PRACTICES AND CHALLENGES OF MARKET SEGMENTATION: THE CASE OF SHOE PRODUCERS AT ETHIO-INTERNATIONAL FOOTWEAR CLUSTER COOPERATIVE SOCIETY

Abstract

To design well formulated strategy, a firm must first select its target market through market segmentation. Having this in mind, the study has been designed to assess the market segmentation practices and challenges of shoe producers organized under Ethio-International Footwear Cluster Cooperative Society both on quantitative and qualitative perspectives. The study employed mainly primary data sources using collection instruments of questionnaires along with interview with closed ended and open ended questions while secondary data were collected on some aspects. After determining the overall samples size, the selections of the respondents were carried out in two stages first by using stratified random sampling method because there were three groups of producers based on the size of working space (micro, small and medium). The total samples of 101 were involved who were drawn from 124 producers and the researcher also took two respondent from Executive Board Members and two from Management Member of the cooperative. Even though the market segmentation practices are in place among producers, it is performed based on intuition and judgment and lacks formal and written approaches. There are internal (capability related) constrains and external factors both at the segmentation and implementation stages adversely affecting capacity utilization and profit performance. Protracted process of commencing operation by the cooperative created multifaceted problems on producers besides other constraints including capacity, marketing system, tax policy execution, imports of substandard but cheap products, shortage of knowledge on modern production technology, low promotion, distance of working premises from main market center (Mercato).There have been some differences with respect to segmentation and important differences among the three groups of producers was observed in terms of implementation witnesses by variations in capacity utilization and profitability performance where medium enterprises are in a better position than the small and micro enterprise groups.