Street’s Ice-Cream Company’s Segmentation, Targeting and Positioning

Abstract

This marketing segmentation, targeting, and position report of a new ice-cream that begins with an assessment of the ice-cream industry in which Street’s Ice-cream company operates. In this industry, the clear opportunity is the growing demand for ice cream in both Australian and international markets. On the downside, the industry is rife with competition and is plagued with health issues particularly cause by obesity.

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In terms of performance, Street’s Ice-cream company has indeed dominated the market. The company has adhered to relentless promotions activities via a combination of direct selling, sales promotions, and events marketing. The company also heavily advertises through print, TV, Internet, and engages in event sponsorships, focusing on supporting weddings.

In the next two years, however, Street’s Ice-cream company would have to address several challenges. One is its maturing customer target segment that is already aging.

In this regard, it needs to reach out to a new breed of young adults. Given these challenges, the marketing objectives of Street’s Ice-cream company are simple but vital. One is to sustain the growth in sales and the other is to develop a new product.

Consequently, the marketing mix is geared towards supporting the new product development initiative of the company.

Introduction

Street’s Ice-cream company has invested in a new line of ice cream that is rich in nutrients and cost-competitive. The objective is to a write to successfully distribute the products in Australia.

The industry the company operates under can be described as a broad sector that encompasses numerous product lines and therefore highly competitive. To begin the new product line, it is best to establish a clear marketing segmentation for the company that reflects the strategic intentions of the firm.

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Segmentation

According to Booms and Bitner (1981) before selecting a segment one must arm himself with substantive knowledge about the buyer. The basis selected should be such that it evokes a sufficient purchase response to justify cultivating that segment. If it were easy to identify the various mixes of benefits sought by the various groups in the market, segmentation would hardly present any problems.

In the case of a new product, market segmentation is applied based on geographical, demographical, and psycho graphical information or a combination of such data. Every marketing problem however must be approached in the light of particular objectives and circumstances. Consequently, the research needs and the criteria used for purposes of marketing segmentation will differ from one product to another and one type of market segment to another adds Campbell (1999).

Kotler and Kevin (2006) stated that traditional marketing research surveys are mainly aimed at collecting information on standardized demographical and social-economic variables such as age, population group, language differences, and levels of education, occupation, and income groups. A more recent development in research for market segmentation purposes is the analysis of the market in terms of consumer motivation and expectation as well as actual buying behavioral patterns. There are certain groups of variables that are employed to segment the market for consumer goods. These include geographical, demographical, socio-economic, and psycho graphical factors in an analysis of consumer characteristics and behavior. Depending on the nature of the relevant products and the distinguishing nature of market segments, the analysis of certain variables might be superfluous and it might be necessary to give special attention to the other variables.

According to Kotare and Helena (2004), the market can go further and try to analyze certain consumer reactions to his policy and strategy for segmentation purposes. Several aspects should be taken into account in analyzing such possible consumer reactions. The approach is that both objective and subjective criteria must be employed in an attempt to study consumer reactions to each of the elements of the marketing mix. As such there is no standard answer to what basis is the best in a particular case and companies resort to one or more of the following adds Kotler et al (2006):

  1. Intuition and experience: Many marketers try to segment their market based on their empathetic understanding of the situation. But you must not forget to check such intuitive thinking against the evidence which may be there in support of such a hypothesis.
  2. Trial and error: Trial and error is another method that is used to divide a market into different groups based on product attributes and to subsequently check whether such groups are proving meaningful in terms of market response.
  3. Research on consumption systems: observing and studying the total consumption system associated with the product in use helps generate new ideas for benefit segmentation.
  4. Research on attitudes and perceptions: This is an area in which there is currently the greatest interest. This type of research is being used, in respect of quite a few of the consumer products that are being introduced by large-sized companies.

When selecting a market segment some factors are used to evaluate any economic opportunity and the factors specific to the situation are considered in evaluating segment options against these criteria. The general factors are company thrust, size and growth potential, the investment needed, profitability, risk, competition; and Specific segmentation factors are segment durability, mobility, visibility, and accessibility argues Kotare and Helena (2004).

