Consumerism and market segmentation



Understanding the implications and using them to your advantage.

THE EVER-CHANGING AND competitive landscape in which small to medium sized businesses conduct their daily activities necessitates strategic thinking, careful observation, orientation, firm decisions and of course, relentless implementation. One of the key benefits of associating with a reputable franchi- sor is to be found in the franchisor’s experience, know-how, marketplace intelligence and its ability to respond to the various contingen- cies that could influence the wellbeing of its franchisees.

One has to ask whether the average inde- pendent business owner has the ability and the capacity to continuously gather informa- tion, keep an eye on consumer trends and competitor intentions, make appropriate decisions and act on those decisions. This can be a daunting task when one has to make ends meet month after month while trying to keep your business sustainable during tough economic times.

Franchisors have no other option but to remain constantly aware of significant developments within their respective industries as well as any national and/or international influ- ences that may impact on the suc- cess of their franchisees. In the real estate environment, for example, we continuously have to consider the preferences of both buyers and sell- ers of immovable property. I am not only referring to their preferences with regard to finding suitable housing or fetching acceptable selling prices, but also to the holistic consumer behav- iour with regard to other aspects such as affordability, lifestyle, safety, status, return on investment, migration patterns, retirement and estate planning.

Any business owner who is serious about his business will be mindful of consumer behaviour and other external influences that could impact their business and as a consequence, continuous research and develop- ment is inevitable. How does one stay abreast of relevant research results, new technology, changes in legisla- tion and regulation, social media marketing trends and the like? To add to the complexity, South Africa is experiencing a brand new ‘consumerism’. In this era of highly informed, price conscious and rights savvy consumers, staying up-to-date by reading the local newspaper and a family magazine is no longer sufficient if you want to excel in business. Any successful business is dependent on having continued access to relevant and accurate data in respect of its target audience (customers), its prod- ucts, its services, its prices and its competitors.


South Africa is experiencing a brand new "consumerism" epitomised by highly informed, price conscious and rights savvy consumers.


Because of our country’s ‘consumerism’, we believe it is necessary to divide consumers into distinct groups of shared needs and characteristics prior to developing a marketing strategy for any one group. This practice is commonly referred to as ‘market segmentation’. Amongst the numer- ous factors to consider if you want to market your products or services to any particular market segment, is the size of the market, the growth potential and your ability to service that particular sector. Proper market segmentation, however, is a little more complex.

Experienced franchisors will consider factors such as geographic features, demographics, psy- chographics, socio-cultural variables, use-related data, brand awareness, brand loyalty, convenience and security. Thorough analyses of these factors provides a better understanding of the nature of the goods or services customers are more likely to purchase or consume and business- and marketing plans can be altered accordingly. More often than not, developing a successful strategy requires that one considers several of these factors in combina- tion. By allowing the business owner to concentrate his resources on the greatest opportunities avail- able in a particular segment and thereby increasing sales or the use of its services without necessarily increasing the overhead costs, the implementation of such a tailor-made strategy can result in a substantial competitive advantage.

Business owners who wish to appeal to multiple market segments must develop a differentiated strategy that talks to smaller markets in a cluster of unique (yet aligned) strategies. This is where the going gets tough and where the assistance of a seasoned franchisor will be most beneficial to new- comer franchisees. Regardless of its composition, once the strategy has been developed it is time to decide on the positioning of the products or services. Positioning refers to the consumer’s perceptions regarding certain aspects of the products or services, such as the product or service itself, the price, the distribution channel and even the promotion thereof. That is another science in itself,but as a point of departure one should understand ‘consumerism’ in the South African context prior to implementation of one’s new strategy.

For more information on RealNet’s tailor-made franchise solution contact us on 0860 640 640