ABSTRACT
In the
field of marketing, market segmentation and marketing performance have
continued to receive lots of attention over the past decades and have become of
great importance due to structural market changes, especially globalization
(Dolnicar and Freitag, 2013).When
markets are divided into different homogenous groups of consumers, it is known
as market segmentation. According to Kotler, (2009) has defined market
segmentation as the marketing strategy of having a total heterogeneous market
divided into relatively homogeneous markets. This is in agreement with the marketing concept which calls for
the understanding customers and efforts to satisfy their needs profitably.
However, customers differ in their needs and it is rarely impossible to satisfy
all customers by treating them equally. Market segmentation helps companies to
better understand the needs of the customers, and this function serves as one
of the main reasons why companies engaging in it.
TABLE OF CONTENTS
Cover page i
Title page ii
Declaration page iii
Certification page iv
Dedication v
Acknowledgements vi
Table of contents vii
List of tables viii
Abstract ix
CHAPTER 1
INTRODUCTION
1.1 Background
of the Study 1
1.2 Statement
of Problem 4
1.3 Objective
of Study 5
1.4 Research
Questions 5
1.5 Research
Hypotheses 6
1.6 Significance
of the Study 7
1.7 Scope
of the Study 8
CHAPTER 2
REVIEW OF RELATED LITERATURE
2.0 Introduction 9
2.1 Conceptual Framework 9
2.1.1The concept of market segmentation 9
2.1.2 Approaches and strategies 10
2.1.3 Levels of market segmentation 13
2.1.4
Requirements for market segmentation 15
2.1.5 Benefits of market segmentation 16
2.1.6 Target marketing and strategies 17
2.1.7 Steps in
market segmentation 20
2.1.8
Challenges of market segmentation 22
2.1.9 Concept
of marketing performance 23
2.1.10Market segmentation and its importance for effective value chain
management 30
2.1.11The nigerian leather industry 33
2.1.12 How
leather is made 36
2.2 Theoretical Framework 39
2.2.1 Contrast theory - Hovland, Harvey and Sherif (1987) 39
2.2.2Negativity theory – Carlsmith and Aronson
(1963) 40
2.2.3 Consumer socialization theory – Scott Ward
(1974) 41
2.3
Empirical
Framework 42
CHAPTER 3
RESEARCH METHODOLOGY
3.1
Research Design 47
3.2
Area of Study 47
3.3
Population of the Study 48
3.4 Sample Size Determination 49
3.4.1
Sampling procedure 49
3.5 Sources
of data collection 50
3.5.1
Primary data 50
3.5.2
Secondary data 50
3.6Validity
of the Instrument 51
3.7 Reliability of the Instrument 51
3.8
Method of Data Analysis 51
3.9
Model Specification 52
CHAPTER
4
PRESENTATION AND ANALYSIS
OF DATA
4.0 Introduction 55
4.1 Relationship Between Market
Segmentation and the Customer Acquisition in the Leather Industry in the Study
Area 55
4.2. Effect of
Market Segmentation on the Sales Volume of the Leather Industry in the Study Area 56
4.3 Effect of Market Segmentation on
Customer Loyalty in the Leather Industry 57
4.4 Effect of Market Segmentation on
the Profitability of the Selected Leather Enterprises 58
4.5 Effect of Market Segmentation on
the Market Share of the Leather Industry in Aba, Abia State 59
4.6 Factors Influencing Market
Segmentation Practices of the Marketers in
Leather Industry 61
CHAPTER 5
SUMMARY, CONCLUSION, RECOMMENDATIONS
5.1 Summary of Findings 63
5.2 Conclusion 6
5.3
Recommendations 66
References 68
LIST
OF TABLES
4.1:
Correlation coefficient table showing the relationship between market
segmentation and the customer acquisition 55
4.2: Regression
analysis showing the effect of market segmentation on the sales volume of the leather industry in
the study area 56
4:3: Regression analysis showing the
effect of market segmentation on customer loyalty in the leather industry 57
4.4: Regression analysis showing the
effect of market segmentation on the profitability of the selected leather
enterprises 58
4.5: Regression
analysis showing the effect of market segmentation on the market share of the
leather industry in Aba, Abia State 59
4.6: Multiple regression analysis showing the
factors influencing market segmentation practices of the marketers in leather
industry 61
CHAPTER 1
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
In the field
of marketing, market segmentation and marketing performance have continued to
receive lots of attention over the past decades and have become of great
importance due to structural market changes, especially globalization (Dolnicar
and Freitag, 2013).
When markets are divided into different
homogenous groups of consumers, it is known as market segmentation. According
to Kotler, (2009) has defined market segmentation as the
marketing strategy of having a total heterogeneous market divided into
relatively homogeneous markets. This is in agreement with the marketing concept which calls for
the understanding customers and efforts to satisfy their needs profitably.
