Define segmentation
Segmentation is the identification of a group of consumers that share at least one characteristic that will likely increase their responsiveness to our marketing efforts
Why is segmentation needed
- Increase efficiency of marketing efforts
- Disciplined approach to uncovering opportunity/latent demand
- Take into account customers’ diverse needs and behaviours
Segmentation criteria?
- To be useful, market segments must be:
○ Measurable
○ Accessible
○ Substantial
○ Differentiable
○ Actionable
What is customer segmentation
a set of segments used on an ongoing basis to structure marketing efforts, and the variables are the factors which help create the segment profiles
Demographic variables for Koala
- Age: (18-35, first time buyers, prioritize cost/convience), (36-55, may seek high quality due to health/comfort), (55+, offer superior support)
- Gender: N/A
- Family life cycle: Young couple that just moved in to elderly couple
- Income: Middle-high income
- Occupation: N/A
- Education: N/A
- Generation: Younger generation, as older generations may be used to inadequate mattress quality, or like to keep the same mattress quality
Geographic variables for Koala
Geographic is kind of irrelevant in the mattress market, due to the fact that no matter where you live, you can always be able to purchase mattresses as they can be delivered nowadays
Psychographic variables for Koala
- Social class: Higher socioeconomic status
- Lifestyle: Health-conscious (orthopedic support, hypoallergenic materials), eco-conscious (sustainably sourced)
- Interests: prefer brands that use ethical materials, or stick to brands with good reputation
- Personality characteristics: Prefer classic mattress types, or the opposite being willing to try out different mattresses to see what benefits their sleep and comfort
Describe 3 meaningful profiles for the Koala mattress market
Eco-friendly people
- Ethically sourced, each mattress bought helps to save a koala or plant a tree or donate to a foundation that helps sustain ecosystems
Elderly users
- For convenience, they have a quiz online for which mattress suits you, they have fast and free delivery, they also have 120 return policy
Health-disadvantaged individuals
- Their beds are made with certain materials that help airflow, they have cooling systems and methods as well as a structure that helps spine alignment, along with preventing sinking, along with antimicrobial treatment on each layer to help prevent nasal issues
Behavioural variables for Koala
- Occasions: For sleeping
- Benefits sought: Comfort, price, support, durability, convenience (online shopping)
- User status: First time buyers, or reoccurring buyers (moving house, marriage etc.)
- Usage rate: Light users may go for a more cheap option, while heavy users may invest in a more higher-quality option
Define targeting
Selecting which segments on the marketplace to target
What are is Segment evaluation criteria?
- Segment evaluation criteria
○ Size and growth (How big the market is, how fast its growing in customers)○ Structural attractiveness (How appealing the market segment is based off things like competition, customer bargaining power, demand) ○ Company objectives and resources (The products offered to the market segment, how capable the company is of providing resources to keep up with demand and align with their goals)
4 types of targeting market strategies
Undifferentiated (Mass), Differentiated (segmented), concentrated (niche), Micro (local)
How does Size and growth relate to Koala
- Koala would pick larger markets to play out in, though there are numerous competitors, Koala’s product stands out in various forms, they have certain advantages against opponents, and are shipping globally to other countries, showing their capability with dealing with a larger market
- Their market sizes are also increasing due to more people being aware of the fact that there are mattresses built to help people’s discomforts or even just having a good mattress can lead to good health
How does structural attractiveness relate to Koala
- The market is quite competitive as mattresses seem to be more of a need than a want when it comes to living, this helps Koala though, as Koala has many points which help it stand out
- Customers also have high bargaining power in this market, due to the various competitors or alternatives they can choose, However Koala decreases their bargaining power by offering something that several mattress companies do not, all the way from spinal alignment, to breathable mattresses, to being eco-friendly sourced to primarily online delivery for convenience.
Which market targeting strategy does Koala use? Why is it not the others? What are the downsides of this strategy?
Koala’s Targeting Marketing Strategy would most likely be Differentiated (or segmented)
Differentiated marketing refers to approaching to various types of consumers within a market, Koala shows this as they approach different aged people with different requirements for mattresses, along with different valued people as well (talking about those with eco-friendly values)
Koala targets different types of customers with the same product, as explained before, as age ranges for these customers, they may have different demands, such as a younger generation looking for price effective and comfy mattresses, to a middle age person looking for help with spinal alignment and cooling methods for sleeping to an elderly person who can’t go out as much so the benefit of fast and free delivery would help.
