Marketing is a system of business activities designed to plan, price, promote and distribute ‘want satisfying’ products to customers in the market in order to achieve business objectives.
However, the total market is very large and it would be impossible to develop some strategies that would meet customer’s needs and wants of everyone better. Because of this, businesses break the market down into segments which are so important for businesses to aim at their specific target market. The best relevant business case study to illustrate the selection of market is ‘Sprite’ produced by Coca Cola.The target market needs to be identified.
The target market is the current/ potential customers with similar characteristics. For ‘Sprite’, a new target market was selected to take advantage of the fact that young males drink the most soft drink. In this market, Sprite competes with other products such as Solo, Fanta based on its market segmentation in four key areas: Demographic, Geographic, Psychographic and Behavioural. ?Demographic segmentation: It is the division of the market into groups based on demographic variables such as age, gender, family size, income, education.The market segmentation of Sprite in primary market demographic focuses on the male or teenager whose ages are between 12 and 17. It is based on their ages, income and gender. At the age of 12 to 17, they identify some products with characteristics of ‘Cool Refreshment’. And they cannot afford to some expensive products.
The secondary market segmentation is to concentrate on all lemonade drinkers aged 8 to 29. According to family size, some of Mums and Dads buy soft drink for their families. So Sprite segments its target market to aim at those groups to purchase their products with low prices, and gain more profits. Geographic segmentation: the market is divided by location because it is assumed that the people who live in the same area will probably have similar needs and wants. These can be in the form of countries, states, cities and local neighbourhoods. While, Sprite was produced by any places like Urban.
People lived in urban or cities are likely to spend some money on fashionable and popular products. And their standards of consumption are higher than other people who live in countryside. ?Psychographic segmentation: it occurs when the market is divided into different groups ased on social class, lifestyles and personality characteristics. Nowadays, young males who have their own identity and make their own choice. They have their own lifestyles and motives to be a cool and trendy people. They are not fooled by traditional promotional ploys. They are attracted by creative and unique things.
Based on this current situation, Sprite produces ‘cool soft drink’ to meet these male’s need and wants because its target market are the customers who are being honest and being interested in something fresh with particular personalities. Behavioural segmentation: this is the segmentation strategy when the market is divided into groups based on consumer knowledge, attitude towards use for and responses to a product. It involves purchase occasion, benefits sought and usage rate.
In the context of Spite, building loyalty and repeat custom through relationships management is the way to take advantage of behavioural characteristics. It provides products with low price in many places and it has large customer base. Then buyers can be grouped according to the occasion on which they buy a particular product or service.After identifying the methods used to segment target markets, it is very important and essential for business to develop marketing strategies in order to satisfy the needs of the target market to achieve marketing objectives effectively. Otherwise, in the same way, Sprite also focuses on marketing strategies which include marketing mix of four P’s: product, price, promotion and place.
?Product: Product is a good or service that can be bought or sold in the marketplace that fulfils customer’s need.This strategy refers to 3 particular features: position, branding and packaging. But product itself was not changed as it has already been established by its market to have a great taste. However, Sprite can be available to change in range of sizes from 300ml bottles, 370ml cans to 2 litre bottles. 1. Positing: it is the strategy of placing the business in the market and creating an impression in customer’s mind. Creating a position that will give their products the greatest advantage in their target market. Sprite’ would probably be places below solo, coke, but above Fanta or other stores because of the ‘cool refreshment’ with low price.
2. Branding: is a product feature that adds values to business. And it is the tool to distinguish one company from others. A lot of customers may only buy product because the brand is well know such as Coca-Cola or Sola. During these years.
‘Sprite’ is establishing its own branding to make customers feel a sense of security and predictability. 3. Packaging: is the design of containers which Sprite used. It can protect products and provide information.The packaging of Sprite was changed in order to disassociate the drink with lemonade by designing a new label that reflected Sprite’s new ‘cool’ identity. It involves changing the colours from white to green and blue. It becomes more attractive and fresh.
