Marketers use the market segmentation process to identify the different types of customers and to determine specific needs or wants. By grouping similar consumers together, marketers can send the intended message to the right consumers. To determine Ekornes’ market segmentation, it is important to consider these three aspects; homogeneity, distinctions, and reaction. Homogeneity is grouping the consumers by their common needs. The second aspect, distinction, is how to understand that one group of consumers have distinct needs versus another group. Finally, reaction is when the consumers of a specific group have similar reactions to the advertisement of a product.
There are various ways to segment a market by determining variables such as gender, income, religion, and social class. All of these variables are grouped in four main categories: geographic, demographic, psychographic, and behavioral segmentation. A segmentation strategy can combine more than one variable, the key is to recognize customers’ differences and adjust the market strategies for each of them[1].
Market Segmentation
REFERENCE
[1] Kotler & Keller, 2012, p. 214
[2] http://www.un.org/en/development/desa/population/
[3] http://www.statista.com/statistics/278697/average-size-of-households-in-china/
[4] http://www.tradingeconomics.com/china/wages
[5] http://www.beijingrelocation.com/blog/top-10-richest-regions-of-china/
Geographic segmentation divides the market into groups such as nations, regions, cities, and neighborhoods. This segmentation is very useful for international companies so they can focus their marketing strategies domestically. In order to define the market segmentation of Ekornes in China, the company needs to consider having a stronger presence in the bigger cities than the smaller ones since there is a higher demand. According to the United Nations World Urbanization Prospects, the largest cities of China by population are Shanghai, Beijing, Tianjin, Guangzhou, and Shenzhen[2]. Another point to take into consideration is the average number of people living in households, with this information the company can determine the average pieces of furniture a household demands. According to statista.com, the average number of people living in households in 2012 was 3.5 persons per household[3].
Demographic segmentation is associated to the consumer needs and wants. This category divides the market by groups such as age, gender, nationality, and income. Although income segmentation does not always predict the best consumer purchasing trend for a given product, this is one of the most common tools companies use to target consumers. Ekornes must take into consideration the average income of a country if they plan to sell their products there. According to trading economics, the highest average income in China is RMB 51,474 per year while the lowest is RMB 445 per year in 2013 by tariff[4].
Combining the geographic and demographic segmentation, the market’s gathered information will be more detailed and precise. There is a linkage between consumers that reside in larger cities and have a higher income and their demand for high-end furniture. According to statistics, the cities with the highest disposable income per capita are Shenzhen, Shanghai, Guangzhou, Wenzhou, and Hangzhou[5].