Introduction
Product segmentation is a marketing strategy that involves dividing a company's products into subgroups based on specific criteria, such as customer needs, preferences, and behavior. Product segmentation helps companies to tailor their marketing efforts to meet the unique needs and preferences of different customer groups, which can increase customer satisfaction, loyalty, and profitability. This report aims to study and identify the product segmentation process of SevenUp Bottling Company in Nigeria.
Product segmentation offers several benefits to businesses, including:
Targeted marketing: By dividing the market into smaller, homogeneous segments, businesses can tailor their marketing efforts to specific customer needs and preferences. This results in more effective marketing campaigns and higher customer engagement.
Increased sales: By targeting specific segments, businesses can identify and capitalize on unmet customer needs and preferences, leading to increased sales and revenue.
Cost efficiency: Targeted marketing reduces wasted resources by focusing efforts on customers who are most likely to purchase a product or service. This results in more efficient use of resources and lower marketing costs.
Improved customer satisfaction: By offering products and services that meet specific customer needs and preferences, businesses can improve customer satisfaction and build loyalty.
The application of product segmentation differs in global and local markets due to differences in cultural, economic, and social factors. In a global market, businesses must consider differences in language, cultural norms, and consumer preferences across different regions. This requires a deep understanding of local markets and the ability to adapt marketing strategies to meet the unique needs of each market.
In a local market, businesses can rely on a more in-depth understanding of the cultural and social factors that influence consumer behavior. This allows for more targeted marketing efforts that resonate with local customers and lead to higher levels of engagement and customer loyalty.
Company Overview
SevenUp Bottling Company (SBC) is a subsidiary of SevenUp Bottling Group, which is one of the largest independent bottlers of PepsiCo beverages in the world. SBC was established in Nigeria in 1960 and is headquartered in Lagos. The company produces and distributes a range of soft drinks, including Pepsi, 7UP, Mirinda, Teem, and Mountain Dew. SBC has since become one of Nigeria's largest beverage companies. It operates in Nigeria with over 11 bottling plants across the country and its products are sold in over 1 million retail outlets across the country.
Over the years, SBC has expanded its product portfolio to include a range of brands, including Pepsi, Mirinda, and Aquafina. The company has also invested in local production to support the Nigerian economy and create jobs for the local population.
As of 2021, SBC's market share in Nigeria is estimated to be around 30%, making it one of the leading beverage companies in the country. The company has faced increased competition from other local and international beverage companies in recent years but has continued to maintain its market position through innovation, marketing, and strategic partnerships.
SBC has also been recognized for its commitment to sustainability and corporate social responsibility. The company has implemented various initiatives to reduce its environmental impact and support local communities, including a waste management program and a scholarship program for Nigerian students.
SBC Product Segmentation
Product segmentation is a process of dividing a product market into different subgroups of customers with distinct needs and characteristics. This enables businesses to tailor their marketing mix to meet the specific needs of each group. The criteria SBC uses to segment its products include demographic, geographic, psychographic, and behavioural variables. These variables help the company divide the market into smaller subgroups with distinct needs and characteristics, enabling it to tailor its marketing mix to meet the specific needs of each group.
For example, SBC may segment its carbonated soft drinks by demographic variables such as age and gender, geographic variables such as location and climate, psychographic variables such as lifestyle and personality traits, and behavioural variables such as usage rate and brand loyalty. By using these variables, SBC can develop targeted marketing strategies that resonate with each segment's specific needs and preferences.
The product segmentation process of SBC can be structured into four steps:
Step 1: Market Research
The first step in the product segmentation process is market research. SBC conducts market research to identify the different types of customers in the market and their needs. The company uses various research methods such as surveys, focus groups, and online research to gather data on customer preferences and behavior. The data collected is analyzed to identify the different segments in the market.
Step 2: Segment Identification
The second step in the product segmentation process is segment identification. SBC uses the data collected in market research to identify the different segments in the market. The company divides the market into different groups based on various factors such as age, income, lifestyle, and geographic location. The company also considers the product usage rate, benefits, and attitudes towards the product.
Step 3: Segment Profiling
The third step in the product segmentation process is segment profiling. SBC profiles each segment by analyzing their needs, behavior, and characteristics. This enables the company to tailor their marketing mix to meet the specific needs of each segment. SBC uses different segmentation variables such as demographic, geographic, psychographic, and behavioral variables to profile each segment.
Step 4: Targeting and Positioning
The fourth and final step in the product segmentation process is targeting and positioning. SBC targets the segments that have the greatest potential for growth and profitability. The company then positions its products to meet the specific needs of each segment. SBC uses different marketing strategies such as product, price, promotion, and place to position its products in the market.
Mountain Dew Illustration
SBC uses different product segmentation strategies for its different product lines. For example, Mountain Dew is a citrus-flavoured soft drink that is known for its association with extreme sports and its appeal to young, active consumers. To effectively market Mountain Dew, the brand has implemented a segmentation strategy that targets specific demographic, geographic, psychographic, and behavioural segments.
Demographic Segmentation:
Mountain Dew targets young, active consumers aged 18-34 who are primarily male. This demographic is more likely to engage in extreme sports and activities, which aligns with Mountain Dew's brand image.
Geographic Segmentation:
Mountain Dew's marketing efforts are targeted towards consumers living in rural and suburban areas of the United States. These areas tend to have a higher concentration of outdoor enthusiasts and extreme sports participants.
