Segmentation and Target Market
MKT/571 - Marketing
November 22, 2014
Segmentation and Target Market
In business marketing, market segmentation and targeting specific markets aids organizations by reducing the risks involved in decisions of how, where, when, and with whom the brand, product, or service will be advertised, directed, or promoted to. Positioning the product or service to the accurate target while controlling the marketing budget are tactics used by marketing professionals to assure reaching the largest target group and controlling costs (Boundless, 2014). Attracting the right customer is the ultimate objective of targeting specific markets by ...view middle of the document...
Costco keeps prices down with low overhead by offering a no frills warehouse approach. Costco currently has 76.4 million paid membership cardholders, serves 41.9 million households, and employs 189.000 full and part-time individuals as of August 2014 (Costco Wholesale, 2014).
To be of value market segments must be measurable, substantial, accessible, differentiable, and actionable (Kotler & Keller, 2012). Segmentation of demographics for Costco is vast as the current product offerings include all genders, ethnicities, incomes. age groups, and social classes. When considering demographics it is important to consider the average or typical characteristics of the target market. As mentioned earlier the target market or focus for this company is supplying the small- to medium-sized business, and targets the middle- to high-end consumer with its private label brand Kirkland Signature. Categories of products currently include major appliances, furniture, electronics, luxury items, special events, seasonal items, hardware, sporting goods, housewares, apparel, health and beauty products, jewelry, tobacco, alcohol, apparel, office supplies and equipment, groceries, gasoline, photo and media services, and partners with many other companies to offer savings in many other areas such as home improvement, pharmacies, optical services and the like (Costco Wholesale, 2014).
From a psychographic point of view where activities, interests, buying habits, attitudes, and opinions are concerned, Costco continues to grow and rate favorably with customers. Consumer Reports magazine reports that Costco is the leader and is the preferred retailer in the opinion of the readers based on factors such as product quality, value, friendliness of store and staff, ease of returning items, and overall service. Costco was also considered the value leader by providing the best bang for the buck. Walmart, Sam’s Club, and Target fell below Costco’s ranking in terms of popularity and value for consumers (Keshner, 2010). Psychographic characteristics typically go beyond the external focus and are not as easy to quantify, but do identify why consumers buy a particular product or service (All Business, 2014).
Geographically Costco currently operates 461 warehouse locations in 45 U.S. States. Additionally, 173 warehouses are also operated internationally in Puerto Rico, Canada, Australia, Japan, South Korea, the U.K., and Mexico. Majority-owned subsidiaries are also located in Taiwan and Korea. Costco specifically tailors product to each of these ethnically diverse locations. Currently 28% of net sales is generated from international operations with plans to expand in these markets in the near future. When considering opening new warehouse location Costco considers the region and neighborhood, the size of the area, population density, and climate (Costco Wholesale, 2013).
Behavioral characteristics appear to be directly related to how Costco...