Role of market segmentation & diversification

The market is not a single but cohesive unit it is a seething, disparate, pullulating, antagonistic, infinitely varied sea of differing human beings every one of them as distinct from every other one as fingerprints everyone of them living in circumstances different in countless ways from those in which every other one of them is living. This description of a market is a colourful representation of popular marketing thought on the composition of markets in the late 1950s and 1960s. Smith (1956), introduces a marketing strategy labelled market segmentation, as an approach to competing successfully in the reality of an environment of imperfect competition. The original article by Smith (1956) introduces market segmentation as a strategy. Market segmentation strategy was considered an alternative to product differentiation strategy to deal with diversity in the market. While the initial representation of the market segmentation strategy is based in economic theory, market segmentation developed as one of the most foremost concepts in marketing thought. At a broad level, market segmentation provides a marketer with a clearer focus oncustomer needs, and thereby aids decision making for improved competitive advantage . While highlights market segmentation as aiding decision making in general, some specifies what exactly segmentation analysis can achieve. In identifying groups of customers with similar needs, a marketer has the information required to target the most profitable group with the most potential. With this knowledge a marketer can develop product lines and promotion activities, choose advertising media, advance positioning of offerings and improve timing of advertising to appeal to the segment of the market whose needs possess the greatest profit potential. A critical decision to be made in conducting segmentation research is choosing an appropriate segmentation base. A segmentation base is the criteria used to divide the defined market into groups of consumers with similarities. At the most basic level a market can be split up according to the profiles of the

consumers. Variables such as emographics, geographic location of consumers and the socio economic class to which they belong, are considered profile segmentation bases. The behavioural segmentation category includes bases such as usage occasion, benefits sought, perceptions and beliefs, while the psychographic bases category includes lifestyle and personality variables as a means for identifying groups of consumers with similarities. The more abstract and less concrete the information required for the segmentation base, the more difficult it is to measure responses and their link with behaviour. In choosing a segmentation base for a wine market study there are a number aspects to the market which need to be considered. Literature on wine consumer behaviour focuses on two areas; the factors influencing baby (as a consumer) behaviour and mother as consumers who in purchasing decisionmaking process. An effective wine segmentation study would be one which aids understanding of these two areas and aids marketers in evaluating how stimuli, such as brand positioning strategies, influence wine choice. According to Bruwer et al. (2002), wine markets have been segmented using all the bases identified above. For the purpose of an Irish wine market segmentation study, behavioural segmentation with an involvement basis proves a suitable choice as it is an approach, which yields insight into consumer behaviour, but is not overly difficult to measure. Employing a behavioural segmentation base allows for the decision making process and the influencing factors of the Irish wine consumer to be tested and makes the process and the factors the basis for splitting up the market into meaningful and actionable segments. A key consideration in exploring the consumer decision-making process and consumers evaluation of alternatives, some illustrate how consumers have preferences according to the bundle of benefits they are seeking such as a economic value and nutrional value. The challenge in understanding these preferences is the large number of food products attributes which exist, and therefore, the greater number of possible bundles of benefits that are present. By All that explanation market divesification comes. There where many interest and need in consumer who influence decision-making process.

Pricing Strategies Pricing has a huge impact on profitability. Pricing strategies vary considerably across industries, countries and customers. Nevertheless, researchers generally concur that pricing strategies can be categorised into three groups there are cost based pricing, competition-based pricing, and customer value-based pricing. In this case we sure that Indofood as a Sun & Promina mother used a combination based pricing to separate a market segementation. There are needsbased market. The best approach to market segmentation is one that takes customer needs as the primary segmentation variable. Such a needs-based market segmentation enables marketing and pricing strategies to cater to a variety of market segments rather than being restricted to the segment that is presumed to care only about price. An effective needs-based market segmentation not only identifies the size and composition of the price-driven market segment (which is never 100 percent of the market), but also delineates the nature and size of other market segments of customers (for whom product dimensions other than price have value). Cost-based pricing derives from data from cost accounting. Competition-based pricing uses anticipated or observed price levels of competitors as primary source for setting prices and customer value-based pricing uses the value that a product or service delivers to a segment of customers as the main factor for setting prices.

Reference
Bruwer, J., Li, E. and Reid, M. (2002), Segmentation of the Australian wine market using a wine related lifestyle approach, Journal of Wine Research, Vol. 13 No. 3, pp. 217 -42. Kotler, P. and Keller, K.L. (2003), Marketing Management, 12th ed., Pearson Education, Prentice Hall, Englewood Cliffs, NJ. Smith, W. R. (1956), Product differentiation and market segmentation as alternative marketing strategies, Journal of Marketing, Vol. 21 No. 1, pp. 3-8.