(Doc) Market Segmentation - Assignment

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CHAPTER II
LITERATURE REVIEW
II.1 Market Segmentation
Technically, market segmentation is the process of dividing the population
of possible customers into distinct groups. Those customers within the same
segment share common characteristics that can help a firm in targeting those
customers and marketing to them effectively (Lovelock and Wirtz, 2011).
Segmentation is one of the most important concepts in marketing. Firms
vary widely in their abilities to serve different types of customers. Hence, rather
than trying to compete in an entire market, firms should segment the market.
Through the process of market segmentation, firms will identify those parts, or
sections of the market, that they can serve best.
There are many ways to segment the market, including the following
common ways and these approaches can be used in combination:
a) Demographic segmentation, such as age, gender, income, has been widely
used. That works well, when demographics are highly associated with
needs and wants. However, such an association may often not be the case,
as two people with the exact same demographic characteristics may have
very different needs and therefore exhibit different buying behaviours.
b) Psychographic segmentation has become more popular as it reflects
people’s lifestyles, attitudes and aspirations. Psychographic segmentation
can be very useful in strengthening brand identity and creating an

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emotional connection with the brand, but may not necessarily result in
sales.
c) Behavioural segmentation is based on product consumption-related
behaviours and can include frequency, volume and type of product usage.
This type of segmentation can be very powerful for firms that have a
membership-type relationship with customers, for example, via a contract
such as banks and telecommunications providers, or via loyalty
programmes. Here, firms can exactly observe consumption behaviour. A
drawback is that firms typically can only observe the behaviour with
regard to their own products, but not those of their competitors.
d) Needs-based segmentation groups customers based on similar needs and
wants, or benefits sought, with regards to a particular product or
consumption context. Needs-based segmentation is perhaps the
segmentation truest to the marketing concept, that is, satisfying customers’
needs and wants. For companies to increase their sales, segmentation
requires understanding customer needs, including those that are
underserved or even unmet.
II.2 Brand Community
A brand community is a community formed on the basis of attachment to a
product or marque. Recent developments in marketing and in research in customer
behavior result in stressing the connection between brand, individual identity and
culture. Among the concepts developed to explain the behavior of customers, the
concept of a brand community focuses on the connections between customers.

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A brand community is a specialized, non-geographically bound
community, based on a structured set of social relationships among admirers of a
brand. It is specialized because at its center is a branded good or service. Like
other communities, it is marked by a shared consciousness, rituals and traditions,
and a sense of moral responsibility. Each of these qualities is, however, situated
within a commercial and mass-mediated ethos, and has its own particular
expression. Brand communities are participants in the brand’s larger social
construction and play a vital role in the brand’s ultimate legacy.
The research on brand community and brand loyalty has been developed
and some might have been well-implemented. In a study of Jeep and Harley
Davidson community, McAlexander et al. (2002) said that community-integrated
customers serve as brand missionaries, carrying the marketing message into other
communities. By proactively providing the context for relationship to develop,
marketers can cultivate community in ways and increase the customer loyalty.
Customers who are highly integrated in the brand community are emotionally
invested in the welfare of the company and desire to contribute to its success.
In area of brand community and virtual community, Ouwersloot and
Odekerken-Schröder (2008) argues that heterogeneity within communities does
exist and treating them as a single, homogenous group may be a serious mistake.
Both suggest that communication with members should be differentiated and the
communication strategy used to promote the community also should be adapted to
the prime purpose in which the community is built.

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Brand communities in general provide brand ability-related information
and integrity-level experiences. This in turn motivates customers themselves to
improve the brand with which they associate, since they strongly believe that their
opinions will be reflected in the brand management (Hur, W-M et al., 2011).
Muniz and O’Guinn (2001) who have carried out a lot of studies about the
brand communities focus on the three important elements of brand communities;
(1) Consciousness of Kind: Collective consciousness is about strong connection
feeling between community members. Members feel like they know each other,
although they have never met. Legitimacy and oppositional brand loyalty
concepts are important in collective consciousness. Legitimacy is about usage of
the brand with the “right reasons”. For instance, the community members do not
find the reason of “using the brand just because it is popular” legitimate.
Oppositional brand loyalty is about the thought that possession of that certain
brand makes members special and different. Brand loyalty is so critical for
continuity of collective consciousness (Muniz and O’Guinn, 2001:418). (2)
Shared Rituals and Traditions: The rituals and traditions are also among the
elements, important for the collective consciousness to develop and continue.
These are generally formed by “celebrating the history of the brand” and “shared
brand stories”. Stories about brand and celebration of noteworthy days of the
brand contribute to create and hear shared values amongst community members.
One of the stories about the brand history is logo or label of the brand. While
current logo or label has a commercial value, older one has a nostalgic value.
Stories in exchange are the elements that is shared and talked about by community