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Executive summary
In the marketing of goods and services market segmentation is a useful tool that helps divide the market into different subsets. This in turn allows the service provider to identify one or more segments for the focus of the marketing effort to derive maximum benefit for the business. Demographic characteristics, Car categories, and geographic location are three bases for market segmentation for Australian motor car insurance providers. Psychographic (lifestyle) descriptors are perhaps a better basis for Australian motor car insurance provider market segmentation. Dividing the market by key characteristics will also help identify the services required by the target segment and help enhancement of policies, visibility, and revenue. Management and marketing strategies based on a good evaluation of market segments help create value for customers through product differentiation and the creation of centers of excellence specializing in narrow fields of service vital for the financial success of the organization.
The purpose of this report is to develop a specific market segment for this Australian motor car insurance provider, through an understanding of its customers, and which will allow us to develop a strategic edge and product differentiation the keys to success.
Introduction
Most Australians who own a motor vehicle or wish to own a motor vehicle prefer particular insurance that meets their needs and they can be segmented into various demographics. The demographics can be grouped into four distinct segments which are of interest to a marketer of motor insurance services and these distinctive segments have different segment profiles that are easily measurable. They can be summarized into the following:
Budget-conscious/entry-level buyers
This is the new or young generation who are in their mid twentys and below the majority of them who are college graduates or still in college and their income level ranges between $50,000 to $ 75,000 per annum. This group mostly uses cars for leisure, social, or errands because the majority of them are employed at the lower level of management while others may use cars to commute to college. In consideration of their income level and the purpose for the car they normally go for in the market that is sports like that consume low fuel as well as with low maintenance cost, therefore, insurance affected. These have a direct impact on the insurance cost that they are likely to incur. This segment is the best for any insurance marketer because it is easier to create loyalty for this group and ensure a long-term client. After all, if the service is good he will continue to patronize the company until old age. This segment is the largest in the country and in recent times wealth is shifting from the aged to the young generation. This group goes for cars like dodge, Pontiac, and other sports cars from other companies.
Domestic premium aspires
These groups consist of graduates from institutions and are in business or employment, they earn between $ 75,000 to $100,000 per annum. They are typically between the age of 35-45 years old and with such kind of income at their disposal, they own cars that can be used for domestic purposes or take them from one point to another including their families. Those with children in schools will use their cars to take them to school, others will use the vehicle for shopping and taking the children out for the weekend. This group will go for cars that fit the activities and lifestyles such as handling family activities. The insurance service marketer should be able to analyze and understand the family status and level of income before marketing the service to the customer.
Business/do it yourselfers
These groups are between the ages of 45-60 and also are university/college graduates or businessmen. The majority of them are employed in the senior management level and if in business they have stable businesses and they earn quite a substantial amount of money which may range between $ 50,000 to $ 100,000 per annum. Mostly they use their cars for business transactions their project, going to work, taking the family out others may own a car for prestige or social class. Those who are not married may use their car for other businesses like traveling with their pets. Therefore they need a car which you can load in items and remove the items easily. This group buys all types of models from Dodge, master, Toyota, master, range rovers, Prado, Nissan, and many others. A marketer targeting this market must be very careful if he is a new entry into the market because the product may be irrelevant if not well introduced.
Luxury import buyers
This group may be a member between the ages of 55 onwards who are old in the business, in senior positions in organizations, their income is beyond 100,000 K. they like buying luxury cars which most of them are imported. They may also use these vehicles for going out for vacations at the same time they may use the cars for taking care of their families. They prefer comfort, luxury, and automatic cars. Safety is of paramount importance to this group. They use cars such BMW, Mercedes Benz, Volkswagen, Acuras, Toyotas, Premio, range roves, and many models that are in existence.
The last two segments are the most important since these are both upscale in income and less concerned about lower prices than the other segments .
Using the descriptors outlined helps identify the market segment that Australian motor car insurance providers must target through a strategy aimed at winning over customers in the fiercely competitive market of insurance.
The above market segmentation is based on:
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Geographical
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Demographic
Given that people of the ages 25-50 are spread of the population in Sydney, the command area (Kotler & Clarke, 1987) in which the insurance will focus its marketing efforts is identified as the area within a radius of 10 miles, adjusting to the particular demographics of townships and colonies. This provides a target population in keeping with the size of the insurance. Beyond this, geographical market segmentation has no significance because it is an existing insurance and its location fixed. However, future expansion through the establishment of insurance must factor for population demographics and growth patterns.
References
Armstrong G. & Kotler P. (2007). Consumer Markets: Influences on consumer behavior, Principles of Marketing.
Kerin and Peterson (2007); Strategic Marketing Problems: Cases and Comments, 11th ed., Pearson/Prentice Hall.
Kotler P., 1989, marketing management; Analysis, planning, implementation and control, 6th Edition; Prentice-hall, India (NewDelhi)
Schaik J.L., (2002); The Task of Marketing Management; J.L. van Schaik (Pity) ltd.
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