THE EFFECT OF MARKET SEGMENTATION ON THE PERFORMANCE OF A FIRM

THE EFFECT OF MARKET SEGMENTATION ON THE PERFORMANCE OF A FIRM

The Complete Project Research Material is averagely 52 pages long and is in Ms Word Format, it has 1-5 Chapters. Major Attributes are Abstract, All Chapters, Figures, Appendix, References Level : BTech/BSc/BA/HND/ND

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(A CASE STUDY OF AIRTEL NIGERIA, IKOT EKPENE ROAD, UYO)


CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND TO THE STUDY

Customers are the focal point of all marketing activities of the telecomm industry which includes the Airtel Nigeria telecommunication company. Organizations therefore have no other option than to define their products not as what the companies make or produce but as what they do to satisfy customers. Excellence in customer patronage can be achieved when organizations make efforts to understand and respond to customer expectations. The customer has largely been regarded as the lifeblood of every business organization. The marketing concept as a business philosophy holds the position that the long-term profitability of a business is best achieved by focusing the coordinated activities of the organization towards satisfying the needs of particular market segment(s) according to Gray et al. (1998). The Airtel Nigeria as part of the telecommunication industry needs unwavering customer loyalty for profitability in this era of intense competition among the various telecommunication industries.

 Players in the Nigerian telecommunication industry are utilizing their database management tolls together with individual customer information to categorize customers into various market segments to allow adjustments in the customer patronage lever as well as customer service levels, (including privilege fee waivers, customer supports, discounts, etc) to foster customer loyalty, customer retention and most impotently, profitability.

However, as Hinson, et al., (2006) contend, in a competitive era, customer switching to other service providers is high especially when customers are dissatisfied with service provided. A study by Rosenberg and Czpeil (1984) however claims that it is between five to ten times more expensive to win a new customer than it is to retain an existing one. Telecommunication companies  however should at least acknowledge that some customers are more profitable than others. It is therefore prudent from the business perspective to give more attention and priority to more profitable or attractive customer segments.

Marketing in the telecommunication industry should be viewed as a strategic function that is charged with helping to lead a more customer-centric business model. Offering excellent customer service entails creating constant communication with all customers, most especially, high valued customers. Telecommunication industry in Nigeria gain competitive advantage for being able to practice the best marketing mix element suitable for its operations; this demands sophisticated analysis of customer data, market segmentation and the use of information technology and bundling products in an attractive manner. The significant numbers of telecommunication companies has resulted in intensive competition among all the major four (4) telecom companies. This is partly due to the fact that all these telecom companies offer almost the same products and services.

Kucukemiroglu (1999) recommended that telecommunication companies follow market segmentation strategy in order to differentiate themselves by creating an image which is lined to or limited to the provisions of a few services or elements of service quality. The studies also revealed that among the common selection criteria for customers include the following; fast and efficient service, friendliness, convenience and efficiency for completing telecommunication transactions. It is among these reasons that Airtel Nigeria, Uyo Metropoly has adopted market segmentation in meeting the needs and expectations of their customers. In order to stay ahead of competitors Airtel Nigeria, Uyo Metropoly has no other option than to provide superior and quality service to all class and segments of customers to foster customer loyalty and customer retention. Moreover, studies have shown that customers are six times more likely to repurchase a company‟s products over a period of one or two years when they are totally satisfied than when they are merely satisfied.

The customer segmentation process determines “the modus operandi" of all the functions that serve the customer. A key element for increasing market share and profitability in a fragmented market like the Nigerian telecom industry, Uyo metropoly is through the strategy of market segmentation since stiffer competition in the telecomm  industry has resulted in the need for Airtel Nigeria, Uyo Metropoly to identify various options for survival.

The primary objectives of segmentation must be how to win and retain customers. Players in the telecomm industry Uyo Metropoly must concentrate on attracting new customers into their organization and most importantly efforts must be geared towards keeping such customers; market segmentation therefore offers an opportunity to do so. Unfortunately, the few among the telecom industry in Uyo Metropoly has been slow in taking advantage of market segmentation though it brings some benefits to such companies. However, most companies in various industries use market segmentation in achieving customer service excellence.

There are specific characteristics of the market of the telecomm industry including diverse customer base with varying needs and buying behaviour. These characteristics make the telecom industry especially suitable for market segmentation. The changing and the increasingly more competitive market environment for telecommunication providers such as Airtel Nigeria Uyo Metropoly, have recently resulted in some growing interest in market segmentation.

 

1.2. STATEMENT OF THE PROBLEM

The dynamics of the business environment for telecom services industry as well as the dynamics of the customer needs are not debatable. It is therefore very important for telecommunication companies to respond to the changing needs of the customer and the business environment. Competition in the Nigerian telecommunication industry as a result of the proliferation of the network in Nigeria, means customers now have a choice. Dissatisfied customers are therefore more likely to switch their brand to other competitors.

Poor customer service causes considerable damage to the goodwill of service industry players like telecommunication industries and this eventually lead to financial loses and dwindling market share since excellent customer satisfaction on the other hand has a positive correlation with profitability, growth and customer loyalty. To achieve excellent customer service in the service industry, telecommunication Companies must design products and services that meet the needs of various segments of customers and more so exceed their expectations. Achieving customer satisfaction will be very difficult if telecommunication service providers like Airtel Nigeria, Uyo Metropoly, fails to provide tailor-made products and services to high valued customers while simultaneously having a good package for the average customer.

