Q1
Market segmentation is the division of a substantially homogenous market into potential customers that are readily identifiable in well-characterized segments. Market segmentation is essential for companies since it makes it easier to match the customer’s wants and needs closely. The firm can create better marketing strategies and planning since it is easier to predict the reactions to the activities of the marketing programs. Marketing organizations enables companies to recognize the potential customers who are more likely to buy. Market segmentation identifies consumers according to their traits and abilities and willingness to purchase products allowing the marketers to identify the consumers who can buy the company’s products and services. The marketers learn and understand their customers better through market segmentation, which is essential in providing better services. Identifying the customers who are less or more likely to buy the products of a company enhances the ability to project the expected return on investment. When marketers can identify the prospects that will highly likely purchase, the return on the marketing investments is high. Defining the amount of investment that should be allocated for each segment increases the benefits obtained from a marketing strategy, thus efficient use of time and resources. Introducing budgets for the market segments leads to lower costs and increased profitability. The creation of marketing strategies based on the marketing segments increases the realization of sales since it ensures that the activities in marketing and sales are more focused.
Some of how companies may segment the population include demographic and behavioral aspects. Demographic segmentation may consist of segmentation on the qualities of gender, income, age, and nationality. Understanding the various attributes of the consumers is plays a vital role in defining the purchasing power of the customers and their willingness to buy a particular product. Different genders have different tastes and preferences and have variant willingness to purchase a specific product. For example, men associate the value of a car purchase to the interior layout, exterior styling, ruggedness, and technology, whereas women are more likely to value cars based on safety, affordability, durability, and reliability. Various age groups have different willingness and ability to buy multiple products and services. The age group between 18 and 34 years, for example, are more likely to spend money on vacations than the rest of the age groups. For the behavioral segmentation, the segments are based on aspects such as brand loyalty, price sensitivity, and the intensity to use a product. Behavioral segmentation requires the company to understand the actions of the consumers.
The activities gained from the customer may be related to the company or may be described further from the brand. In brand loyalty, some consumers are more loyal to a particular brand and are less likely to change their brands. However, other consumers are spontaneous and are expected to purchase various brands that fit their needs and wants. In price sensitivity, some consumers are more sensitive to change in price, and a slight increase in price would lead to a massive decline in sales. The intensity of product use analyzes how often a customer purchases a product or services where a frequent buyer can be given an incentive to buy a particular brand and become a regular consumer. The frequency of product use determines the retention of the customers, depending on how a consumer perceives the goods.
Q2
The decline of sales of the company can be associated with the brand value and equity of the soft drink. A brand needs to put out a clear message about what it stands for and how it differentiates from the competitors. Brand equity ensures the products are well-positioned, and the customers internalize and understand the brand clearly by using it consistently. The role of branding has changed and impacts the generation of sales. In products and services that consumers don’t consume regularly and connect with the brand, the eventuality is a decline in the realized sales. A brand should create interest and develop a strong impression amongst the consumers. The producer of Purple Soda may lack the essential tools in improving the perception of the brand, such as an attractive logo, a memorable tag line, and a company name that resonates with the consumers. The soda may lack the distinction from other brands, which taints the image of the brand. Ultimately, the branding of the products affects the value perceived by the consumer and hence the price and generate sales. Taking an example of the soft drink industry in 2012-2013, they experienced a decrease in sales by 3% due to a decline in the word of mouth impressions by 6%. There was a decrease in the people consuming soda, and thus fewer people were talking about the drink.
The company seems to have failed in maintaining the image of the company that promotes confidence in the performance and quality of the soft drinks. After creating unique names and images for the products in the mind of the consumers, it is vital to communicate effectively through the advertisements campaigns with a consistent theme in branding. The campaign for the Purple Soda seems to have gone wrong, and that’s the reason why the response was jokes about it on the online platforms. Despite its association with a significant music band, the marketing strategy was not received well by the customers due to the reduced brand equity. The advertisements are less interactive, and the dominance of the company of the online space is quite limited. Recently, social media has become a crucial part of interacting with consumers and making advertisements. Ensuring that the social media communities identify with a brand value increases the chances of a successful advertisement strategy. A decrease in social media conversations characterized the decline in sales in the soft drinks industry.
