Marketing report help: Segmentation of company  

Executive summary:

Intend of this report is to highlight the role of segmentation in a company when it plans to go international. In this context, a brief outline of market segmentation of the products has been presented. The analysis has to be made on the basis of a company so that practical implications can be discussed. Further, most significant factors playing role in segmentation of international markets also have been identified. The entire analysis is based on the firm chosen for the study of report. Therefore, an introduction of the relevant company is an essential part of the report. Moreover, a line of its products have also been introduced to define the segmentation for it. Next, a separate section has added to the report for making recommendations. The recommendations are concerned with the information that company can take into account while conducting the segmentation analysis. Afterward, some decisive points have been drawn out of the entire report to put the conclusion forward. 

Introduction:

The company being chosen for the report is ‘Elegance’ a cosmetic company situated in Sydney. It has a multiple line of products which it offers to the customers. The company offers the product and takes care of both beauty and health into mind simultaneously. Apart from this, company conducts market researches and collects the data from the Web to know the diverse behavior of customers and also perception and their opinions. The elegance company has set different sections for the segmentation and to offer its multiple chains of products in the country. For that, it makes sure that a complete research has been conduct in order to know about different cosmetic brands and their relevance to the industry. Next, company has decided to go internationally. For that, it needs to conduct segmentation for its products to be offered at international level. Elegance has mainly targeted the audience of Germany, UK, United States of America and others.

Following this, role of segmentation will be defined in the next part of the report helping company to go international.

Literature Review:

Segmentation refers to the subdivision of the market into different subsets of such customers that have the parallel kind of requirements, behave in the same way and also have the same level of perception for a particular product. Therefore, each section made for the target market is reached with the different strategies. It is noticed and made a point that is should be measurable and also large to earn good profit. Market segmentation criteria articulate that the level should have the stability factor so that it does not fade away after a point of time. Through market segmentation, it becomes easy to reach the target and potential customers with the help of promotional strategy and distribution channels of the company. Alternatively, a situation can also take place where potential customers can have distinct preferences and qualities based on different segments (Hunt & Arnett, 2004).

Furthermore, there are a number of basis defined for the segmentation of consumer market. First is geographic segmentation that is based on the segmentation of geographic criteria such as national, state, countries, cities, zip codes and regions. Next, demographic segmentation based on age, family, marital status, gender, size, level of income, education and moreover nationality. Afterward, psychographic segmentation comes forward in light that is based on customer’s lifestyle, values, attitudes, status and beliefs (Salah &Stephen, 2005).

Role of segmentation in international market:

Elegance has planned to go international through it wants to make an entry into different countries with its target market. Here, international market segmentation comes into consideration because it has become a major concern while expanding, developing, positioning and selling a company’s products across its national border. Similarly, by developing and conducting a new segmentation, a company can automatically increase the revenue and also raise the market return on the investments made by it. But for this, it is necessary to know the role and importance of the segmentation for international market planning. Therefore, some of the following points have been discusses in response to the role and importance of international market segmentation.

Understand customers: First of all, segmentation helps understanding the new target and potential customers for their particular brand. Additionally, company gets a fair idea on why the people of that country would like to buy their product based on their preferences for products such as, quality, price, outlook, stability, name of the brand, etc. In this case, the customers of different countries might have found rational or irrational. Apart from knowing the target customers it also helps developing the profiles of diverse kind of customers who may buy the product of the organization making international entry (Market reader, 2012).

• Maximization of product prospective: Segmentation helps to know on how the products of that particular organization are used by the group of different customers. On the other hand, the alternate use of the products offered by the organization can also come across during the segmentation, which had not previously been discussed or put forward. This further helps discovering a new and prospect market for the product. All the information obtained from the segmentation makes company capable enough to enter internationally.  This results in the additional information of product’s use which provides a clear way to the organization for offering its product differently at international level (Bains. Et al, 2005). 

• Distribution channel improvement:  When a company conducts segmentation, it gets to know the way customers want to acquire their products. In this way, company can develop more effective distribution channels according to the customers’ requirements. Therefore, with the help of this segmentation, company can put across the customers’ preference at the time of making entry to international market. If a large group of customers prefer to buy the products online rather than going at retail stores, then in this case it can focus on the online presence and can reduce its resources for stores. Moreover, market segmental plays a significant role in letting know about the locations and areas where the products of particular brand are much popular (Dibb. Et al, 2001).

• New clients gaining: All-inclusive market segmentation helps identifying the customers who are no buying the product of the company. It brings out the reasons for the product not being purchased. Therefore, by minimizing those issues and modifying the market strategies, company can make best out of it and can grip new clients or its products. But by doing this, it is also important to note that there should not be any risk of losing existing customers. When company plans to enter internationally, it considers all the negative points drawn out in segmentation and attempts to eliminate them before making an entry (Clancy & Kieff, 2004).

Important factors in international market segmentation for firm’s products:

In designing and conducting segmentation research for international market, some key factors should be considered on the top priority. These are geographic location of the country and the point/level of economic development in the country. For the company chosen Elegance, key factors have been defined with reference to the international market segmentation for its cosmetic products. If country characteristic is used as a basis for market segmentation, then it is required to set a link between that country’s characteristic and responses of market particularly (Goller, Hogg & Kalafatis, 2002).

Following are the important factors in international market segmentation:

General country characteristics: All these related key factors can be defined one by one in order to assess the segmentation for Elegance’s cosmetics products.