Psychographic Segmentation:
Mountain Dew's target market values adventure, excitement, and individualism. The brand's advertisements often feature extreme sports, such as skateboarding and snowboarding, and highlight the "Do the Dew" slogan, which promotes individuality and a rebellious spirit.
Behavioral Segmentation:
Mountain Dew consumers tend to be heavy users who consume the product frequently and are brand loyal. The brand also targets consumers who are willing to try new flavors and are willing to take risks.
Based on this segmentation strategy, Mountain Dew has developed a marketing mix that aligns with the needs and preferences of its target segments. The brand's advertising campaigns feature extreme sports and highlight the brand's association with adrenaline-pumping activities. Mountain Dew also offers limited edition flavors and special promotions to appeal to its brand loyalists and encourage new users to try the product.
In addition, Mountain Dew has also partnered with extreme sports events, such as the X Games, to further align itself with its target market. This strategy has helped the brand to establish a strong brand image and a loyal following among young, active consumers.
Product Segmentation in Comparison with Other Brands
Product segmentation is essential in the Nigerian beverage industry as it enables companies to differentiate their products from competitors and cater to the diverse needs and preferences of consumers. Effective product segmentation can lead to increased brand loyalty, higher customer satisfaction, and improved profitability.
One example of a beverage company that has successfully implemented product segmentation in Nigeria is Coca-Cola. Coca-Cola offers a range of products tailored to different segments of consumers, including sugar-free options such as Coca-Cola Zero Sugar and Diet Coke, as well as localized offerings such as the popular Coca-Cola Cherry flavor, which is exclusive to Nigeria. The company also targets specific demographics with products such as Fanta, which is popular among young people, and Sprite, which is marketed towards a health-conscious audience. Nigerian Bottling Company (NBC) produces and distributes a range of popular soft drink brands, including Coca-Cola, Fanta, Sprite, and Limca. The company also offers a range of low-sugar and sugar-free options to cater to health-conscious consumers.
Another successful beverage brand that has implemented product segmentation is Red Bull. Red Bull has created a unique positioning as a premium energy drink that targets young adults and extreme sports enthusiasts. The company has also launched a range of different products, including energy drinks, sports drinks, and organic beverages, to cater to the diverse needs and preferences of its target audience.
In comparison, SevenUp Bottling Company in Nigeria may need to evaluate its segmentation strategy against other industry players to remain competitive. This could involve conducting market research to better understand consumer needs and preferences, and developing new products or variations of existing products that cater to different segments of consumers.
Example of a Successful Product Segmentation Strategy.
One example of a successful strategy for product segmentation can be seen in the skincare industry, specifically with the brand CeraVe. CeraVe recognized that the skincare market was highly competitive, with many brands offering a wide range of products that often-left consumers confused and overwhelmed. CeraVe focused on simplifying the market by targeting a specific segment: people with sensitive skin.
To develop its segmentation strategy, CeraVe conducted extensive market research to understand the specific needs and preferences of people with sensitive skin. The company discovered that people with sensitive skin often struggled to find skincare products that were gentle, effective, and affordable.
Based on these insights, CeraVe developed a line of skincare products that were specifically formulated for people with sensitive skin. The products were designed to be gentle, fragrance-free, and non-irritating, while still delivering effective results.
To market its products, CeraVe used a variety of strategies that targeted its specific segment. The company focused on education and transparency, providing detailed information about its product ingredients and how they benefited sensitive skin. CeraVe also partnered with dermatologists and other healthcare professionals to create a trusted network of experts who could recommend its products to their patients.
As a result of its successful product segmentation strategy, CeraVe has become a leader in the skincare industry, with a loyal customer base and strong brand recognition. The company was even acquired by L'Oréal in 2017 for $1.3 billion.
Conclusion
In conclusion, market segmentation is a crucial strategy for businesses to achieve marketing success. A successful strategy for product segmentation involves identifying a specific segment with unmet needs, conducting extensive market research to understand that segment, developing products that meet their specific needs, and using targeted marketing strategies to reach and educate that segment. A product is able to differentiate itself from competitors and achieve significant success The product segmentation process of SevenUp Bottling Company involves market research, segment identification, segment profiling, and targeting and positioning. SBC uses different segmentation strategies for its different product lines, such as demographic, geographic, and psychographic segmentation. By tailoring its marketing mix to meet the specific needs of each segment, SBC can achieve greater efficiency and effectiveness in its marketing efforts.
References
Aaker, D. A., & Day, G. S. (1986). Market research and analysis. John Wiley & Sons.
Kotler, P., & Armstrong, G. (2010). Principles of marketing. Pearson Education.
Kumar, V., & Reinartz, W. (2018). Customer relationship management: Concept, strategy, and tools. Springer.
Lamb, C. W., Hair Jr, J. F., & McDaniel, C. (2011). Essentials of marketing. Cengage Learning.
SevenUp Bottling Company. (n.d.). About us. Retrieved from https://7up.com.ng/about-us/
Yoo, B., Donthu, N., & Lee, S. (2000). An examination of selected marketing mix elements and brand equity. Journal of the Academy of Marketing Science, 28(2), 195-211.
The beauty of data-driven marketing: How CeraVe became the #1 facial skincare brand in the US (Think with Google, 2020)
The Inside Story of How L'Oréal Used Data to Rebuild CeraVe Skincare for a Global Market (Adweek, 2018)
5 Lessons from CeraVe on Building a Disruptive Brand (Inc., 2021)