Kotler et al (2006) explores this concept and summarizes that:

  1. Value Buyers appears to be a distinct segment consisting of people who weigh the service against the cost and choose a product that provides maximum value for money spent.
  2. Economy segment that seeks to minimize cost is not clear. This is because the quality of products affects the future economic well-being of the consumer and this concern is common across the entire consuming population.
  3. The Affluent class is more likely to consider services designed to maintain and improve their well-being.

Demographics

The demographic and socio-economic segmentation of consumers represents the most common traditional based segmentation. These variables include the level of education and income, ethnic groupings, language groups, age, sex, family size, and the position of decision-makers / purchasing agents in the family life cycle. The main reason why such information is generally used as criteria for segmentation purposes is that it is usually readily available. Some of these variables will be dealt with briefly in the following paragraphs.

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Socio-economic status

According to Kotare et al (2004) consumption is to a large extent a function of disposable income and social status. A thorough analysis of consumer income, income distributions, and how consumer units appropriate their disposable income is thus essential in any quantitative market study. Information on differences and trends in the distribution of income on a geographical basis and by the ethnic group can be particularly valuable in the demarcation of regional market segments and target market segments. Income data on cities and parts of cities is also used for purposes of decision-making on the location of branch stores and shopping centers.

Coupled with the rapid rate of growth in the number of consumer units in the higher income brackets, spells a dramatic increase in free purchasing power. The level of discretionary income of any community is of special significance since it implies a growing market potential for durable consumer goods, some luxury goods, and certain types of services. Information on the relationship between income and consumer expenditure on particular categories of goods and services is particularly useful for a purpose of market segmentation adds Kotare and Helena (2004).

In the case of magnum, ice-cream Street’s Ice-cream company will target AB, C, D, E, and FG quintiles because they are found to consume an almost equal amount of ice creams. However, will consider those in full-time employment because they have a constant flow of income to spend on ice-cream

Work status

The educational level of consumers can be closely related to occupational structures and income distribution patterns in a market. The educational levels of the various population groups in Australia differ markedly and this exerts an important influence on the potential use of specially printed communication media in particular market segments.

Age group

Kotare et al (2004) argue that the size of various groups will affect the demand of some groups in the international market. Youth groups demand different types of products as well as the aged. When entering the international market the company will analyze and know the demographic segmentation in terms of each group so that they will know the amount of product that will be sold in that country. The market shall be segmented into various age groups which will include 14-17year olds 18-24-year-olds, 25-34-year-olds, 35-49-year-olds, 50-64-year-olds, and over 65-year-olds. Most of the revenues shall be raised by two age groups i.e. 25-34 and 35-49. These age groups are working class, meaning that they have extra disposable income to spend on ice cream. They are also at the age of preparing to have partners; therefore they take ice cream while going out. 14-17 age groups are teenagers who depend on their parents to purchase ice cream for themselves, therefore are dependants, and are a small group of consumers. The 18-24 years are students who are in tertiary colleges and in universities, who spend pocket money, therefore are the third lowest consumers of ice-creams. Those who are over the age of 65 are retired at the same time avoiding sugary foods.

Gender

The sex groups male and female have different characteristics and have different demands for different products. Women with large disposable incomes will increase the demand for household appliances, food, and other devices which are for women while men would demand things like cars, beer, and other luxurious drinks. This is because women are associated with Families and it has been proved a woman with money is a family asset as compared to a man. This behavior is also reflected in consumption. Therefore a company wishing to enter the international market will be required to audit the market and know the ratio of men to women who have disposable income before introducing the product argues Kotare et al (2004).

In our product magnum ice cream shall be consumed by a great percentage of women while men will consume less than 50%. Therefore we shall segment the market where women will be a larger segment as compared to men. This is through research which shows that women are larger consumers of ice- cream as compared to men 52% of the consumers will be women as opposed to 48% of men.

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Targeting

Based on the importance of consumer orientation as well as the elements of the marketing mix, it should be remembered that the marketing strategy consists in directing a proper marketing mix towards a target group of customers or market segment. Targeting is the process of segmenting the customers. The first step in the identification of the need of a group of persons or market segment is targeting. Here we should define the target group. The target group will consist of both male and female populations, but the gender ratio may vary.

