Exam Question and Answer on Market Segmentation
QUESTION AND ANSWER ON MARKET SEGMENTATION
Salim Brommer is the Marketing Director of Ashkol Furniture Supplies, a medium-sized company which specializes in manufacturing office furniture. The company makes its products in India, so benefiting from relatively low labour costs. However, it has recently experienced intense competition from suppliers who have even lower cost bases. Salim has decided that his company will benefit if he focuses on those customers who can provide higher profit margins.
He has decided to target domestic customers in Europe. Increasingly, private households, particularly those with computers, are converting spare rooms into office-style areas. Additionally there has been a noticeable trend towards working from home. This saves employers incurring the costs of office provision, and also employees save on travel and can also work at times convenient to themselves. However, Ashkol has no experience of dealing with these types of customers. The company now needs to develop a suitable marketing strategy to succeed in this new area and maintain a sustainable competitive advantage.
Required:
a. Using a suitable model of your choice, develop a marketing approach which Salim might use to enter this new market. b. Explain how Salim could select appropriate target markets and position his products so as to create and sustain competitive advantage.
Suggested Answer
Salim needs to develop a marketing strategy for entry into the domestic market in Europe. This can be achieved by looking at the factors that make up the marketing mix: product, price, place and promotion.
Choosing a marketing mix
The design of the marketing mix should be decided on the basis of management intuition and judgment, together with information provided by market research. Elements in the marketing mix partly act as substitutes for each other and they must be integrated. The product needs to be positioned to appeal to the target customer. For example, Ashkol would struggle
Salim Brommer is the Marketing Director of Ashkol Furniture Supplies, a medium-sized company which specializes in manufacturing office furniture. The company makes its products in India, so benefiting from relatively low labour costs. However, it has recently experienced intense competition from suppliers who have even lower cost bases. Salim has decided that his company will benefit if he focuses on those customers who can provide higher profit margins.
He has decided to target domestic customers in Europe. Increasingly, private households, particularly those with computers, are converting spare rooms into office-style areas. Additionally there has been a noticeable trend towards working from home. This saves employers incurring the costs of office provision, and also employees save on travel and can also work at times convenient to themselves. However, Ashkol has no experience of dealing with these types of customers. The company now needs to develop a suitable marketing strategy to succeed in this new area and maintain a sustainable competitive advantage.
Required:
a. Using a suitable model of your choice, develop a marketing approach which Salim might use to enter this new market. b. Explain how Salim could select appropriate target markets and position his products so as to create and sustain competitive advantage.
Suggested Answer
Salim needs to develop a marketing strategy for entry into the domestic market in Europe. This can be achieved by looking at the factors that make up the marketing mix: product, price, place and promotion.
Choosing a marketing mix
The design of the marketing mix should be decided on the basis of management intuition and judgment, together with information provided by market research. Elements in the marketing mix partly act as substitutes for each other and they must be integrated. The product needs to be positioned to appeal to the target customer. For example, Ashkol would struggle