying the lipstick and enhancing the looks. L’Oreal reiterates the fact through its endorsements of lipsticks and other beauty products that women are worth it.
Working women is the new female consumer, and they account for almost 85% of all the customer purchases which include everything auto’s to healthcare, consumer durables and other services. As per a study based on a website ‘She-conomy.com’, women control over 20$ Trillion in worldwide expenditure. This target segment is well educated, internet savvy, financially independent and always on the go (PreoÅ£iuc-Pietro et al. 2015). There are a lot of key trends which are driving the working women population and their buying patterns and some of the important points which should be considered when making key business decisions when targeting this segment are: women labor force has increased exponentially across the globe. Women also prefer to marry at an older age or even prefer to stay single and also choose to have fewer children. The working class women have a multiplier result as they buy things not only for themselves however also on behalf of the family and friends (Randive 1975). Working women are more aware of the trends in the market and also the source of ideas of innovation of new products and services. Example, a working woman needs to look fresh throughout the day at the office, hence the businesses might come up with products as deodorants, stay on lipsticks, minimal touch makeup products depending on needs generated by this segment.
The working class women are those who could be even part time worker, freelancers, entrepreneurs and those who prefer to work from home to better manage and balance child care and the job. They are contributing to the household income and sharing responsibilities. The marketers believe that ‘women are different’, however there is a need for a profound understanding of how and why the selected target segment is different. Women’s purchasing decisions and behavior are also influenced by the celebrity endorsement and their red carpet looks and the desire to ape them.
The impact of social media is also playing an important role in the purchasing behavior of the target segment like the Facebook and Instagram. Companies are also using social media to promote and place their products by asking users to download the shopping to purchase. The customer especially the target segment now has financial freedom unlike the previous generations, are tempted to shop online anytime and anywhere they feel like (Cao, Meister and Klante 2014). The online sales have tempting offers and discounts for different occasions, easy return policies and better customer services which make it easier for working women to shop with a group of friends at a coffee shop, at the workplace during breaks or while they may feel lonely. Retail therapy has become latest alternative to get over relief from the broken relationships or celebrating an event.
Marketing Mix is a simple marketing tool which used is design the marketing strategies. It is the premeditated mix of the controllable essentials of a product’s promotion strategy commonly termed as 4Ps: product, place, and promotion. The four elements are tuned until the right amalgamation found that caters the needs of the product’s consumers while generating most favorable returns (Belz and Peattie 2012). The origin of marketing mix started in the late 1940, and E. Jerome McCarthy was the marketer who first developed the theories of the marketing mix. By 1990 the marketing mix definition became 4C’s. The four C’s differ, however, are based on either Lauterborn’s concept (consumer, cost, communication, convenience) or Shimizu’s theory (commodity, cost, communication, and channel). The latest new theory that has been proposed is people, processes, programs, and performance. Consumer satisfaction, value for money and product quality are the central to the success of the company and marketing mix interfuses these essential elements to come up with the best outcomes, and these four elements are the product, place, price and promotion (Assadi and Hudson 2010).
The first P: Product is the goods or services that business offers to its consumers/customers for sale for the target market. Product development and designing should consider the target customer, the quality, packaging, after sales service. There is should extreme clarity on what is being sold and to whom it is being sold. The four Ps of Marketing may appear uncomplicated however they can be tricky too. There is a need for a excellent research and a sound knowledge of the market and the target audience before the merchandise is ready to sell. L’Oreal is one of the top cosmetics company in the world, and it believes that depending upon the woman’s position in the society or at work, and social mobility, her assumption of beauty and appearance can immensely vary. If a lady can establish a career and must uphold expectations of the society’s class and sophistication, there is higher precedence and approval for what the cosmetics business can offer and L’Oreal Lipsticks targets on this assumption of the working woman. Hence they have come up lipsticks with tags as 9 to 5 for working class launched in different shades and textures such as matte, crème, and shades which suit the office environment, which is travel friendly packing and shades that last all day long like lipstick crayons which can slip into trouser pocket, multiple shades in a small box, twin shades in a single packaging and so many tempting shades to suit to different occasion and target segment is convinced to own each one of it (Bristow, Gulati and Schneider 2013).