However, customers differ in their needs and it is rarely impossible to satisfy
all customers by treating them equally. Market segmentation helps companies to
better understand the needs of the customers, and this function serves as one
of the main reasons why companies engaging in it. It has been observed that the
task of segregating consumers by specific features has helped companies to
identify other applications for their products that may or may not have been
self evident before. Uncovering these other ideas for use of goods and services
may help the company target a large audience in that same demographic
classification and thus increase market share among a specific sub-market base
(Maina, 2015).
The goal of market segmentation is on the belief that
no single individual is exactly the same with the other. Also, either by
cultural, social, geographical, political, space and time, no single group of
people can be a replica of the other.
This is why different people will continue to have different needs, aspirations
and demands which are completely different from those of others. It is the presence of such differences that
forms the basis for differentiating and segmenting consumers with distinct
consumption patterns and buying behavior.
It is based on this marketing philosophy that made Waiter (2009) in
Inyanga (2008) to suggest that market segmentation means the recognition that
groups or sub-segments differ with respect to (behavior and
attitude)properties, and therefore, different marketing mix are required to
appeal to the different observable consumer groups. It is still on the forgoing
that Bush and Houston (2010) saw market segmentation as the process by which
organizations match their total marketing programme to the peculiar manner in
which one or more customer groups behave in the market place; which is usually
manifested in customer expectations.
While there is the belief on the
existence of some theoretically ‘ideal’ market segments, but in reality every
organization operating in a market will have to develop different strategies of
carving specific market segments, and also create different product
differentiation strategies to exploit these segments. Such market segmentation
and the corresponding product differentiation strategies can give firms competitive
advantage over rivals, which is essential to its strategic survival (Maina,
2015).
Effective marketing performance within
any business industry (even among leather enterprises) can be obtained through
success in market segmentation. For manufacturers, producers, sellers and
service business providers to achieve sustainable marketing performance,
efforts should be made at the concentration of attention, externally on
customers’ needs to be addressed. To be able to achieve effectively their set
goal, an efficient and flexible strategic decision is needed - the channels
through which the goods and services must pass before they reach to the
ultimate consumers, the required promotion tools to be employed, among others.
The market which is to be targeted by the company can only be determined
through market segmentation. This enables the marketer to select his target
market(s). It is also worthy of mention here that all marketing activities of
every organization are directed towards the customers
and this includes those in the leather business industry of Abia State,
Nigeria. This makes it necessary for organizations to define their products in
terms of what they do to satisfy customers and not as what they can make or
produce. Success in customer service can only be achieved when firms make
increased efforts to understand and respond promptly to customers’ expectations
accordingly. The customer must always be viewed as the lifeblood of every
successful business enterprise.
Even
as a leather enterprise, it is not possible to be all things to all people. The
quest to offer equal customer service to all customer of a business
organization is good, but this is uneconomic service mantra that belongs to the
past. Players in the leather industry are utilizing their business experience
and individual customer information to categorize customers into various market
segments to find a balance in customer service levels, (including customer
supports, discounts, etc) to foster customer loyalty, customer retention and
most importantly, profitability. However, as Hinson, et al., (2016) contend, in
a competitive world, the propensity of customers switching to rival firms
becomes high especially when such customers feel dissatisfied with offers
provided.
This
study gives the researcher the opportunity to examine the effect of market
segmentation on the marketing performance of selected leather enterprises in
Aba, Abia State.
1.2
STATEMENT OF THE PROBLEM
Today, the market place is extremely competitive
with a wide array of products facing the customers. Market segmentation
strategy is a basic tool for achieving market efficiency which helps to
increase customer loyalty, corporate image, acquisition, which all contributes
to the development and growth of a company. Market segmentation strategies are generally used to identify and
further define the target customers, and provide supporting data for marketing
plan elements such as positioning to achieve certain marketing plan objectives.
Businesses may develop product differentiation strategies, or an
undifferentiated approach on the specific products or product lines depending
on the specific demand and attributes of the target segment. Doing this poses problems
to marketing management. These problems include identification of market
segments, adoption of segmentation, differentiation and target strategies.
One of the hindrances encountered in the process of
analyzing the effect of market segmentation on growth of firms is the inability
to develop a segmentation strategy that will increase acquisition. According to
Anyanwu (2013), a consumer is a king in every business, thus, a proper
segmentation of market will increase consumer’s level of purchase which in turn
contributes to a firms growth.
However, Tu-Shar (2009)
has revealed that research works have not been seriously carried out on the
effect of market segmentation on marketing performance in the leather industry.
