Ch. 8 - Segmenting and Targeting Markets

Market is people or organizations with needs or wants and the ability and willingness to buy. A group of people or organization that lacks any one of these characteristic is not a market. Within a market, a market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.  

Market Segmentation

Market segmentation is the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups. Chanel offers widely products line and deeply product line to target diverse market segment, such as: Haute Couture line, ready to wear, men’s and children’s collections, fragrances, accessories, footwear, and cosmetic products. Chanel’s target segments are mostly all age women, so their products are focus on women.

Bases for segmenting consumer markets

Marketers use segmentation bases, or variables, which are characteristics of individuals, groups, or organizations, to divide a total market into segments. Consumer goods marketers commonly use one or more of the following characteristics to segment markets:

©      Geographic Segmentation-refers to segmenting markets by region of a country or the world, market size, market density, or climate. Chanel geographically segments by country. For example, compare Chanel handbags designs in United Stated to China. In China, people do not prefer white color because it is a bad luck sign according to the tradition. Chanel retail store in China, they have more black color of handbags than the white. In United States, white color is the meaning of purity, innocence, and virginity and people will favor white color.

©      Demographic Segmentation-Marketers often segment markets on the basis of demographic information because it is often related to consumers’ buying and consumption behavior. Some common bases of demographic segmentation are age, gender, income, ethnic background, and family life cycle. Chanel often adopts this segmentation its prices are not affordable to most working class. Also, Chanel concentrates mostly on women, so this segmentation will help to design different product for women at different ages.

©      Psychographic Segmentation-segmentation markets on the basis of personality, motives, lifestyles, and geodemographics. Many of Chanel’s customers purchase its products because they appreciate luxury goods, and see Chanel as a symbol of elegance, simplicity, modern, and class.

Repositioning

Repositioning is changing consumers' perceptions of a brand in relation to competing brands. An example of Chanel product line is the No.5 Perfume series.  Chanel has repositioned the N^。5 fragrance from classic elder to sexy allure. The advertising of the products become less informative and focus on attracting consumers’ emotions. The advertisements of No.5 perfume series in the old days are vintage style that present its theme of classical that intended to attract customers. Recently, Chanel adds on the idea of sexy to its advertisement of No.5 fragrance series in order to compete with its competitors.