To regain sales, I would recommend that the company improves the brand equity of the company. The company can adopt marketing strategies that sell the image of the brand and easily resonate with the consumers. The logo of the company can be improved to make it visually attractive and make a marketing campaign that is easily memorable for the consumers. The brand should distinguish themselves from their competitors and be unique. The company should ensure that every time a customer consumes its drink, the customer’s experience reinforces its uniqueness and recognize its differentiation point. Brand awareness and communicating what the brand stands for is more likely to reshape the perception of the consumers towards the brand. The company should also increase social media interactions to increase their sales. For example, the soft drink industry in 2011-2013, increased social media conversations by 23 %, to boost their purchases after a decline.
Q3
Recommendations for brand A include conducting market research that aims to define the target market of the company. The company should identify and understand the target market to ensure that the price and product line that they choose fits with the needs and wants of the consumers. When aiming to achieve a larger target audience, it is crucial to put into consideration significant aspects of the target market, such as their willingness and ability to pay for the chocolates. Different characteristics of the target market, such as age, gender, income, and nationality, affect the consumption of chocolates. Different age groups have an unusual willingness to buy a product, and the age group that consumes more chocolate is highly likely to purchase chocolate regardless of the price. However, for people between the age of 12-18 may be willing to consume more chocolate but have fewer abilities to buy. Understanding the income of the target market will ensure that the company caters to the more substantial part of the market by setting an optimally standard price. To ensure that the company increases its target market, it should be more inclusive in setting the price of the chocolate, which is mainly available and accessible to a wide variety of target markets. The product line should be developed concerning addressing the various characteristics of the target market and ensuring that more potential consumers achieve their needs by accessing the variety of products offered by the company. The aim of the product line development should be focused on addressing the various compositions of the target market rather than achieving maximum profits. It should maintain a relatively similar price and should offer alternatives to the broader target market. It should encourage cross-selling where people don’t have to purchase chocolate from other producers. The product lines should be longer to ensure that they increase the growth in the target market. Taking an example of Cadbury, the company offers a wide variety of product lines such as dairy mi chocolate, crème egg, rose’s selection, and a range of confectionery products. In chocolate confectionery, Cadbury has a market share of over 70%.
For brand B, I would recommend that the company understands the various aspects such as production and distribution cost, the competitor’s price, and the size of the target customer base. The company should set relatively high prices that realize more significant margins and should remain highly competitive compared to its competitors. The company should aim to provide higher value for the chocolates and increase the perceived value hence maintain high prices to generate greater profits. The product lines for brand B should be slightly differentiated but keep fewer unique products to ensure increased profits. Taking an example of Ferrero Rocher, it creates chocolate bars that are differentiated with the sleeker look to being premium and an individual gold foil wrapping. The packaging of the chocolate is unique, providing for an increase in the perceived value. The product line should encourage up-selling, where it moves the buyers to an expensive taste and preferences with higher perceived value. The company may resolve to change the compositions and packaging of the products to ensure that they remain increasingly attractive to the consumers. The product line should offer higher prices to provide more significant margins and increase profits and enhance more growth.
Q4
The ALS ice bucket challenge campaign was successful because of its authenticity and personalization. The campaign was new and unique, which appeared to grow from the grassroots base and spread into heights involving the realm of celebrities and beyond. The people were able to watch the participants pour the bucket of ice water on them consisting of coldness shocks from the ice and were very messy, which seemed entirely authentic. The challenge connected with ordinary people to raise awareness of the disease. The challenge was found to be genuine, which made people voluntarily participate in it. The perception and attitude of individuals towards the challenge was highly improved. The strategy used in marketing involved marketing experts and psychological researchers who made a combination to capture the attention of its audience entirely.
The participation of the celebrities in the challenge, help boost the success of the campaign through influence. They acted as the aspiration reference groups which were desired and admired by the public and wanted to emulate them. The marketing campaign selected the necessary media as the source of their campaign. The use of social media to promote the campaign, created content that is user-generated, rather than using the prepared adverts by the marketers. The campaign involved real people, which many of the people knew and were doing something tangible that others could emulate. The challenge didn’t include paid advertisements or pushy taglines. However, it involved a directive to the cause of the challenge through the popular hashtags. The free will of the audience was captured and led to participate in it and donate. ALS Association was keen to ensure that they kept a record of the results of the campaign and gave an update on the progress of the donation compared to the previous years. The measurement of the progress of the campaign outcome encouraged more people to participate in it and make more donations.
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