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Term Paper, 2017
15 Pages, Grade: 1,4
List of Figures
2 Market Segmentation
Figure 1 Major Segmentation Variables for Consumer Markets
Figure 2 Example of a Profile "Porsche in America"
Figure 3 Key Elements of the Marketing Process
A business' success lies in its marketing. "The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself". Successful marketing in particular focuses on reaching the target group and tries to satisfy their needs. Customers have become more discerning, especially as the internet and social media have had a dramatic impact on the types of marketing activities that are the most effective. Customers can access information very easily and compare companies. Therefore they have the power and can easily walk away if they do not like the companies product, the result is they now determine most of the markets.
Therefore, successful marketing involves everything that an organization has to make happen if customers are to be satisfied with their products. For this to be done effectively and in target-oriented way, an organization has, therefore, to discover and access customer needs, design products and services which are likely to be bought by the customers. Then these products have to be promoted and of course delivered. Marketers try to implement a feeling in consumers to fulfill unfelt needs.1 For this reason the most important aspect is to correspond with customers directly. A company should never just assume that they know the customers' desires.
Basically, marketers define their markets in terms of the needs they gather from sound research. To satisfy the customers the marketer needs to know the target group for certain products. To define a target group the marketer makes use of market segmentation, profiling and targeting. What changes are the objectives along with the methods and tools used.
Segmentation is about creating groups of similar profiles, profiling is about knowledge, and targeting is about when and how to communicate with chosen groups. There are some significant factors that dictate the approach to profiling and others that make segmentation and targeting more complex for a successful marketing.2
Market segmentation means dividing a market of potential customers into homogenous groups. Within different segments the existing and future customers share the same major characteristics or needs. Therefore a marketer can tailor the marketing mix to each segment very specifically. Because individuals from the same segment generally respond in a similar manner it is important for a company to know exactly which segments represent the most potential sales for its business.
There are basically four dimensions to segment a market: demographic, psychographic, geographic, behavioral segmentation.
The demographic segmentation is based on variables like age, sex or marital status. Many companies use this kind of segmentation, because the access to this information is easy to gain. A simple division of the market is based on age. Typical groups are toddlers, teenagers, adult and seniors. An example is higher prices in the zoo for adults and discount prices for children.
The market is divided by the social status or economic standing in society in the psychographic segmentation. Academic families have different needs than non-academic families. They are more likely to purchase expensive goods more frequently e.g. go more on vacation or possess more cars.
Another possibility is the geographic segmentation. The customers are segmented by their place of living. The segments can vary from continents, countries and regions to political boundaries or even climate e.g. the demand for beer is higher in Bavaria than in lower Saxony even though there is a regionally fragmented beer market in Germany.
Some companies base their segmentation on behavioral differences. The customers have different purchasing habits, patterns of use or are not committed to the brand like other costumers. Purchasing in department stores, online or catalogue can require a different marketing mix. This version of separation is called behavioral segmentation. 
As described there are various possibilities to divide the market. There is no right way to segment a market. The marketer has first to try different segmentation strategies, before he knows which strategy is the best for the company and its products.
The aim of the segmentation is to identify all possible lucrative target customers, so they can concentrate on them to multiply the revenue. Moreover, it gives the company a better chance for growth. After dividing the market, organizations can come to the conclusion to develop different products for the various segments, leading to fulfilling the customer needs better and enhancing revenue. Being able to divide the market into different segments makes it easier to find and implement the right customer communication.
Another reason for the market segmentation is to create and maintain a successful relationship with a customer so that they feel involved with the product or the brand itself. The problem in this case is that the marketer has to know as much as possible about the target group. It is best to create a profile of each group. Without enough information a marketer cannot know if the chosen targeting group fits the brand. It also reduces the risk of an ineffective marketing campaign. When marketers divide a market based on key characteristics and personalize their strategies based on that information, there is a much greater chance of success than if they create a general campaign and try to implement it across all segments.
It depends on the strategy that the company uses, but some segments of the market have basic characteristics and there is no need to profile each segment. In this case a company is choosing their segmentation and they continue with targeting. In the other side case, considering more aspects, an organization needs to be more concerned about developing a profile.
It is a way of describing a group of consumers categorically. It helps a company to focus more effectively on specific types of customers to create tailored marketing and advertising. The more information a company has about their customers, the easier it is to apply successful marketing strategies and to spot opportunities to sell them new products.
The complete target market profile will use all the information a marketer has gathered or surmised. The profile is usually divided into the different types, the percentage of all owners and the description. The description contains four characteristics: demographic, geographic, psychographic and behavioral aspects. A profile could read, "Males between ages 35 and 50 who live in suburban areas, enjoy golfing and want to look stylish." Another example might say, "Teenage girls living in the inner city who tend to idolize pop stars and buy items that boost their status among their peers."
Profiling the customers allows the company to target the communications to the most relevant groups within the database, at the most relevant time with the most relevant offers.
After the segmentation and the profiling a company has to target the market. Targeting is a process in which the segments are evaluated and selected, whereby a company chooses which segment(s) to enter. Furthermore, they can decide if they want to serve one or more segments. The aim of targeting is to pitch the marketing concretely towards the target group which increases the efficiency and effectiveness of a campaign. A target market is defined as "a set of buyers sharing common needs or characteristics that the company decides to serve." Basically the targeting process is divided into a two-step process.
 Drucker (14.01.2017)
 See Barnes (2001), p. 72
 See Doyle/Stern (2006), p. 64
 See Strydom (2007), p. 66
 See Ferrel/Hartline (2008), p. 173
 See Zikmund/D’Amico (2006), p. 253
 See Keller (2008), p. 102; Figure 1, p. IV
 See Kotler/Armstrong (2013), p. 204
 See Doyle/Stern (2006), pp. 67f
 See Ciotti (15.12.2016)
 See Figure 2, p. V
 Whole Brain Group (13.12.2016)
 See Pride/Ferrell (2016), pp. 181f; Hüttenrauch (2016), p. 45
 Kotler/Armstrong (2013), p. 203
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