The second P: Place means the way the product is distributed and delivered to the end customer and the distribution methods adopted. The place may be the where the business is conducted for the product or where the product is manufactured or it can retail stores, malls, online shopping portals like Amazon, EBay, L’Oreal’s online shopping portal. It is necessary that the company identifies with the strategy for the positioning. The business needs to make it work, even if it means seeing through the haze of marketers who plan to create confusion up the psyche of customers. The product should be easily available, and it should be on top of the mind of the customer every time they think of the product, and there should be a catchphrase of the brand and product which is simple, intelligent and effortless to recall. Understanding the target segment: working women, thoroughly and the business can discover the most competent positioning and distribution paths that directly converse with the target segment. Some of the points which help devising the distribution strategy are: what are working women looking for in the product and the kind of services they are looking for, example, the demonstration on the usage of the product on delivery, a survey to find the places where the target customer enjoys making her purchase and what are the distribution strategies adopted by the competitors and main differentiator, is there a requirement of a strong sales force, attending trade fairs etc.
The third P: Price of the product and the how much is the customer willing to pay and whether the customer has required purchasing power. The following factors should be considered while pricing, the cost of manufacture distribution, promotion expenses and the need to determine whether these costs are variable or fixed to arrive at the genuine price of the product (Sonderegger, 2011). Branding is innately a sensitive part, if a business is new to the market and has not yet made a name for it, is unlikely that the target market is ready to pay the high price. However, L’Oreal has been very careful regarding pricing of its lipsticks. For the working class, it has designed lipsticks in different categories, for example, if a particular range of matte lipsticks priced at $10, then they have a similar product in a lesser weight in different packaging at $5 as well. L’Oreal has designed their lipsticks and priced in such a way that each and every customer in the target segment whether the low-income working women or the higher income, there is a range of products which are lucrative and appropriately priced for all and none are disappointed. Pricing should also factor in the taxes and the budgets of the customers.
The fourth P: Promotion is all about the communicating with the target segment the working women about the all the benefits and values they would gain on purchasing the product. The different methods or promoting a product are direct marketing, sales promotion, advertisement and personal selling to lure and influence the customers. L’Oreal has chosen celebrity endorsement for lipsticks in different countries like Blake Lively, Eva Longoria, Julianne More, Jennifer Lopez to name few and whom the working class women look up to as role models. There is a need to motivate the target segment constantly for the business promotion and try to put themselves in the shoes of the working woman to find out how they view their products and business. The budget assigned to the marketing mix, the stage of the product cycle and how the promotions can be used are key aspects which can be used to position the product in the target segment. The fundamental aspects which affect the market segmentation are the clear recognition of the segment, the measurability of its effective size and ease of access through promotional efforts (Yoo 2016).
Marketing mix has been impacted by the internet due to the new era of marketing strategies in e-commerce (Dominici 2009). The 4Ps of the marketing mix, product, price, place and promotions are also applicable offline as well as online businesses. E-commerce brings fresh concerns which the business must need to consider and start being innovative and re-evaluate about the existing marketing mix as the new technology present new products and new placing or distribution options and latest pricing strategies and consumers have the option of comparing with the best price according to his budget. The Segmentation can be done based on the marketing mix of an organization (Richardson, Gosnay and Carroll 2010).
Conclusion
To conclude that market segmentation and target marketing is extremely vital for higher success and customer satisfaction. In the paper, it has been observed that women drive at least 70% of purchasing either directly purchasing or through influencing. There is an enormous opportunity still to attract to women working class segment with innovative design strategies with the right marketing. The influence from customer’s side is forever significant and should be respected to calculate potential prospective markets and risks. There are lots surveys, publications available online to understand the market segmentation and strategizing a suitable marketing mix for the target segment (Constantinides 2006).
References
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