In this era of shrinking markets, Airtel Nigeria Uyo Metropoly can gain competitive edge over rivals by devoting resources to improve customer satisfaction in order to retain existing customers instead of wasting useful time and resource to win new customers. In the various categories or market segments of Nigerian telecommunication company, the needs of customers are diverse. It is therefore impossible for Airtel Nigeria Uyo Metropoly to access the needs of each and every specific customer separately since meeting the needs of customers on one-on-one basis is impossible. Airtel Nigeria Uyo Metropoly therefore must adopt market segmentation strategy to overcome this problem by specializing to satisfy the needs of various segments of the market rather than addressing the requirements of individual customers separately.

The study therefore takes a critical look at how the telecommunication industry in Nigeria seeks to achieve customer service excellence by using market segmentation. the intent is to specifically narrow the study to Airtel Nigeria Uyo Metropoly   which has a good segmentation strategy to satisfy the various categories of customers in order to keep and increase the market share in the midst of stiffer competition from rival Networks. 

1.3. OBJECTIVES OF THE STUDY

The specific objectives of the study are to:

1.    To determine the effect and the performance of market segmentation on the profitability of a firm.

2.    To examine the dimensions and bases of segmenting market and their relationship in meeting the needs of the consumers

3.  To enumerate the importance or benefit of firms adopting market segmentation strategy in order to achieve organisations objective of profitability and customers satisfaction. 

4.  To determine whether market segmentation enhance the effect of marketing mix

STATEMENT OF HYPOTHESES

1.  Hi:    market segmentation strategy significantly influence the  profitability of a firm.

      Ho:    market segmentation strategy does not significantly influence the  profitability  of a firm.

                                                                                   

 2.  Hi:     geographic market Segmentation strategy bases has a significant relationship in meeting the specified needs and satisfaction of a consumer.

      Ho: Segmentation bases does not have a significant relationship in meeting the specified needs and satisfaction of a consumer.

   3.  Ho:    Market Segmentation Does Not Enhance Effective Use of Companies Resources

     Hi:     Market Segmentation Enhance Effective Use of Companies Resources

1.4.      RESEARCH QUESTIONS

          The main research questions that were addressed by this study includes the following:

1.       What are the various market segments and the basis of segmentation at Airtel Nigeria Uyo                  Metropoly.

2. What is the level of customer patronage for the various market segments of Airtel Nigeria Uyo Metropoly Akwa Ibom State. customers?

3. What are the effects of market segmentation on customer Patronage, at Airtel Nigeria Uyo Metropoly Akwa Iboms.?

4. Is market segmentation profitable to the organisation?


1.5. SCOPE OF THE STUDY

The effect of market segmentation in achieving customer patronage excellence in the telecommunication industry is the focus of the study. In this era of stiffer competition in Uyo Metropoly telecommunication industry, this research is meant to critically looked at how Airtel Nigeria, Uyo Metropoly has segmented their various customers into various categories and how they have developed tailor-made products and services to meet the needs of the customers.

The choice of Airtel Nigeria Uyo Metropoly as the organization for this study was due to the fact that Airtel Nigeria as the best telecommunication industry in Nigeria has successfully implemented market segmentation over the years to satisfy the various categories of customers. Airtel has operated in Nigeria for the past sixteen (16) years and currently has one thousand and one to five thousand employees and branches all over the country, airtel has it’s present over twenty(20) countries and fifteen being African countries. Access to data for this study was easier than it would be for other telecommunication industries considering the constraints of time and other resources. Geographically, the study was conducted in Uyo, the regional capital of Akwa Ibom State of Nigeria. The motivation for the specific choice of the Ikot-Ekpenne Road Branch in Uyo in Akwa-Ibom State was due to proximity and the fact that the branch has all the various departments, units and halls for all the market segments for the customer base of Airtel Nigeria Uyo Metropoly, Ikot-Ekpenne Road . This branch therefore provides a good source of data for the study.

1.6. SIGNIFICANCE OF THE STUDY

As Nigeria seeks to attain middle income status, the importance of telecommunication Industry in facilitating the development of the economy cannot be under-estimated. Competition in the Nigerian Telecommunication industry has been triggered over the past decades after the passage of the universal telecommunication law which caused the proliferation of service providers nationwide. The telecommunication industry is now characterized by increased customer choice and new products and services development. The survival and profitability of telecommunication intermediaries in Uyo Metropoly depends largely on what will drive customer choice. Players in the Nigerian telecommunication industry must make efforts to attract the most profitable segments of the market and to forge closer relationship with such high valued customers whilst retaining the average customer who is part of the mass market. Most international telecommunication company all over the world, e.g. MTN Nigeria,Etisalat,and Glo Nigeria etc. are adopting market segmentation and customer relationship management as a strategy to serve their customers better and to increase customer loyalty in the face of stiff competition.

The significance of this study includes the depth of knowledge that i stand to acquire in the area of market segmentation in the services and telecommunication industry. This project also offers me the platform to apply knowledge in the area of scientific research in the marketing field and other areas of academic pursuit. Among the stakeholders who can benefit from my study include the following;

The management and staff of Airtel Nigeria Uyo Metropoly will get to know of the impact of market segmentation strategy on customers  patronage. The study will identify problems customers encounter in the various segments for management to re-strategize by developing different products and services for effective customer satisfaction and patronage. 

Customers who get access to findings from this study can recognize the market segments that better address their telecom needs in Airtel Nigeria Uyo Metropoly and hence make informed choice.

This study seeks to contribute to the body of knowledge that can be used by scholars and researchers in the field of academia to develop further studies. The study adds to the body of knowledge in the area of marketing in the telecommunication industry.

Knowledge from the study can be used by the marketing department of other telecommunication network  industry as a basis of developing business strategies and specifically, market segments for their customers and to promote customer service excellence/patronage. 




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