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Principals of Marketing

In the current essay I would like to consider what segmentation is and discuss different segmentation bases on the certain product/service. For this essay I would like to consider coffee and coffeehouses market and pick up Starbucks as an example. To begin with, it should be noted that segmentation – is the division of the market into groups of customers with similar characteristics, in order to study their reactions to a particular product or service. As a fact, segment – is a group of customers having similar needs, desires and opportunities. The division into different segments of the market and their subsequent study enables companies to focus on the most promising in terms of profitability segments. As a rule segmentation can be performed both the consumer and the industrial market. Consumer market segmentation can be performed on several grounds: geographic, demographic, psychographic and behavioral, each of these characters has its own variable, according to Market Segmentation (2009).





In my opinion, in certain case of coffee and coffeehouses business, the two main segmentation grounds should be used, among them are: segmentation of behavioral traits and segmentation by demographic characteristics. It can be said that segmentation of behavioral traits is to allocate groups of customers based on their knowledge and qualifications of both the users and their reactions to the product. There are following variables of such segmentation: the intensity of consumption (low, medium, high), the degree of willingness to purchase (does not know anything, knows something, informed, interested), user status (non-users, former users, a potential user) the degree of loyalty (weak, average, strong, absolute) and the utility purchases (savings, convenience, prestige), according to Market Segmentation Analysis (2010). It should be noted that Starbucks has leading positions in the coffee market both in the U.S. and in the world. The company’s main audience are middle and high class, who is ready to pay reasonable price for high quality coffee and best service, which help them to economy their time. Moreover, Starbucks is oriented on high intensity of consumption and can be characterized as a coffeehouse, where you can pick up a cup of coffee in the morning, while you are getting to the job and also take your time with friends in the evening having a cup of coffee. Also, Starbucks has the highest degree of willingness to purchase its products by customers in the market, because the company is a market leader in its segment. It can be said that Starbucks is one of the most recognizable brand in the world – that is why the willingness to purchase this coffee is extremely high. Consequently, Starbucks has absolute degree of loyalty by the customers and the utility of purchases can be named convenient.


As a matter of fact, the main competitors of Starbucks on the U.S. market are 7-Eleven and Dunkin Donuts. As a Starbucks, each of these brands are widely and well-known. It is essential to note that despite Starbucks and Dunkin Donuts, 7-Eleven has different positioning on the market. The company is positioning itself as the network of small shops, where you can not only buy products, but have a meal and spend time with hot or cold beverage. Dunkin Donuts, in turn, is positioning itself as a Starbucks, as the place where you can buy coffee and donuts to go, as well as spend time in the coffeehouse.


The second group is segmentation by demographic characteristics, which divide the market according to such variables as age, sex, family size, occupation, income, education, nationality, religion. Segmentation by demographic characteristics most often used by companies in marketing research, because the reaction of customers to a particular commodity more dependent it is on the demographic variables, according to Market Segmentation Analysis (2010). I presume that all these companies are major players in coffee and coffeehouses business in the U.S. market – that is why it is not surprising that all of them are positioning themselves as the companies for all groups of population. All these companies provide the best service to coffee lovers – no matter of their sex, age, nationality or religion. Moreover, it can be said that Starbucks, 7-Eleven and Dunkin Donuts are global players, and with the aim to cover all segments of population in many countries around the world, they have developed unifying standards, that make their products and services of interest to a wide range of people with different demographic characteristics.


To sum it up I would like to say that segmentation – is the division of the market into groups of customers with similar characteristics, in order to study their reactions to a particular product or service. The division into different segments of the market and their subsequent study enables companies to focus on the most promising in terms of profitability segments. As a matter of fact, the main competitors of Starbucks on the U.S. market are 7-Eleven and Dunkin Donuts. As a Starbucks, each of these brands are widely and well-known. All these companies are major players in coffee and coffeehouses business in the U.S. market – that is why it is not surprising that all of them are positioning themselves as the companies for all groups of population. All these companies provide the best service to coffee lovers – no matter of their sex, age, nationality or religion and correct segmentation is one of the key elements of their success.

References


Market Segmentation Analysis (2010). Retrieved July 30, 2011 from http://www.buzzle.com/articles/market-segmentation-analysis.html
Market Segmentation (2009). Retrieved July 30, 2011 from http://www.businessplans.org/segment.html