The living standards measure as a market segmentation tool for selected retailers / by Nedia de Jager

Businesses have realised that they cannot appeal to all consumers in themarketplace. Consumers are too numerous, geographically wide-spread, andtoo varied in their needs and buying practices. Furthermore, the business&themselves vary widely in their abilities to serve different segments of themarket. Businesses consequently conduct market segmentation to identify theparts of the market that it can best serve and most profitably. Therefore, thegoal of this study was to determine the actual target markets of selected retailersby means of the Living Standards Measure (LSM) tool, and to recommendimproved marketing strategies based on the Media Groups Measure (MGM) tool.The objectives of the study were to describe market segmentation byemphasising its importance and discussing the market segmentation process.Further objectives include explaining the application of the LSM- and MGM-toolsin identifying target markets and selecting media to reach these target markets,and to conduct an empirical investigation on the application of the LSM tool forthe selected retailers.A market segmentation strategy concentrates the business' marketing efforts onconsumers who have a similar interest in the business' values. Therefore,market segmentation enables the business to identify consumer needs moreaccurately. The aforementioned assists the business in creating a basis fordeveloping products to satisfy consumer needs. The basis is developed by theidentification of the attributes that are of value to consumers.Market segmentation furthermore assists in the development of an effectivemarketing mix, tailored to the business' strategy and objectives. A propermarketing mix can determine the promotional appeal, media choices, and theprices consumers are willing to pay.The LSM and MGM are only two of the variety of segmentation tools that can beused to segment a heterogeneous market. The LSM is a relatively new andunknown instrument - in comparison with other segmentation tools - and wasspecifically developed for the South African market. It is furthermore amultivariate segmentation tool, consisting of 29 household variables, whichexcludes discriminators such as race and income. The MGM-tool is used toobtain media consumption information on market segments. Its primary functionis to assist businesses in selecting media that are most effective in reaching theirtarget markets.The most important conclusions of this study are that the current target marketsof Shoprite Checkers and Pick 'n Pay in Potchefstroom differs from their actualtarget markets. Gender and age do not differentiate shoppers significantly, andalthough race and income are not included as differentiators in the LSM index,these two variables correlate strongly with the various LSM-groups.Some of the most important recommendations include:The headquarters of both retailers should consider developingdifferentiated marketing strategies for stores in different locations.Shoprite Checkers and Pick 'n Pay (in Potchefstroom) should both targetSU-LSM groups 6 to 10.Both retailers should adapt their marketing efforts in order to provide forthe local market in Potchefstroom.The recommendations will enable the retailers to enhance their business andmarketing efforts, and accordingly satisfy the needs of their customers.