Others have studied the relationship between market segmentation and market
performance as a whole, without using some parameters to measure market
performance indices(Young, 2012).This research work aims at examining the effect of market segmentation
strategy on the performance of leather industry in Aba, Abia State. Performance
of the leather industry has witnessed a downward spiral which is usually
observed through the rate of production and rate of demand of the product
(Adewuyi, 2008). In Aba, there are leather companies that produce different
kinds of leather bags ranging from female, male, unisex and travelling bags.
The bags are being produced with the idea of market segmentation in order to
have varieties of bags in the market and more so to create avenue to maximize
their sales volume only; neglecting other indicators of marketing performance. But this work is poised to identify market segmentation and the
marketing performance of the leather industry in Aba, Abia State. The bases or
the strategies for market segmentation here will include geographical
segmentation, demographic segmentation, psychographic segmentation, benefit
segmentation and behavioural segmentation. Then the indicators of marketing
performance will be sales volume, profitability, market share, customer
satisfaction and customer loyalty.
1.3 OBJECTIVES OF STUDY
The main objective of the study was
to determine the effect of market segmentation on the marketing performance of
selected leather enterprises in Aba, Abia State.
However, the specific objectives were
to:
i.
determine the
relationship between market segmentation and the customer acquisition in the
leather industry in the study area.
ii.
analyze the effect of
market segmentation on the sales volume of the leather industry in the study
area.
iii.
ascertain the effect of
market segmentation on customer loyalty in the leather industry.
iv.
analyze the effect of
market segmentation on the profitability of the selected leather industry.
v.
examine the effect
of market segmentation on the market
share of the leather industry in Aba, Abia State.
vi.
ascertain the factors
influencing market segmentation practices
of the marketers in leather industry
1.4
RESEARCH QUESTIONS
The
research sought to give answers to the following questions.
i.
What is the relationship
between market segmentation and the customer acquisition in the leather
industry in Aba, Abia State?
ii.
What is the effect of
market segmentation on the sales volume of the leather industry in Aba, Abia
State?
iii.
What is the effect of
market segmentation on the customer loyalty in the leather industry in Aba,
Abia State?
iv.
What is the effect of
market segmentation on the profitability of the leather industry in Aba, Abia
State?
v.
What is the effect of market
segmentation on the market share of the leather industry in Aba, Abia State?
vi.
What are the factors
influencing market segmentation practices of the marketers in leather industry?
1.5
RESEARCH HYPOTHESES
The following null hypotheses were
formulated to guide the study.
H01:
market segmentation has no significant relationship with customer acquisition
in the leather industry in Aba, Abia State.
H02:market
segmentation has no significant effect on the sales volume of the leather
industry in Aba, Abia State.
H03: market
segmentation has no significant effect on the customer loyalty in the leather industry
in Aba, Abia State.
H04: market
segmentation has no significant effect on the profitability of the leather
industry in Aba, Abia State.
H05:market
segmentation has no significant effect on the market share of the leather
industry in Aba, Abia State.
H06:
Competition and benefit sought have no significant influence on market
segmentation practices of the marketers in leather industry
1.6
SIGNIFICANCE OF THE STUDY
This research study will hopefully be
of great importance or assistance to the marketing department of leather
industries in Aba, Abia State; and to a great extent aid in retaining the
market share or to increase it.
However,
this study will also show that promotional activities especially advertising
and sales promotion remains a viable, efficient and effective tool to use in
respect of product quality and loyalty of a product over another not also
overlooking the importance of branding.
Finally,
this research study will serve as a resource material and sufficient guide and
good source of secondary data on this topic for future researchers.
1.7
SCOPE OF THE STUDY
The
scope of the study is based on the effect of market segmentation and marketing
performance among leather enterprises in Aba, Abia State. The content of the
study contained segmentation variables such as; benefit status, loyalty status,
buyer neediness, occupation, income, education, etc. Geographically, the study
was carried out in Aba, Abia State. Aba is a city in the southeast of Nigeria
and the commercial nerve center of Abia State. It lies along the west bank of
the Aba River, and is at the intersection of roads leading to Port Harcourt,
Owerri, Umuahia, Ikot Ekpene, and Ikot Abasi. Aba is a major urban settlement
and commercial centre in a region that is surrounded by small villages and
towns. The indigenous people of Aba are the Ngwa. Aba is well known for its
craftsmen. As of 2006 census, Aba had a population of 534,265. Aba has been
nick-named the Japan of Africa due to the many commercial businesses that are
carried out in it. Ariaria International market, Powerline leather market,
Bakassi Market, are many of the leather markets in Aba, Abia State. Thus, this
study was limited to the users of leather products namely bags, shoes, belts,
etc. This group of people constituted the target respondents that generated
data for the study.
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