How might segmentation analysis help a- tesco stores decide on their future marketing strategy b- Heinz decide on the marketing of their marketing strategy?

Answer 1

"Market Segmentation is the division of a market into homgenous groups of customers"

[http://www.quickmba.com/marketing/market-segmentation/ this website provides a great overview of segmentation, definitions and scope etc...]

The important thing (that some people forget) is that segmentation should not be considered on its own. Segmentation is one part of a much broader concept, Segmentation, Targeting and Positioning (STP).

Targeting means sending the right message to the right recipient at the right time [http://www.the-cma.org/?WCE=C=47%7CK=225551]

Positioning is the process by which marketers try to create an image or identity in the minds of their target market for its Product, Brnad or organization. It is the 'relative competitive comparison' their product occupies in a given market as perceived by the target market. [http://en.wikipedia.org/wiki/Positioning_(marketing)]

With those definitions in mind we can now move on to the more specific details of your question.

Modern marketing is about putting customers at the heart of your organisation, customer orientation. So we tend not to talk about products but solutions to problems; the customer has a problem or a need, the successful company must develop a solution to that problem.

It would be pretty dumb to assume that everyone has the same problems and the same needs. That's why mass marketing often fails and the new buzz word 'mass customisation' comes in.

Lets take Tesco, 1 in 3 of every pound spent in the UK is in Tesco. It's massive and growing, Tesco is all over the UK, but if you go into a Tesco in Scotland you will find many differences to a Tesco in Cornwall. To use a cliche, the Scotts might want Haggis and the Cornish would want Jam, clotted cream and scones - that's Geographic segmentation. Or, think about the difference between a Tesco in Kensington (Central London) and a Tesco in Moss Side (Manchester), i know its a cliche but one will have tonnes of smoked salmon and the other would have more smoked kippers.

Do you see? If Tesco wanted to open a new store somewhere, they would identify which segments are more prominant in that area and then use targeting and positioning to appeal to those main segments in a compelling and mutually useful way.

Another form of segmentation Tesco might undertake is demographic segmentation. Say Tesco had a store somewhere and they realised that the majority of the customers in that store were young families, Tesco might identify that in the area is a number of retirement villages or something like that and tesco wants to increase their sales to that segment, well they'd probably do a series of campaigns that target that segment (perhaps leaflets or direct mail) and so stock up on the Ovaltine - that's demographic segmentation.

The main thing is to develop targeted product offerings that work for different segments. A good way to understand this is to consider the following model by Phillip Kotler. (http://www.provenmodels.com/16/five-product-levels/Philip-kotler)

This model represents a stylised, generic product, for a proper explaination check out the weblink above. Differentiation and competition normally occurs on the augmented level. For Tesco, it would almost certainly occur on the Augmented level because there is very little difference in the products offered by tesco, sainsbury, asda, etc... a carrot is a carrot, Tesco sells 90% the same stuff as Asda. It's the extra bits that give one an edge over the other, price, customer services, the staff etc... Hence, differentiation and so STP can be manipulated by understanding the different levels of at which this can occur.

Heinz Baked Beans. Heinz baked beans have a broad appeal in the UK. Us Brits eat more per head than any other nationality. However, there are some segments that probably eat a lot more than others. For instance, college and uni students probably eat more than their fair share. Heinz is a much loved brand in the UK, be it Ketchup, chilli sauce or beans. This is purely conjecture, but i guess the richest upper classes don't eat that many baked beans. Hence, there is a segment to which sales could be increased. However, Heinz would need to develop the product offering so that it targets this new segment in a more effective way. (more to come at a later date)