The circle of yellow and green means carbonation was removed and the only symbol associated with lemonade was a small yellow dot above the letter ‘i’of Sprite. That will make their target market (young children) interested in their fresh products ?Price: Price is the amount of money for which anything is bought, sold or offered for sale.It is a major factor in influencing a customer’s decision to buy because it looks at the value the product and plays a crucial part in the marketing mix because if customers did not accept the price of the product, all other efforts relating to the good would be wasted. This strategy that Sprite used includes some methods: cost price, competition base pricing, market pricing and market penetration pricing. For example ?Cost pricing: It is based on determining the cost of marketing a product and adding a mark-up to that cost to give the business a profit. For Sprite business, a can will sell for about $1. 0, with a production cost of 37 cents.
Then they can gain 63cents per each. About five cents represents marketing which by industry standards is quite high. ?Competition based pricing: it occurs when a business sets it prices with reference to a similar product from competing businesses. Sprite products are price competitive with other soft drinks.
The price is the cheapest in the supermarkets. A can retails for $1. 40 or $1. 00 at a beach kiosk. Applying high prices in a very competitive supermarket will lead to lose sales that wouldn’t be sustainable. Market pricing: it is the price of a product is set in relation to what a business thinks the markets (consumers) are willing to pay for a product. And on the other hand, the target markets of Sprite are young males and teenagers.
They have not got a large amount of money to buy something expensive. Most of them get money from their parents. Due to the low price, young adults can afford its lemonade soft drinks. They are willing to pay the money for Sprite. ?Market penetration pricing: Sprite is being set a low initial price on a product in an attempt to reach a mass market immediately.So it can help Sprite to gain a large number of sales. It also intends to discourage other business competitors. And on average, Coles will pay a lot less for 2 litre bottles of Sprite than a service station.
Then a lot of outlets will pay money for Sprite as products based on saving costs. It allows Sprite to become established in the softdrink market. ? Promotion: Promotion is an activity of informing and persuading their customers to buy their products.
It involves personal selling, advertising, below the line, publicity and word of mouth.However, with the promotion of Sprite, a new advertising campaign was launched to completely beak away from the product’s old image of being ‘friendly and fun’. Due to this reason, they have advertisements on TV and in the newspapers with new slogan ‘Image is nothing Thirst is everything, Obey your thirst.
This gave the products honesty and credibility which translated into sales. They are also having sale in the market and giving discounts to customers. On the other hand, its target markets are mostly young teenagers who like playing basketball and trend to fresh and confidence.That’s why Sprite has an advertisement on TV on Saturday morning to show “The Dream Team’ is drinking Sprite. ?Place: Place is concerned about getting the product in the right place at the right time. It is channel structure that transfer products to the market.
It involves channels, distribution, and transport and inventory control. Different sales outlets or channels stock different Sprite products. ‘Sprite’ has a large range of places to be located. It is intensive market segmentation because people can buy the products anywhere. ‘Sprite’ set up its outlets in these places showed below: 1.Supermarkets (such as Woolworths, Coles, K-mart). There are a lot of people and families coming to these shops to buy some drinks and food what they want. 2.
Petrol station. This is a good location when cars are having more petrol, drivers may feel thirsty. 3. Cinema. Cinema is a very popular place for young adults or teenagers. They organise to the cinema to watch movie together.
They should buy some chips and soft drinks. Then ‘sprite’ might be their first choice due to low prices. So it will help ‘sprite’ expand their target markets and increase the profit.
4.Sports ground. For young males, they like to go to studio to do some exercises. During the exercise, they need some water or soft drinks to drink. So the meaning of ‘cool’. Sprite will attract their attention and persuade them to buy it.
They will enjoy playing basketball and drinking ‘cool and fresh’ bottles. And a business has a choice regarding the number of intermediaries to use. Sprite has indirect channels that are distribution channel in which a producer uses intermediaries to serve the market because the products produced by Sprite are sold by retailers.Otherwise, they use vans to transport their products to each shop. Then Sprite also needs to have inventory control which is the management of stock levels. It is critical that it is controlled effectively. It makes Sprite to ensure products are available for sale when needed holding too much stock.
In conclusion, it is so clear to see that the selecting a target market is very essential and necessary for each business. It will impact on their marketing strategy and help business to focus on their market segmentations to make more profits and manage its market effectively.