A STUDY OF MARKET SEGMENTATION IN AN ORGANISATION

A STUDY OF MARKET SEGMENTATION IN AN ORGANISATION

(A CASE STUDY OF NASCO GROUP OF COMPANIES, JOS, PLATEAU STATE)

ABSTRACT

This study is designed to show the importance of market segmentation in an organization.  The meaning of market segmentation, bases, strategies, conditions for effective segmentation and method of segmentation market segmentation has been playing a vital role in the market scene throughout the global economy.  Its role is dynamic in nature due to technological advancement and innovation of the existing market segmentation strategies.  The market segmentation contributes a lot in an organization which includes increase sales of an organisation’s products in the local market due to different segmentation.  In chapter one, the work is made up of introductory aspect of the topic which was followed by the background of the study, objective, statement of the problem; its significance, research questions, statement of hypothesis, scope of the study, limitation and definition of terms.  The chapter two is basically on literature review, meaning of market segmentation, its strategies and conditions for effective segmentation.  In chapter three, the methodology used by the researcher in data collection was discussed.  The source of data collection, population sample research, instrument, questionnaire design and questionnaire distribution and collection.  Chapter four was based on data presentation and analysis, test of hypothesis and research findings.  Finally, the chapter five was on summary, conclusion and recommendation, bibliography, list of tables was based on the above mentioned chapters and appendix.

CHAPTER ONE

INTRODUCTION

1.0   BACKGROUND OF THE STUDY

A market is the total number of actual and potential buyers of a product.  There are classes of buyers which are different from one another a viewing of differences in firm performance and units.

This of course has lead to the existence of heterogeneous buying groups, for survived and forth, it is expected that a firm should be able to reach each customer/consumer.

A market consists of buyers, and buyers differ in one or more ways.  They may differ in their resources, locations, buying attitudes, and buying practices. 

Any of these variables can be used to segment a market. Unfortunately, no single firm can supply all the needs and wants in the market place, hence the idea of breaking the market into distinct and meaningful sub-set that could attend segment market segmentation, for the test of this work.

MARKET SEGMENTATION:  Has been defined as “the process of dividing a market into smaller groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. This implied that segmentation on the other hand involve sub-markets of different brands of homogeneous products.  Thus, market segmentation in the other hands can be seen as the process of dividing the total heterogeneous market for goods or services into several segments, each of which tend to be homogenous in all significant aspects.

Management selects one or more of this segment as the organizational target market.   The above looks quite simple but is actual fact, it is an adduces task because of the followings:

-         Some market is quite inaccessible:  if the target market is readily identifiable, the next question is whether they can be easily reached.  Segmentation is not feasible if marketers cannot communicate economically with the chosen subsets of consumers.

-         Not substantial:  this refers to the degree of unpredictability of the segment; the segment is not able to be profitable.

-         A market segment that is large enough to be profitable.  There must be enough people in a potential segment to justify higher costs of marketing and production e.g. textbook of blind students.

-         A market segment is identifiable:  markets should be able to spot a common need or characteristic of some people different from that of other people in the market.  Marketers often use income as a means of distinguishing groups of people in a given market.

However, for effective marketing segmentation and the bases applied include.  There are four potential bases for segmentation; they are demographic, behavioural, geographic and psychographic.

Demographic Segmentation:  In demographic segment, the market is sub-divided into different parts based on demographic variables such as age, family size, family life cycle, income, occupation, education, religion, race, generation and nationality.

Geographic Segmentation:  In demographic segmentation, the market is divided into different geographic units such as nations, regions, states, countries, cities or even neighbourhoods.  It determines those geographic markets that it could serve best.

Psychographic Segmentation:  In psychographic segmentation, buyers are divided into different groups on the base on social class, lifestyle or personality characteristics.  People in the same demographic groups can have very different psychographic makeups.

Behaviural Segmentation:  In behavioural segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product.  Many marketers believe that behavior variables are the starting point for building market segments.

1.1   HISTORICAL BACKGROUND OF THE CASE STUDY

The idea of establishing Nasco Group of Company, Jos was born as a dream in Jose in 1973.  The dream however materialized into what is known as Nasco Group Company, Jos today in 1974.

The organization was established as marketing institution and most of their products were curtains and curtain materials.  Based on research, the organization normally export their product of curtains and curtain materials to some countries of the world.

They only operate on working days, normally the organization do not operate on weekends.  The organization employed both skill, slime skill and unskilled labour.

Advancement technology has moved the organization forward.  As of date the organization however increased her product line to include computer training and services, and also printing services.  The headquarters of the company is situated at Yakubu Gowon Way, P.O. Box 576 Jos, Nigeria. The organization has a lot of business operations all over the country. 

The organization, Nasco Group of Company Jos, uses segmentation to achieve target market and market positioning in the market place.  Market segmentation has made Nasco Company Group to identify bases for segmenting a market, and develops profiles of resulting segment.  Through market targeting, the organization is able to develop resources of segment attractiveness and select the target segment.  Market segmentation contributes a lot in an organization which include increased sales of the organisation’s products in the local due to different segments.

