Business Management

Running head: UNDERSTANDING TARGET MARKETS 0

Understanding Target Markets

Victor J. Ayala

University of Phoenix

MKT/571

Patricia Estabrook

May 8, 2017

Understanding Target Markets

Before launching a product in the market, the consideration of the implication of demographics and psychographic factors on the choice of consumers is critical. It is on this basis that designers of the marketing plan for Ikea are going to exploit age, income and cultural aspect as the demographic components in the categorization of the market. Upon completing the process, the team will consider the psychographic elements in the segmentation of the market. According to the plan, the venture is going to identify the revenue potential consumers as the priority component for segmentation, after that, place the products in the market in a manner that resonates to the expectation of the customers. The reason for the decision is attributable to findings of studies that affirm that a significant majority of consumers peg decision on the perception of values obtained from the product (Chen & Vaughan, 2010). The record of Ikea shows that loyal customers increase profitability hence the need to formulate ways of retaining segments that base a decision on purchasing power.

The subsequent demographic element for consideration in the plan is age, since it is a critical component in the decision of consumers. Those steering the campaign must acknowledge the usability of the product and such depends on the age of the individual. If the company decides to target young shoppers, it will get the opportunity to leverage on a large number of the shoppers belonging to the category. They must acknowledge the desire for the group for sophisticated components. However, such is not applicable in decision targeting older shoppers. The group has small number, and they lack fascination for technological inventions (Schindehutte, Morris & Kocak, 2008). Nevertheless, the advantage in targeting the group is that older consumers maintain loyalty to the brand, as depicted in the data of Ikea sales. Once the marketer convinces the group, they maintain loyalty, and they can influence other makes the same decision.

The third critical variable for consideration during the planning stages is the family attributes or the cultural implications. In a setting where people ascribe to certain values such as honesty, the marketer must uphold integrity in their communication. The adoption of modality that enhances openness in communication accentuates sales (Chen & Vaughan, 2010). Therefore, in the case of Ikea, the segmentation must consider the cultural perception. The management can opt to recognize anniversaries and celebrations adored by the members of the population in the segmentation of the markets. The religious connotation may also affect the perception of households on the use of the brand hence the urge to consider such in marketing.

Additional dynamics for consideration when planning for marketing include the acknowledgment of psychographic elements that can influence the demand for a commodity. When opting to target the working class, for instance, the marketer must acknowledge the activities that bring the people together in the plans. The campaigns must incorporate elements of uniformity associated with the category of shoppers. The venture can model the plan to exploit the strengths of the group. A typical example is designing sophisticated devices preferred by those in the corporate sector (Schindehutte, Morris & Kocak, 2008). The decision, in turn, can result to increase in sales for the commodity. The consideration of the issues that members of the groups treasure such as accuracy in performance is critical.

The data presented about the performance of Ikea in the local markets suggest that occupation influences the decision of shoppers. Some chose commodity because of familiarity and not the perception of values as highlighted by the advertisers. The peers of the shoppers influence the perception of benefits attained from the utilization of the product (Eggert & Ulaga, 2002). The presentation also suggests that consumers in the international market show laxity in purchasing the brand and such is attributable to psychographics components. The culture of the people contributes immensely to the decision to associate with a brand.

Insights

The insight gained from the exploration of the concepts on psychographics and demographics role on marketing is that capitalization on the perception of consumers is critical in enhancing loyalty for a brand. A company that manages to captivate the desires of the shoppers excel in the market. However, the exploitation of the same in the international market does not guarantee profitability. This is because the segment considers a myriad of factors in decision-making. The geographical proximity and the demographics play a critical role in their consideration of a product to embrace.

Another lesson from the exploration is that retention of consumers is more beneficial that seeking ways to exploit the new markets. For that reason, it is advisable that marketers formulate strategies that show concern to the existing customers. In the case of Ikea, their experience with a product can directly increase sales through personal selling. The loyal clientele can serve as ambassadors in marketing the brand to new shoppers (Eggert & Ulaga, 2002). Chances are also high that their loyalty can propel the business to greater heights of success even without the expansion into new markets.

Exploring the concepts of psychographics and demographics as highlighted in the analysis also teaches one that harmonization of various components is critical in attaining success in the market. The assumption is that no single model fits all situations. Instead, businesses ought to redesign models in line with the prevailing dynamics in the market and at no single point can the situation replicate. For that reason, the exploration of the markets from a holistic perspective is mandatory. In the case of Ikea, the venture can embrace the idea in formulating models that consider psychographics and demographics components together with other consideration in marketing its brand.

References

Chen, Y., & Vaughan, J. W. (2010, June). A new understanding of prediction markets via no-regret learning. In Proceedings of the 11th ACM conference on Electronic commerce (pp. 189-198). ACM.

Eggert, A., & Ulaga, W. (2002). Customer perceived value: a substitute for satisfaction in business markets?. Journal of Business & industrial marketing, 17(2/3), 107-118.

Schindehutte, M., Morris, M. H., & Kocak, A. (2008). Understanding market‐driving behavior: the role of entrepreneurship. Journal of Small Business Management, 46(1), 4-26.