Koala’s mattresses offer various benefits, which fit towards various customers, though it’s the same product. For example their mattresses eco-friendly way of sourcing may be strongly targeted towards people who value environmental sustainability, therefore influencing them to purchase. And Koala’s use clean materials may be targeted towards those who have problems with hayfever etc. And their advanced cooling methods and systems, and also the structure of mattress can be targeted towards those with health issues. Showing the variability of consumers it attracts.
It’s not mass - as it is not heavily mass produced and is not appealing to the largest number of buyers
Its not niche - as it doesn’t focus on just a few segments, or niches, it is in a competitive field
It’s not micromarketing - as it is not one to one,
There are downsides to this type of marketing, as it will be more costly, both time and money. To eco friendly source these materials, they have to spend more time finding the right places to source, the right people to use for these sourcing and overall spend more money and time on the sourcing process. They also need to spend more time thinking about what each of their target segment values, they need to forever keep their reputation, if one day segments fail or price draws back, they can’t take the easy way out to being like other competitors that source easily and make money, otherwise they ruin their reputation
How does company objectives and resources relate to Koala
- Koala mission is to build high quality furniture (including mattresses), through an eco-friendly method, which helps promote sustainability and also has benefits of enhancing customers sleep (mattress), this helps them align with customer values especially within the mattress market
- They also have robust resources all the way from producing to shipping, as can be observed through their global expansion in multiple overseas countries
Koala maintains a positive brand reputation, through explaining how they go out of their way (unlike other companies) to ethically source these materials
- They also have robust resources all the way from producing to shipping, as can be observed through their global expansion in multiple overseas countries
Define differentiation
creating unique products and services to attract more customers than the competitors
What value proposition most fits Koala? and why?
“More for same” Because Koala isn’t necessarily a cheap brand, but it isn’t expensive either, this is compared to a company like super Amart with cheap mattresses compared to like Ecosa. But it offers more as not only it has materials to help benefit sleep, back alignment, nasal issues, but also the fact that it is once again ethically sourced
How does Koala use differentiation?
- It differs from the other mattress companies due to various ways, but the most important one is that it is ethically sourced, however other ways include
○ Quite bang for buck, though not the cheapest option, it does offer great quality for its price
○ Ethically sourced
○ Cooling systems, technology advancements
○ Antimicrobial stuff
Define positioning
how consumers define products on important attributes
What are some differences worth promoting criteria?
That its: Important, superior (alternatives for same benefit), affordable, communicable (to the buyers), profitable, distinctive
How does Koala use positioning? and how do they promote it?
Koala is viewed as a transparent company which fosters genuine interest in creating top quality products that help people, shown through their extra efforts to ethically sourced
How they promote it:
* They show their transparency and genuine interest in giving the customer the best through various ways
○ One of which they have a 120 night policy, showing that customers can return if dissatisfied, proving their attitude towards putting customers first
○ They highlight their Kloudcell technology, showing that this material has breathable holes, enhancing airflow and keeping the individual cool throughout the night
○ They use ethically sourced materials such as Lyocell fabric, ensuring that they are not treating the environment or the workers unfairly, unlike some other companies
○ They connect with customers both during and after service, post-service asking them of how the service went, and they leave customer feedback posts on their website
What is Koala’s positioning statement?
For people looking for an ethically cheap mattress, Koala Furniture is an exceptional furniture company that ethically sources materials to create a difference in comfort for a good nights sleep.
What would Koala’s perceptual map look like?
It would have the two variables of satisfaction and comfort
Sleeping duck - High cost, but very high comfort, quite reliable, but not everyone can/be willing to afford leaving some overthinking about the cost, lowering satisfaction
Koala Mattress - Decent cost, very high comfort, also sustainable, 120-night, leaving high satisfaction
Sleep number - High cost, generally reliable but sometimes technology can malfunction causing discomfort, similar to sleeping duck, lower satisfaction due to price, and sometimes malfunction
Snooze Sealy - Lower cost, but often found to have lower comfort as well, leaving either high satisfaction or low.