• Geographic location: It basically depends upon the geographic location in which the company elegance wants to enter. Concerning this, it can take countries on the priority which have close geographical immediacy because such countries follow same cultural patterns and have almost similar climatic conditions. For an instance, European countries have similar cultural patterns as compare to the eastern countries’ different cultures. Therefore, elegance can offer different kind of cosmetic products to the different countries.
• Demographic characteristics: These characteristic mainly age structure of the international country’s population will also provide an expedient basis for the segmentation. As elegance is into cosmetic line, it needs to know the age structure of the country so that it could present the different products for youths and aged groups. It is referred because youths have different perceptions and choices for the cosmetic products. Similarly the average number of females and male persons is also necessary to know before entering in order to make a diverse line for both differently.
• Socio–economic development level: It is also an important factor which helps determining the consumer behavior patterns for cosmetic products. In case of Elegance cosmetic company, socio-economic development is associated with the demand of beauty and health products. It can affect the market size for a specific product, type and quality of the product as well. Elegance offer reasonable prices for its beauty products according to the quality and ingredients it uses. Therefore, elegance should not go for the countries presenting low level of socio-economic development. In that case, it can seek for higher earning countries such as USA, UK and other developed countries (Wind & Douglas, 2001).
• Cultural characteristics: Elegance has mainly targeted women for its health and beauty products. Likewise, it wants to make an entry to the countries where women have same status and also have the rights for purchasing decisions. Factors such as less importance to the family rather than group and low status of women in family having less influence for buying decisions can adversely affect the company’s business. For an example, Elegance can target US for its products because women have relatively high respect there and have the full right to make any kind of buying decision. Alternatively, it is totally different in Eastern countries where men make the purchase decisions for the family (Wind & Douglas, 2001).
• Political factors: The regime of political parties in a country also affects the buyer and seller motivations for Elegance’s products. The effect will be seen in terms of marketing mix of the company which can vary with the state-owned and free organization countries (Gruca, Sudharshan & Kumar, 2001).
• Legal factors: Level of tariffs imposition on goods, patent agreements and other government policies may affect the demand of the products. On the other hand, regulations linked to consumer credit may also affect the demand for major cosmetic products of Elegance Company (Steenkamp &Hofstede, 2002).
• Market conditions: This is one of the most important factors of segmentation which depicts the market scenario of a country including the competition level, attitude of business, and product life cycles’ stages. The competition reveals that there are L’Oreal, Lakme, Mac, Maybelline, Elizabeth Arden are in the line of competition and well-establish brands in many countries. The stages of product life style may impact the needs and interests of the buyer for a particular product. Besides, the role of intermediate market can be powerful in the different countries which will avert the entry of Elegance at an international level (Wensley, 2002).
• Life style characteristics: People’s cultural values, their social class, lifestyles and status are also an important part of the international market segmentation. Families earning higher income are more likely to buy high quality cosmetic products and therefore are not concern about the higher price. Hence, it can be delineated that status symbol also represents the position for a particular brand in new market. In this context, Elegance can put across the market research in order to know the level of high and medium class’ inclination toward their beauty products (Baumgartner & Steenkamp, 2001)

Recommendations:

To make an international entrance, Elegance can conduct best segmentation. For this, it needs to gather more information from various sources.

• Survey: One of the most known sources to gather the information is survey. It can be conducted through a number of different modes such as email, questionnaire, in-person distribution, by making phone calls or via physical mails. These surveys should consider the customer’s needs interests and preferences first while conducting the segmentation survey or a market research. Moreover, in surveys, there should be organized and balanced question concerning the privacy of customer’s need because it will result in the quality of the survey and the level of information required. Apart from this, surveys can be distributed to various similar and different geographic locations and to the current and potential customers (Qualtrics University, n.d). 

Purchase: It is another source from where information related to the customers for a particular region or location can be obtained. For this, Elegance can make a contract with a company that will provide the statistical and descriptive data and identify the market segment for the company. Hence, the purchased data from the contracted company will include the information regarding household income level, education, age and gender in the company’s location area and the countries in which it has planned to make an entry (Hoek, Gendall & Esslemont, 1996).

• Internal data: Furthermore, Elegance can also use its own descriptive sales data and other related databases for a market segment analysis. It will help understanding the buying behavior of its consumers and the key logical parts of their preferences while buying a beauty or health product. This entire data becomes a strong part in revealing the customer’s choice and perception for a particular cosmetic product.

• Focus groups: A focus group can be conducted by the company with its already existing and potential customers. A small group of customers provide in-depth information about the customers’ needs, preferences in terms of quality and price, logical thinking and desires from the product. To conduct this focus group in more effective way, a pre-established number of questions can be taken in order which will rank the segment alternatives. One benefit of this group is that, customers generate the positive points and relative information and talks about the key ingredients that company can add to its brand (Crittenden & Muzyka, 2002).

• Questionnaires:  This is one of the simplest sources of information for market segmentation. In this a set of questions is prepared with the options available to answer from. It is less time taking source and can easily be distributed and conducted at large scale. Different sets can be distributed to the diverse locations and to the customers having similar needs (Hoek, Gendall & Esslemont, 1996).

 Conclusion:

The entire report talks about the role of segmentation in international market and the key factors consideration while making an entry international. Segmentation process divides the subsets of customers having similar or different needs for a particular product. Therefore, the market segmentation has been presented for the company chosen Elegance which offers health and beauty products and is planning to go international. Furthermore, on the basis of overall study it can be articulated that international level market segmentation helps identifying the prospect customers for the company, introduces various distribution networks according to the customer’s preference and interests, and also generate the new clients and helps retaining the existing customers by adding innovation to the products for them. Finally, key factors important in segmentation for Elegance have been put across such as economic, political, legal, socio-economic, cultural patterns, and lifestyles characteristics. In support, examples from some countries characteristics have been raised to identify the important segmentation factors. At the end, recommendation for more information from the sources focus groups, purchase, questionnaire, and surveys have also been made for the firm to grow effectively and to entry at international level.

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