The organization confesses that last market segmentation has played a dynamic role, in nature due to technological advancement and innovation of the existing market segmentation strategies, which the organization uses.

i)      Undifferentiated:  involving the marketing of one product to all market using the same marketing mix, or

ii)     Concentrated Market:  where a firm is concentrating all market segments in a small segment of a total market.

The organization Nasco Group of Company, Jos, sales in bulk.  For the purpose of this project, the case study is Nasco Group of Company. Jos.  Below is the organizational structure of the company.

1.2   OBJECTIVE OF THE STUDY

The objective of the study is aimed at uncovering the importance of market segmentation in an organization.

i)            Management can focus attention on the most profitable buyers.

ii)          It facilitates the selection of appropriate media of marketing communication.

iii)        It enables an organization to develop products that really match the market demand.

iv)         It permits management sensibility funds or money to different segment of the market.

1.3   RESEARCH QUESTIONS

1)     Does market segmentation help to access the organizational competitive strength and weakness?

2)     Which of the communication mix or tools your organization adopts?

3)     How important are market segmentation activities to a successful business organization?

4)     Which organization or enterprise do you consider best in practice of market segmentation?

1.4   STATEMENT OF THE PROBLEM

Technology advancement has enabled manufacturing organization to produce different products that serve almost similar purposes.  Being that the market is heterogeneous in nature, it is difficult for firms to identify the products that will suit their buyers taste and performance exactly.  Apart from this, problems as well exist when markets cannot be measured, identified, reacheable, responsible and profitable enough.

1.5   SIGNIFICANCE OF THE STUDY

The significance of the study highlights the benefits to be enjoyed by a marketing organization that practices market segmentation.  Such benefits includes being able to assess the competitive strength and weakness of the organization. 

It also affords consumers the opportunity to choose between variables when segmentation is in place.  Moreso, it help as a marketing tools for business planning and also a major determinant of high sales volume importance to company promoters and future researchers who may see this as a referral piece.

1.6   STATEMENT OF HYPOTHESIS

The following are the assumptions of the researcher and they are drawn from the statement of the problem.  The hypothesis is stated in the null and alternative form.

Hi:    Market segmentation activities are responsible for increase in profit of the organization.

Ho:   Market segmentation activities do not have much impact on the profit of the organization.

1.7   THE SCOPE OF THE STUDY

Market segmentation has been viewed as a process of dividing total heterogeneous market for goods or services into several segments each of which tends to be homogenous in all significant aspect.  The study also aims at finding out whether the segmentation process can help to achieve a better competitive position for existing brand.  It also aims at investigating buyer behavior considering the fact that marketing activities are becoming more complex.

In this view, the work is to identify the introduction of market segmentation to existing organization, also include finding out as at how market segmentation is importance to an organization, before segmenting a market there are variable a marketer need to note.

-         Is the segment large enough to be profitable?

-         Is the market reacheable?

-         Is the market responsive?

-         Is the segment expected not to change quickly?

1.8   LIMITATION OF THE STUDY

During the course of this project, the researcher experienced many problems.  Some of these problems include financial problem, transportation fare from the place to Jos where the case study is located is expensive. Moreso, the researcher is a student as dependent.

Another problem to the study is time constraint.  Most at times, there is conflict between time that the researcher is free and the time that the respondents were free to attend to the researcher.

1.9   DEFINITION OF TERMS

MARKETING

Philip Kotler (1998) defined marketing as the analysis, planning and implementation and control of the programmes designed to create, build and maintain mutually beneficiary exchange and relationship with the target market for the purpose of achieving the organizational performance objectives.

Pride and Ferrell, (2008) sees marketing as “the process of creating distributing, promoting and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers and develop and maintain favourable relationship with stakeholders in a dynamic environment.

MARKET:  Can be defined as the place where buyers and sellers meet for exchange of goods and services are offered for sales and transfer of owners occurs. 

SEGMENTATION 

Kotler, P. et al (1999) sees segmentation as a demand-oriented approach that involves modifying the firm’s product and/or marketing strategies to fit the needs of individual market segments rather than those of the aggregate market.

MARKET SEGMENTATION

According to William Stanton, “Market segmentation is the process of dividing the total heterogeneous market for a product into several sub-markets or segments.  Each of which tends to be homogeneous in all significant aspects.

ORGANISATION

Mr. Itopa I. Jafaru (2011) defined organization as a group of people bond together to provide unity of action for the achievement of stated objectives.

END NOTES

Philip K. (1998):  Marketing and Planning Analysis and Implementation. Sixth Edition.  London Prentice Hall Inc.

Mr. Itopa I. Jafaru (2011):  Fundamentals of Marketing Lecture Note unpublished.  Department of Marketing, Federal Polytechnic Nasarawa.

Philip K. (2008):  Principle of Marketing.  12^th Edition.  London Prentice Hall Inc.