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Evaluate How Uk Supermarkets Use Market Segmentation, Targeting And ...


Evaluate how UK supermarkets use market segmentation, targeting and positioning to gain a competitive advantage.
1. Introduction
This paper sets out to apply basic segmentation, targeting and positioning concepts to the UK supermarket sector and will evaluate the extent to which the use of these concepts is leading to the achievement of sustainable competitive advantage with any or all of the supermarkets selected.
The focus will be on the three major supermarkets: Tesco, Asda and Sainsbury.
The paper will begin with an explanation of the concepts and will move on to a description of the strategic positioning of each of the major supermarkets in the current marketplace. Chapter 4 will evaluate the relative success of the three companies chosen and assess the extent to which their approach to segmentation and positioning has enabled them to achieve some measure of competitive advantage.
Sources of information are: recognised marketing textbooks, articles from learned journals, newspapers and periodicals and company annual reports and websites.
2. Definitions, explanations and questions
2.1 Definitions of the basic concepts
Jobber defines segmentation as the identification of individuals or organisations with similar characteristics which have significant implications for the determination of marketing strategy.It is a process which results in the clustering of people with supposedly similar buying behaviour, such that marketing mixes can be designed to meet the specific needs and wants of people
within the cluster.
Once the market has been described in terms of an amalgam of homogeneous segments, companies need to decide which, if any, segments to target. Should they adopt a niche approach (like Morgan in the automobile sector), where only one type of vehicle is produced for a specific segment of the market, or should they adopt a mass market coverage approach (like Ford or GM), where vehicles are produced to appeal to the whole range of different requirements across the different segments?
Positioning describes the manner by which a company differentiates its products/services from the competition within each target market. Sometimes these differences are very fine. Mercedes and BMW both have, for example, quality images and are priced high relative to most competitors but Mercedes has historically had a greater appeal among older, more conservative drivers and BMW has appealed more to those who see themselves as dynamic and thrusting.
2.2 Segmentation rationale
At one level the segmentation process enables companies to tailor their products or services to meet the needs of the market better than competitors and to choose segments which are aligned with their capabilities as a company. They are also able to select segments which are large enough for them to supply efficiently. Segmentation therefore facilitates differentiation, which should improve competitiveness, which should, in turn, lead to higher profitability.

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