THE RELEVANCE OF MARKETING SEGMENTATION AS ITS AFFECTS ORGANIZATIONAL PERFORMANCE (CASE STUDY COCA-COLA NIGERIA PLC, BENIN CITY) CHAPTER ONE INTRODUCTION 1.1 BACKGROUND TO THE STUDY It is usually impossible for a particular organisation to have a comprehensive knowledge of all the customers that made up a particular market, whether is industrial, consumer services (Coles, 2001). This is the situation most times because customers are usually headily read, many and heterogeneous in what they buy and now they buy. So rather than dissipate energy trying to serve all the customers that make up market without having a comprehension knowledge about any particular sets of the customers, an organisation with a good vision is expected to study the various sets of customers with a view to identifying the particular set/sets that could be served most effectively and profitably and settle for some. One basic tool required to get this done effectively in the market segmentation, which Onayemi (in Sanyaolu, 2002) defines as the process of dividing a market into district sub sets of customers, each of which can be considered as a target of market with common needs and can be theory approached with a district of marketing mix, action or programme. Market segmentation is according to many textbooks one of the fundamental principles of marketing. Kotler (2002) marketing theory suggests that businesses adopting a market segmentation approach can enhance their organisational performance. Kotler (2007) market segmentation is grounded in economic pricing theory which suggests that profits can be maximized when pricing levels discriminate between segments. Frank et al (2002), one reason for the wildspread acceptance of the approach is the belief that organisation cannot normally serve all the customers in a market. Kotler (2002) state that customers are hundred numerous, and diverse in their buying requirements. The implication here is that segmentation helps to homogenize market interogeneity and coincidentally allows for improved organisational performance by targeting specific segments of the market. Thus, customers who have been aggregated according to similar buying needs and behaviour will tend to demonstrate a more homogeneous response to marketing programmes (Choffray and Lillien, 2003; Wind, 2001). Modern marketing literature identifies a range of benefits for business pursuing a segmentation approach. The underlying logic is that segmentation can enhance marketing effectiveness and improve an organisations ability to capitalize on marketing opportunities (Bean and Ennis, 2001; Weinstein, 2002). This is partly due to the fact that segmentation builds on an excellent understanding of customers and competitors which can lead to fewer direct confrontations with competitors and the design of more suitable marketing programmes. Research has also show that segmentation also helps business to allocate financial and other resources more effectively (McDonald and Dumbar, 2003). Segmentation encourages businesses are to play to their strengths by focusing their resources on the most attractive areas of the market, and consequently earn better profits. Considering these claims market segmentation it could therefore be said that managers who are familiar with the concept and its application should achieve better performance than their counterparts who are neither familiar with it nor its application. This is the basic for the research in this project work which considers the views of staff of Coca Cola Plc Benin City. 1.2 STATEMENT OF PROBLEM There is a chain network between the consumers and the market. For an organisation to stand, it needs to understand the working relationship between the two; However, the market is divided to segment to put a check in place. This is as a result of inadequate assessment of the role marketing segmentation towards improving organisational productivity and performance and management inability to boast productivity. 1.3 OBJECTIVES OF THE STUDY To ascertain the role of market segmentation towards improving the organisational productivity and performance To determine whether knowledge of market segmentation leads to a better understanding of the potential customers needs. To determine if effective market segmentation enhances the level of organisation profit ability. 1.4 RESEARCH QUESTION Does proper assessment of market segmentation improve organisational productivity and performance? Does the knowledge of market segmentation leads to better understanding of potential customers need? Does effective market segmentation boast organisation profitability? 1.5 SCOPE OF THE STUDY The research is confided to assessing view on role of market segmentation on organisational productivity and performance fro staff of coca Cola Plc, Benin City and its some outlets within Lagos and its environs only. 1.6 RESEARCH HYPOTHESIS Hypothesis One Hi: There is significant relationship between the knowledge of market segmentation and potential customers needs. Ho: There is no significant relationship between the knowledge of market segmentation and potential customers needs. Hypothesis Two Hi: There is significant relationship between market segmentation and organisational productivity and performance Ho: There is no significant relationship between market segmentation and organisational productivity and performance. Hypothesis Three Hi: There is significant relationship between market segmentation and organisational profitability Ho: There is no significant relationship between market segmentation and organisational profitability. 1.7 SIGNIFICANCE OF THE STUDY The significance of the stud includes; To sensitize consumers on how to become brand loyal To sensitize consumers on how to make strategic purchase decisions To sensitize consumers on how to locate organisation with the best offers for them To enable marketers who are not familiar with the concept and application of segmentation reposition and integrate the concept into their strategies to gain its full benefits. To enable marketing access the different segmentation techniques and identify they very techniques that best suit their marketing situation. To enable marketers gain new orientation concerning the role of segmentation in the marketing process. 1.8 LIMITATION OF THE STUDY In the course of the research work, a number of problems were encountered which are; Financial constrain: One of the problems faced by the researcher is financial constraint. It was very difficult to provide the necessary finance required for the research work. Time factor: Another problem faced by the researcher is time. There was not enough time for the researcher to carryout this research work. Inadequate information: Most of the staff of Unilever Nigeria plc were reluctant in disclosing some vital information to the researcher. It was also difficult to reach out the most of the staffs during the visit to Coca Cola Plc, Benin City. 1.9 OPERATIONAL DEFINITION OF TERMS AND CONCEPTS Consumer market: A market made up of goods and services designed for the ultimate consumer or for personal family or household use. Customer aggregation: separation of customers into different groups according to buying needs and behaviour. District marketing mix: well planned integrated strategies of the four(4p’s) to achieve some desired results. P1: product planning and development of product that customer require with appropriate packaging and support service e.g. repair services place P2: distribution of products through appropriate channels e.g. wholesales, retailers etc which provide the services required by the customers price. P3: establishment of prices which after both value to the customers and satisfactory profit to the supplier P4: promotion of products through advertising, sales promotion, public relations and personal selling. District subsets of customers: Differentiated groups of customers according to buying need and behaviour, similar to customer aggregation Heterogeneous customer: different types of customers in terms of buying needs and buying behaviour Homogenous response: similar response demonstrated by customers with the same segment. Industrial market: a market mad up of goods and services purchased for the use of a firm operation to make other products industrial goods and services purchased for the use of a firms includes machinery, raw materials etc. industrial buyers include manufacturers, wholesalers, retailers, government etc. Market heterogeneity: differentiated markets Service market: A market made up of non tangible goods and services e.g. accounting services, medical services, engineering services, etc.
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