Q.
Through market segmentation, organization divide large heterogeneous markets into smaller segments that can be reached more efficiently and effectively. It has to use different segmentation variables for this purpose.
a) Outline the four (4) major variables that can be used in segmentiatng property buyers. (20 marks)
b) Clarify the requirements for effective segmentation. (5 marks)
(25 marks, 2017 Q4)
A.
a) 4 major variables in segmenting property buyers
1. Age group - demography - characteristic of people, income bracket.
2. Education level - executives - status, class or psychological trait.
3. Family size - small and with one or no child - psychographic use situation.
4. Information savvy - business people - behavioural, always need to be connected.
Table refer to Abdul Hamid Mar Imam (2002) An Introduction to Property Marketing, page 218.
In short, target segment can be sub-selected for a focus promotion in a marketing plan. Below is an illustration of how the above example is put in place for marketing a residential housing project.
From market survey, current market demands small unit of apartment of about 1,000 sqf with security and amenities. Price range for this type of apartment in the market place is RM400 psf. Locality is near to LRT/MRT.
Hence the property organization would have to design a product based on preliminary market finding above and construction within the cost and affordability bracket.
Thereafter, the marketing plan would target this segment of demographic age - young executives who are graduates earnings at junior executive or managerial level. This target group would want status that commensurate with their social behaviour as professionals.
As property in this category would be RM400,000. Hence, it is considered affordable when their salary range is around RM5,000~6,000 per month. The obstacle of getting a mortgage would be minimum as most of them could have some savings. They should be able to commit repayment of RM2,000/month for 30 years.
This target group, being single or newly married would fit in the category of small family, with one kid or no kid. They do not require a big house. Therefore, these small families would prefer ancillary services like security of guarded and gated community, condominium or service suite. They probably also go to sweat club, gym and being member of recreation clubs. Thus, promotional activities would be tailored to this target places/clubs.
Lastly, the behavioural aspect of information savvy, always need be connected would very much characterize this target group distinctively from others. The promotional strategy of the property organisation would thus capitalize this characteristic via social media like Facebook, Instagram and WhatsApp/WeChat. This segment of the buyer would likely be attracted to birthday parties or member's night at sweat clubs/gyms. Flyers or E-flyers can be linked to these activities for reaching this target group.
In a nutshell, selecting the correct variable in segmentation of the target audience is of paramount importance. The marketing strategy designed for this segment group need to be directed to the target segment correctly for its best outcome. Hence, the segment must be well identified and mode of promotion must also reach them effectively.
b) Requirement for effective segmentation
Read more about the key characteristics of market segmentation bases here.
Effective segmentation has everything to do with the correct selection of bases. If not, the segmentation becomes ever moving, changing its course all the time. For example, choosing segment for online education. If the base for segmentation is hand phone, which means a secondary school teenager who uses hand phone may be a target audience.
In this segmentation, the base - hand phone is too broad. A more specific segmentation base is using hand phone for assignments, then this group would be more defined than the earlier group.
Its selection bases have to be easily identifiable. Ownership of hand phone is easily identifiable, rather than household having hand phone. If household having access to hand phone, that is even worse than household owning a hand phone. Of course, the teenage of age 14-18 years old having a smartphone is the most ideal.
This selected base for segmentation, in the example above is hand phone, should not be a moving target. This means hand phone is quite a permanent item, it is not changing all the time. In contrast, if online education for teenagers were to be based on preference of computer game, say Plant vs Zombie, then due to preference change over time, the measurement of this market segment would only fluctuate. There can be high response when the game is given a new feature. However, the next day teenagers get bored and switch to other games. Then, this target segment is not constant, and thus ineffective in identifying the correct audience.
The aim of this segmentation is to have a distinct identifiable target group where specific strategy of marketing can be directed at them.
Ref:
Own account.