BBA 4951 Unit V Journal

BBA 4951 Unit V Journal

As discussed in the lesson, market segmentation involves dividing a larger specified market into smaller, more distinct sub-markets according to the needs and buying habits of customers. Market segmentation is one of the most important contributions that marketing as a whole makes to the strategic management process. As a car guy who loves all things cars, one very effective form of market segmentation that I have witnessed involves product upgrades within the automobile industry. Over the past few years, maybe a decade or so, many car companies who made a name for themselves as producers of cheap, but reliable lower level car brands have begun to expand and launch new luxury vehicle line ups to reach a portion of the market that they previous did not. Two great examples of this are Kia and Hyundai. Both brands established themselves in the U.S. years ago by producing dependable low-cost vehicles, offering nearly unmatched warranties. As these brands have grown in popularity, so too have their line ups. Hyundai launched an entirely new luxury line-up branded under the name Genesis, which sells high-end luxury vehicles up into the $60,000 range. Though considered a bargain price compared to most luxury brands, Genesis luxury vehicles offer the same level of amenities as many of the luxury brands selling vehicles for upwards of $100,000. The same goes for Kia. The company began by adding luxury and sport packages to existing vehicles in their line-up such as the Kia Optima and recently expanded beyond that with the release of their new Kia Telluride. The new Telluride offers very high-end luxury finishes, with exterior styling to match, at a fraction of the cost of many other high-end luxury SUV’s. The automobile world should take notice of these once “lesser” brands before many put themselves out of business.

Determining whether market segmentation is effective or ineffective is assessed by a number of different criteria. First, effective market segmentation is measurable and obtainable meaning, the size, profile, and other characteristics of the market are actually measureable and obtainable in terms of data. Second, in order to be effective it must be sustainable, it should be of sufficient size and not unjustifiably large for the budget allowed. Next market segmentation should be appropriate and match the organizations objectives and available resources. Finally effective market segmentation is differentiable. This simply means that all customers within a market segment have similar preferences and characteristics. These are just a few of the many factors to consider when determining if market segmentation is effective or ineffective.

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