50 Strategic Marketing: Planning and Control
marketing mix to satisfy the needs of the consumers in that group
while at the same time building a competitive cost position relative to
other companies in that segment.
● Retain customers: Providing products or services aimed at different con-
sumer segments allows an organisation to retain that customer’s loyalty
as their needs change. As an individual moves through life, their needs
in financial services will change. For example, young single individuals
may need a minimum of credit and banking facilities and car insurance,
younger families, however, will need in addition life insurance policies
and mortgages, in middle age these needs will turn to pension provi-
sion. If an organisation can provide all these services they may retain a
customer who otherwise would transfer to another brand.
An organisation may also be able to use segmentation as a way of
moving a customer over time from entry level products or services to
products at the premium end of the market.
● Focus marketing communications: Segmentation allows an organisation
to identify media channels that can specifically reach the target
groups. For example, young women interested in fashion are likely to
read certain fashion magazines. Rather than spending money on mass-
market media that reach far wider than the target group, organisations
can target their money and effort by using media, focused directly on
their potential consumer group.■ The segmentation process
The segmentation process involves establishing criteria by which groups
of consumers with similar needs can be identified. These criteria have to
establish consumer groups that have the following characteristics:● The consumers in the segment respond in the same way to a particular
marketing mix.
● The consumers within the segment have to react in a clearly different
way from other groups of consumers to the marketing mix on offer.
● The group has to be large enough to provide the return on investment
necessary to the organisation.
● The criteria used to identify the segment have to be operational.
Recently a small company in the magazine market identified a group
of customers that had clear needs. Overseas nationals living in the UK
wished to buy magazines from their home country. The organisation’s
proposed marketing offer was to import magazines from overseas and
mail them out directly to the consumers’ homes. This was a potential
customer group that all responded in the same way to the proposed
marketing mix. They clearly acted differently from other groups in the
magazine market. This potential segment was large and potentially
profitable however this was a difficult group to make operational. You
cannot identify overseas nationals easily as no official organisation or