KANENUS COLLEGE

DEPARTMENT OF MARKETING AND

SALES MANAGEMENT
INDIVIDUAL ASSIGNMENT
BY
ALMAZ NEGASH
ID.No.: 079/16

JUNE 2024
ASELLA, OROMIA
 1. AFTER YOU OBSERVE ASELLA MARKET
A. Write Segmented Market
Market segmentation is a marketing strategy that uses well-defined criteria to divide
a brand's total addressable market share into smaller groups. Each group, or segment, shares
common characteristics that enable the brand to create focused and targeted products, offers and
experiences.

A brand's total addressable market can have a variety of needs, challenges, preferences and
buying criteria. Market segmentation carves out focused portions of a target market in order to
create messaging, products and services that are customized to those segments.

Market segmentation can be a competitive differentiator. Customers served by market

segmentation campaigns may perceive that a brand's messaging and products were specifically
tailored to them.

Why is market segmentation important?

Market segmentation results in more effective and efficient marketing, advertising and sales.
Rather than targeting a broad audience with generic messaging and offers, market segmentation
enables brands to provide offers specifically tailored to each segment's needs.

Consider an advertising campaign organized around a particular market segment. A brand can
select relevant targeting criteria to reach users who fit the criteria of that market segment.

Market segmentation can result in a campaign that is both effective and efficient: Audience
segmenting and customized messaging drives higher success rates, while advertising dollars are
only spent to reach the defined audience. The same non-segmented campaign would suffer from
lower response rates, with a portion of the advertising budget wasted on the wrong audience.

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 B. Profiling the Segmented Market
Market profiling and segmentation generally yields customer profiles that are based on the
customers’ geographic location (geographic), traits or characteristics (demographic), personality
and lifestyle (psychographic), and buying patterns (behavioral). Altogether, profiling and
segmentation-related activities will help business owners understand the reason behind under-
performing business areas or marketing campaigns that did not fare well among others.

Kinds of Profiling
When a business profiles or segments its customer base, they can be more aware of the risk
patterns, the level of profitability, and their customers’ demographic, psychographic and
behavioral characteristics. This information can be used by the company in developing and
advancing its products or services, modifying its customer service, choosing its media and
channels, and in target selection.

The three commonly utilized types of profiling and segmentation are RFM, demographic, and
life stage.

Recency, Frequency, and Monetary Value (RFM)

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RFM is a segmenting technique that is based on the customers’ purchasing behavior. The main
purpose of RFM is to better the efficacy of the company’s marketing efforts to its current
customers.

Recency

Recency refers to the total number of months since the last procurement. It is also considered as
the most powerful instrument in forecasting replies to ensuing offers amongst the three. The
logic here is that a consumer who purchased something from the company not long ago is more
likely to make a purchase again, compared to someone who did not buy anything recently.

Frequency

Frequency pertains to the number of acquisition. This includes procurement in a given period of
time or encompasses all purchases made.

Monetary Value

Monetary value is the overall currency amount. Against Recency and Frequency, monetary value
has the least ability and forecasting responses. This value shares similar attributes with frequency
where it involves a certain time frame or all purchases made.

Demographic

The major concern in demographic is to look for people who do not belong to the local
demographic characteristics. However, it is perceived that individuals who reside in the same
locality often have similar behaviors.

There are various approaches on how to segment database and create consumer’s profile, which
can be used in targeting, creative design, and product development. It can be based on their age,
marital status, gender, etc.

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Life Stage

Everyone adheres to patterns which change as time progresses. These patterns are rounded up
according to demographics such as age, gender, and marital status to constitute the life stage
segments. These segments are further classified into young singles; couples or families; middle-
aged singles, couples, or families; and older singles or couples.

Market Profiling and Segmentation

Market profiling is basically enhancing the company’s knowledge regarding their typical
customers. The entire process utilizes information to profile or describe the business’ clients or
target customers. Profiling can be conducted either in its entirety or in subsets (segments). The
general idea here is that no customer can be a part of two or more existing segments.

Collecting consumer data involves three steps. First, identify your clients. This is associated with
knowing the range of their ages, geographical background, income bracket, lifestyle habits, etc.
Next, recognize and comprehend the interplay between the company’s customers and the
company’s products or services. When do they buy your products? How much are they willing to
spend for it? How frequently do they make a purchase? Lastly, determine and understand how
the customers regard the company’s product or service. For instance, does the company offer
products or services that fulfill their client’s basic needs?

Market segmentation is associated with making intelligent decisions regarding the relationships
of the aforementioned information, in order to establish groups or patterns within the company’s
customers. Basically, it divides the business’ customer base into clusters that are characterized
by similar age, gender, or interests, among others. Through market segmentation, companies are
able to effectively target groups and apportion marketing resources.

Market Segmentation versus Market Profiling

There are disparities between segmentation and profiling, although the former is usually
combined used in conjunction with the latter. Profiling is not ideal when specific segments of the
population are being identified. An example is profiling persons with disabilities (PWDs). They

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are divided among various neighborhood profiles. Similarly, segmentation, e.g. gender, is
seldom identified with a neighborhood.

Basic Segmentation Techniques

There are two common approaches when segmenting the market: market-driven and data-driven.
In a market-driven segmentation technique, managers utilize the attributes that they deemed to
be as important business drivers. To put it simply, they pre-select the features that characterize
the segments. On the contrary, a data-driven segmentation technique employs methods like
cluster analysis in identifying homogeneous groups.

Pros and Cons of Market Segmentation

The most pronounced advantage of market segmentation is that it provides a more competent
advertising. Advertising is a lot simple and forceful when the market is segmented. Various
marketing alternatives will become more evident and accessible too. In addition, market
segmentation helps companies to develop new products, discover undeserved markets, and spur
them to be focused. Be that as it may, market segmentation drives the cost, as well as promotion
and distribution expenses to swell. It can also provide inconvenience since a larger inventory has
to be managed by the distributor and manufacturer. Moreover, changes in the characteristics of
the market will render market segmentation pointless and useless.