Market always has price sensitive consumers that purchase items based on comparing prices and choosing a lower one. However, after the 2008 recession, the economic power of many consumers became weak. As a result, the number of price sensitive consumers increased by the shrinking of middle class.

So, how would a company attract price sensitive customers? after the 2008 recession that was the worst one in 50 years, P&G changed its market portfolio in order to target high end and low end market because there is a lot of growth opportunity in these two categories. According to Ellen Byron, “a wide swath of American companies is convinced that the consumer market is bifurcating into high and low ends and eroding in the middle.” http://goo.gl/wYvNFE

 

Based on the market segments P&G chose, products will also be divided into low end and high end that will satisfy the needs of these two market segments. Companies like Tiffany & Co have implemented such strategy as well. They eliminated the lower end products that used to attract the middle class and have focused only on high end consumers. As a result, they have reported increase in sales during the past holiday seasons.

Market segmentation plays an important role in marketing strategy. It will help the businesses focus on the customers’ needs better and cater its products according to their values; be it price sensitive or high end shoppers.