Market Segmentation in the Automobile Industry - Research Paper

Introduction

Marketing segmentation is an undoubtedly interesting topic in marketing. It encompasses the process of categorizing a group of potential customers into subgroups commonly known as segments based on their unique characteristics. They can be grouped either by demographics, geographic location, behavioral patterns, or psychographic factors (Aghdaie, and Alimardani 262). The primary aspect of market segmentation is that these segments often comprises of customers who share similar traits making them respond similarly to particular market strategies implemented by the firm therein. Through analyzing the unique characteristics of the consumer segments, business creates a competitive advantage since they establish strategies that aid at meeting the interests, needs, and preferences of the consumer segments. The papers, therefore, focus on exploring the concept of market segment in the automobile industry by assessing the segmentation strategy utilized by four key firms including Tesla, Ford, Audi, and Mercedes.

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Tesla Automotive Company

Tesla Inc. focuses on the production and sale of solar panels, lithium-ion battery energy, and electric cars. Since it was established in 2003, it began to make profits in 2013, after ten years. The company provides affordable products to its customers owing to its current strong brand in the industry (Tesla "Electric Cars, Solar Panels & Clean Energy Storage").

Tesla automotive embraces the significant market segmentation in creating a competitive advantage in the highly competitive industry that it operates. While Tesla's brand is very powerful in the industry, it incorporates a very simple segmentation strategy. It integrates a mono-segment positioning strategy which refers to a situation where a company focuses on a single customer segment which in this case is the premium customers who prefer using the all-electric sports cars (Tesla "Electric Cars, Solar Panels & Clean Energy Storage"). Nonetheless, the single target market is further categorized based on demographics, geographical location, behavioral, and psychographic features. The market segment is characterized by consumers who are more concerned about the negative environmental effects created by vehicles that use oil and gas. In this case, these customers prefer using Tesla's all-electric vehicles since it meets their interests, preferences, and concerns. Although the company strives to provide affordable prices to its customers, its products are considered to be very expensive for average customers. Therefore, the company targets wealthy consumers who have above average household income.

Ford Motor Company

Ford Motor Company is an American multinational automotive that was founded by Henry Ford. While the company has various product lines, it recently announced that it would be focusing on two major products which are trucks and SUVs (Ford. "New Cars, Trucks, SUVs, Crossovers & Hybrids"). The reason for this new strategy was to focus on producing and selling the most profitable products while providing the best attributes therein. For instance, in the two models, the company would focus on introducing hybrid-electric which is considered to be cost-effective making it affordable to the average income households in the market.

Market segmentation is also an integral part in enhancing the operational efficiency and strengthening Ford's brand image. The company integrates a multi-segment positioning strategy which encompasses using various products to capture multiple customer segments. It means that Ford strives to appeal to the need and preference of various customers by providing a product mix that matches the interests of these consumer segments. It does this by providing economy vehicles, sports cars, luxury cars, vans, trucks, and wagons. While the company targets multiple customer segments, they are further categorized based on demographics, geographical location, psychographic, and behavioral variables. For instance, the company has produced the latest product, FORD FIESTA which targets the youth, young families, ladies, and middle (average) income households (Ford. "New Cars, Trucks, SUVs, Crossovers & Hybrids").

Audi Automobile Manufacturer

Audi is a German automobile manufacturer that focuses on designing and distributing luxurious cars. It is headquartered in Bavaria, Germany and since 1966, it has been 99.55% owned by Volkswagen (Audi "Luxury Sedans, SUVs, Convertibles, Electric Vehicles & More").

Audi uses a mono-segment positioning strategy by focusing on a single market consists of premium customers. These consumers encompass the wealthy and high-income households who do not mind to pay extra to enjoy products that have extra features meeting their needs and preferences. In identifying its customer segment, Audi differentiates them based on geographic location, demographics, behavioral, and psychographics. Creating a strong brand as well as a positive image are key elements that define the marketing strategy. This is because the company focuses on premium customers and therefore, they value strong brands as a way to meet the needs and preferences of the premium customers. Audi's approach is useful since they provide high customer satisfaction by providing high quality, luxurious, attractive designs, and innovative cars that give their customers the luxurious feel (Audi "Luxury Sedans, SUVs, Convertibles, Electric Vehicles & More"). In manufacturing most of its cars, Audi emphasis more on using a stylish design while integrating the modern technological concepts.

Mercedes-Benz Automobile Company

Mercedes-Benz is a multinational brand produced by Daimler AG, a German manufacturer. The brand is headquartered in Stuttgart, Germany. The brand entails both the light and heavy commercial auto motives for its customers (Mercedes-Benz. "Mercedes-Benz International").

Mercedes-Benz adopts a strategy that is almost similar to Audi. This is because it focuses on serving wealthy households within the market by providing luxurious and stylish car designs. While the company targets to reach the market segment (the premium customers), it provides services based on demographics, geographic location, behavioral, and psychographic aspects. Further, the company integrating a differentiation strategy that aids in attracting and satisfying the needs and preferences of the target segment. In this case, Mercedes-Benz brand targets the high-income households, professionals, executives, people from the upper social class, and customers who are more concerned of technologically backed and modernized cars (Mercedes-Benz. "Mercedes-Benz International"). Their cars are often more stylish, more safe, more efficient, and possess a luxurious outlook. The brands have been effective in the market since it provides products that meet the needs of the target market. For instance, it focuses on emotional appeal by producing fashionable, expensive, and stylish vehicles that give a top class feel to its customers.

Conclusion

The analysis above shows that market segmentation is vital in identifying the key needs and preferences of the target market. By understanding the unique characteristics of the target customers, it has helped the four companies to produce products that focus on meeting these needs. Achieving customer satisfaction, in turn, helps in creating a competitive advantage in the particular market segment. However, it is evident that each of the company applies its unique positioning and segmentation strategy depending on their target market.

Work Cited

Aghdaie, Mohammad Hasan, and Maryam Alimardani. "Target market selection based on market segment evaluation: A multiple attribute decision making approach". International Journal of Operational Research, vol 24, no. 3, 2015, p. 262. Inderscience Publishers, doi:10.1504/ijor.2015.072231. Accessed 30 Mar 2019.

Audi. "Luxury Sedans, Suvs, Convertibles, Electric Vehicles & More". Audiusa.Com, 2019, https://www.audiusa.com/.

Ford. "New Cars, Trucks, Suvs, Crossovers & Hybrids | Vehicles Built Just For You | Ford.Com". Ford Motor Companies, 2019, https://www.ford.com/.

Mercedes-Benz. "Mercedes-Benz International: News, Pictures, Videos & Livestreams.". Mercedes-Benz.Com, 2019, https://www.mercedes-benz.com/en/.

Tesla. "Electric Cars, Solar Panels & Clean Energy Storage". Tesla.Com, 2019, https://www.tesla.com/.