Introduction
Innospark is a Lithuania based children’s education toys maker, they seek to develop along their two major strategic dimensions of new market development and new product development. Innospark’s target aims to achieve their target for new product development through launch of one new product in monthly basis. In the same time, they also want to keep their organization focused and flexible. They develop and offer creative educational toys and tools which stir the imagination and inspire to discover and explore & encourages for playing and learning at the same time. Innospark aims to create an environment where children can safely create and dream. While creating the products Innospark follows the principles of the education process is equally important than the results and education needs to be open (innospark.lt).
Segmentation Strategy for Innospark
Innospark needs to provide a simple statement of benefits that they intend to provide to every segment, along with their appropriate pricing that Innospark will charge to each segment for provided benefits. Value maps can be used for every customer segment that would reveal the value propositions that are more likely to appeal strongly to a certain segment. For helping managers implement their value propositions throughout Innospark, a relevant extension of their business system: the concept of value delivery system that is geared at advancement of the value proposition during all stages of distribution and production is required (Golub et al.). To counter the challenge of expansion onto new markets, Innospark can use most of the same variables for segmenting their markets like other large toys corporations. Most business buyers segment either demographically, geographically or by the benefits, usage rate, user status and the loyalty status. Yet, many business marketers are known to use additional variables like customer’s operating characteristics, situational factors, purchasing approaches and personal characteristics.
Innospark planning expansion through new markets and new product features needs to be managed with effective segmentation of international markets. Operating in many countries at the same time presents many new challenges for Innospark. Some countries despite their close geographic positioning can vary in greatly in their terms of their economic, social, cultural and political build-up. Thus, it is important for Innospark to group their world markets in segments with distinct purchasing behaviours and needs, just like they do in their domestic or current markets. Innospark can segment their international markets by combination of one or several variables. They can simply segment by their geographic location and grouping countries by their regions like the Pacific Rim, Western Europe, the Middle-East or Africa. Geographic segmentation strategy can help Innospark to formulate their plans accordingly; nations that are closer to each other are more likely to have similar consumer behaviours and traits. Example can be Canada and United States having many things in common both culturally and economically. Also, it is possible that regional geographic segmentation can be unsuccessful. Example: Innospark should not make the mistake of lumping up the South and Central American countries together. There are several differences in countries from Central and South American. Above all many of them do not speak Spanish that includes around 200 million Brazilians who converse in Portuguese.
Another way that can be used for segmentation of international markets by Innospark is through economic factors. For their need of expansion Innospark can group populations on the basis of their economic levels or through the level of economic development. Every country’s economic structure shapes their population’s services and product requirements and, therefore, possible marketing opportunities on offers. For example, several companies have started to target BRIC countries that have fast-growing and developing economies with their rapidly increasing purchasing power. Innospark can target these countries for their growth potential and any segmentation can be done on the basis of the culture form in these countries. Another way that Innospark can segment their market for international expansion purposes is through political and legal factors like the stability and type of their government, monetary regulations, receptivity to foreign firms and amount of bureaucracy.
Finally, cultural factors can also be implemented by Innospark for grouping markets on the basis of their common languages, values and attitudes, religions, customs, and their behavioural patterns. Innospark needs to ensure any expansion into foreign markets done on the basis of cultural factors evaluates the market on the patterns followed in all countries which affects the choice for expansion in these countries. Any segmentation in international markets and expansion strategy on the basis of geographic, cultural, economic, political and other factors assumes that segments needs to comprise of clusters of countries.
Segmentation of market has been made much easier with availability of communications technologies that includes satellite TV and Internet that connects customers all over the world, marketers can identify and reaches market segments of the like-minded customers no matter what their location. With use of intermarket segmentation Innospark can form segments of customers having similar needs and buying behaviours despite the fact that they are located in different regions (Kotler & Armstrong, p. 199-200).
Conclusion
Effective market segmentation reveals firm’s opportunities in every market segment. Through effective market segmentation, Innospark can divide huge, heterogeneous markets into smaller customer segments that they can reach more effectively and efficiently with the products and services which match the unique needs of Innospark and their expansion challenges. There is no perfect way for market segmentation; Innospark needs to try different segmentation variables, either alone or in combination, for finding their best way of viewing the market structure.
Works Cited
Kotler, P, and G. Armstrong. "Consumer Markets and Consumer Buyer Behavior." Principles of Marketing. 14th ed. New Jersey, United States : Prentice Hall, 2011. 199-200. Print.
Golub. H, Henry, J., Forbis, J.L., Mehta, N.T., Lanning, M.J., Michaels, E.G. & Ohmae, K.
“Delivering value to customers”. Mckinsey Insights & Publication. mckinsey.com June 2000. Web. March 2014
“Innospark”. Innnospark Our Projects. Innospark.lt. n.d. Web. March 2014
