The concept of market segmentation plays an essential role in setting up a company’s target customers. By selectively choosing the main market sector, a firm can deliberately increase its competitiveness in this given segment. It allows organizations to be more efficient and concentrate on specific products that make the largest portion of the revenue. In the case of Zara, it focuses on young people by providing them with constant renewal of fashionable clothes.
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Market segmentation is the process of breaking down the market into sections according to various criteria. The segmentation method consists of determining the market groups of customers with similar customer needs and characteristics. There are several advantages to using a segmentation approach (Ernst & Dolnicar, 2018). By identifying and specifying certain consumer groups, an enterprise gets more opportunities to develop a product or service that meets the needs of these groups. This method is implemented through the creation of a new product and a new brand, based on company promotion, aimed at attracting the attention of the target segment (Ernst & Dolnicar, 2018). Decisions on pricing and the system of distribution are also made, taking into account the interests of a particular section of buyers.
There are a number of factors for the attractiveness of the segments for the enterprise. The part must be large enough in terms of the number of consumers, also in terms of purchasing power, in order to ensure a profitable sale. A segment consisting of few buyers with low purchasing power will not be beneficial for an enterprise that sells a large volume of goods (Tokatli, 2018). However, it should be noted that some small businesses target these very markets, which are too small for larger organizations, and work for them successfully. Further important is the ability to identify. An enterprise should be able to identify members of a segment and define a segment profile. It is necessary to consider the compliance factor, where the characteristics of the selected section should correspond to the main features of the proposed product or service.
It is important to note that Zara mostly applies an undifferentiated form of market segmentation. However, the company still emphasizes young people due to their tendency to renew clothes at a faster rate (Tokatli, 2018). Undifferentiated marketing is a situation when a firm, such as Zara, decides to neglect differences in segments and turn to the entire market with the same proposal at the same time. In this case, it concentrates its efforts not on how customers’ needs differ from each other but on what is common to these needs. The company develops a product and a marketing program that seems attractive to as many customers as possible. The company relies on the methods of mass distribution and mass advertising, and Zara produces clothes for people of every age group (Ernst & Dolnicar, 2018). It seeks to betray the image of superiority in the minds of people because undifferentiated marketing is economical. In the case of Zara, the costs for the production of goods, maintaining its stocks, and transportation are low (Tokatli, 2018). The lack of marketing research on market segments and planning broken down by these segments helps to reduce marketing research and product management costs.
Since the needs and requirements of each are unique, it means that everyone can potentially be a separate market effect. Ideally, the seller would have to develop a different marketing program for everyone. For example, clothes manufacturers, such as Zara, have a large number of buyers, and they target every age group, but the company effectively relies on young people as the primary stream of their revenue (Tokatli, 2018). Many manufacturers do not see the point in adapting their products to meet the needs of each particular buyer. Instead, the seller identifies wide ranks of purchasers, differing from each other in their product requirements and their marketing response responses. For example, a seller, such as Zara, may find that it needs to change depending on the level of income of customers (Ernst & Dolnicar, 2018). In addition, the seller may see significant differences between younger buyers and older buyers.
Nonetheless, it should be noted that there is no single method for market segmentation. The market leader, such as Zara, needs to try out segmentation options based on different variables, one or several at once, in an attempt to find the most useful approach to considering the market structure. For such a situation, there is an excellent statistical method for studying the influence of factors on the result. With this analysis, Zara can easily analyze the influence of a factor on the final result (Tokatli, 2018). Zara chooses exactly these factors that carry the maximum importance in influencing the outcome.
In conclusion, the concept of market segmentation is a crucial factor in determining the future strategy of a company. Although Zara’s products encompass the largest portion of the population, they deliberately target young adults. The main reason for the given action is that young people are more likely to renew their clothes according to fashion trends. Thus, Zara applies undifferentiated segmentation with an emphasis on young adults in order to maximize their revenue stream.
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Ernst, D., & Dolnicar, S. (2018). How to avoid random market segmentation solutions. Journal of Travel Research, 57(1), 69-82.
Tokatli, N. (2018). Fashion, functionality, and the contemporary consumer. Journal of Consumer Culture, 1(1), 2-13.