The total environment can be segmented into three classes as 1. Mega environment 2. Microenvironment. 3. Relevant environment. Out of these three groups as far as the now discussed market planning for the Magnum ice cream is concerned, the microenvironment is the most important one, because the planning is for a relatively shorter period. Therefore our important environmental factors of concern are consumers, governments, and the local community.

Marketing MIX

The marketing mix plays an important role in formulating and implementing a marketing strategy for companies. According to Booms and Bitner (1981), the 4 Ps have been developed and extended to the 7 Ps with the appearance of People, Process, and Physical evidence on to the price, product, promotion, and place. It provides an effective strategic framework for changing different elements of a company’s product offering to influence the demand for products within the target market argues Smith and Chaffey (2005). To market, this new ice-cream 7ps will be used to deliver the product into the market.

Product: According to Kotler et al (2006), Product is the solution to customers’ wants or needs. It refers to the characteristics of a product, service, or brand. However, the product dimension may also face a challenge from a decreasing product-life span, due to the rapid innovation process in technology. As technology evolves, product changes and adaptation may have to be executed with an increased momentum through which companies can encounter problems because of their dexterousness in applying innovative technologies to their business operations.

In this case, the company will offer ice cream as a product and will be packaged in different sizes to attract customers. For a customer to buy ice cream, they should want it hence placing demand for it.

Price: According to Kotler et al (2006) the price of a product should put in mind other factors that affect the market situation. Due to competition, discounts can be adopted to attract more customers and maintaining the already existing customers. Again, the price put to place does not necessarily be in terms of money but it can also be in exchange for things like duration, amount of commitment, or efforts utilized among others. The proposed price is as of the ice-cream:

  • The target price per 20gm is $ 1.
  • The target price per 50gm is $ 2.5.
  • The target price per 100gm is $ 4.
  • The target price per 200gm is $ 7.
  • The target price per 500gm is $ 15.

Place: This factor deals with how goods and services exchange hands. Factors attributed to the settings of where goods are going to reach the customers include the geographical positioning of the customers, the age group, and the social class of the anticipated customers among others. Mainly, it deals with the selling process and how various factors affect it. Therefore, the Ice-cream Company should put into consideration all these factors to reach every person who needs their magnum ice cream.

Promotion: This puts into consideration activities directed towards making know a given company in the market or elevating the image of a certain company. A lot of emphases should be put in place in this area because it is the backbone of marketing techniques. This should start from how the product is packaged to how the goods and service are delivered. Instruments like advertising, branding, promotion of sales, and direct delivery of goods to the customer. For instance, branding is a process that is directed towards giving a special identity to a company. This is best on the activities the company is venturing in. It reflects the culture adopted by a given company. The brand goes beyond a name and logo of a certain entity. For Ice-cream Company to be known effectively in the market, it should embrace a brand that wholesomely defines its quality of products and services. This in the long run will positively affect its sales states Ries and Jack (2000).

People: According to Kotler et al. (2006) “an essential aspect of seeing people as part of the marketing mix is to recognize the different roles which the employees of an organization have in impacting on both the marketing task and also customer contact” (p.27). Kotare et al (2004) argued that people within the organization and being involved in customer contact can be seen as part-time marketers, as they represent the organization to the outside world. However, an organization’s staff must be adequately trained and motivated to deliver added value to the customer and may be a key resource in retaining customers argue Smith and Chaffey (2005).

Physical Evidence: According to Smith and Chaffey (2005), physical evidence is crucial in terms of reassuring the customer about intangible goods of an organization. Businesses can utilize guarantees, refund policies, awards, and customer endorsements to enhance the encouragement of customers (Smith and Chaffey, 2005). Physical evidence consists of the interactive element in terms of customer reviews and references to assure customers or potential customers to purchase a certain product or service from an organization. Furthermore, issues such as ease of use or navigation, availability, and performance are crucial elements of the physical evidence dimension (Chafley et al., 2003). According to Kotler et al (2006), physical evidence is interrelated to the people element of the marketing mix and thus, needs to be supportive and integrated into the mix en bloc to motivate a customer’s purchase.

Process: Process performance is important to deliver and to improve services for the customer (Smith and Chaffey, 2005). This element of the t marketing mix refers mainly “to the methods and procedures companies use to achieve all marketing functions such as promotion, sales a customer service” (Chaffey et al., 2003, p.212). If a company is unable to deliver an adequate process to support products or services, custom dissatisfaction can result, which affects the brand and may lead to the refusal of a repurchase (Kotler et al 2006).

Each of the seven elements of the marketing mix shall be interrelated synergy with each other and “a key issue is the integration of the various elements of the mix so that they are mutually supportive in gaining the best possible match between the internal environment of the organization and the external customer environment” (ibid, p.19). According to Smith and Chaffey (2005), another dimension, the partnership element, can be added to the marketing mix, as a new paradigm.

Positioning

The Magnum ice-cream brand shall be positioned as a strong, effective, good tasting, and healthy Ice-cream for all age groups starting ages of 10. Consequently, the brand will maintain its “taste me”, image.

Fundamentally, the brand will convey the message of reliability, quality, and immense value for money.

This will be done through brand identity and formulating a positioning statement. In the words of Amy Campbell (1999), “An integrated brand identity – which starts with the name, logo, and slogan-, must distill the brand promise uniquely and memorably. With the advent of globalization and increasing competition among products in global markets, and greater fragmentation of mass media, purchasing power is being shifted onto the consumer. As a result of this shift, many once-popular product-centric brands are facing threats from customer-centric brands. There is a need for companies to rethink the role of brands and according to Campbell, brands need to be less image-focused and more experience-focused. With the advent of internet technology, the customer is given more and more information regarding the products and its competitors. In this scenario, differentiation needs to be based not on quality or price or performance, but emotions and the customer’s experience with the brand. It is the goal of brand identity to express the brand experience promise memorably – starting with the name, logo, slogan, etc. and this is best possible through advertising. This is the traditional brand identity creating approach where advertising planners first choose the target, work on the ideal brand positioning and make use of the positioning statement as a framework for creative output, media selection, production quality, and choice of distribution channel for months or years to come. Thus, traditionally, advertising has been the main vehicle of building brand identity.

Summers and Smith (2006); wrote that the success of any product depends on its brand identity and brand identity means that a product is easily identified. Individuals have their identity depending on their name, the way they look, their voice, and their personality (Mitchell, 1993). Likewise, a product needs to have a brand identity, to differentiate it from other similar products in the market. The marketing tools that are used in the process of brand identity creation are band name, packaging, advertising, and promotion. Once the identity is established it will remain in the public mind for a long time due to the building of an emotional association with the product. Therefore, ice cream will be positioned through brand its brand name, the type of packaging, advertising, and promotion equipped Kotare et al (2004).

Conclusion

In conclusion, the ice cream product can adopt various strategies involved in marketing to improve its image and sales to the public. According to Thomson and Rampton (2006) measures like advertising, branding, customer focus, product focus, and sales promotion among others are positive towards improving the participation of the product in the market. Before these approaches are implemented, a market survey has to be carried out to establish what the need of the customer is. Then implementation of the newly acquired practices should be put into place. This marketing process can only end well if the team of professionals is in the leadership of the marketing department.

References

Booms, B. & Bitner, M 1981, Marketing strategies and organizations structures for service firms. In J. Donnelly and W. George (eds), Marketing of Services. An American Marketing Association, New York.

Campbell, A 1999, Building Brand Identity in the New Economy. Infoworks Information Design-Content Strategy.

Kotare M & Helena K 2004, Global Marketing Management– 3rd Edition, New York, John Wiley and Sons

Kotler, P. & Kevin, LK 2006, Marketing Management, 12th Edition: Pearson- Prentice Hall

Mitchell, A 1993, Advertising Exposure, Memory and Choice. Lawrence Erlbaum Associates, Hillsdale, NJ.

Ries, A. & Jack, T 2000, Positioning- The Battle for Your Mind– 20th, Anniversary Edition: McGraw-Hill

Smith, PR. & Chaffey, D 2005, E-marketing Excellence: at the Heart of E-business, Second edition, Butterworth-Heinemann

Summers, J. & Smith, B 2006, Communication skills handbook, 2nd edition. Wiley publishing, New York

Thomson, C. & Rampton, L 2006, Putting Your Customers First, Market Research. Melbourne press, New York

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