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Assignment 2 - Market Segmentation Memo
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10/9/24, 10:31 Assignment 2 - Market SegmentationAM Memo
TO: Tiffany Morrow, Vice President of
Marketing FROM: Full Name, Marketing
Analyst
DATE: 11 April 2023
SUBJECT: Amazon Smart Thermostat Market Segmentation Memorandum
Market Segment Analysis
The Amazon smart thermostat is an innovative energy star-certified device designed to save
energy. The device conveniently connects to available Wi-Fi, providing global access to
remotely control the temperature via the Alexa application. The Alexa application facilitates
users' ability to manage and track their heating and cooling energy use. The device leverages
artificial intelligence and machine learning to automate HVAC management fully. The smart
thermostat gathers data that allows it to learn and develops heating and cooling schedules based
on the observed pattern of life and user preferences. Amazon’s primary target market is
millennial residential customers desiring to lower their energy bills based on the company’s
website and associated advertisements. The primary segment Amazon targets with its intelligent
thermostats are millennials. Additionally, the company’s offering has demand and use in
commercial and industrial markets.
Behavioral segmentation provides a means to separate customers and group them based on their
interaction towards and with a company’s products (UMGC, 2022). Amazon can gather and
analyze various usage rate data authorized for sharing by existing customers. The company can
analyze customer product reviews to gain insight into the benefits and features desired by the
customers. This information helps enhance current and future offerings.
Demographic segmentation provides a means to separate customers and group them based on the
following variables: social class, occupation, income, family size, nationality, ethnicity, age,
education, and religion (UMGC, 2022). Amazon can gather demographic information from its
registration databases, product sales data, census bureau data, and other publicly available
information sources to adequately segment customers.
Psychographic segmentation provides a means to separate customers and group them
depending on observed attitudes, interests, activities, lifestyles, values, and opinions (UMCG,
2022).
Amazon leverages social media platforms, blog sites, customer reviews, and company-
generated surveys to gain customer psychographic insight. Amazon’s marketing strategy is
effective due to the company's in-depth knowledge of its customers.
In the late 1980s, the SRI company introduced the Values, Attitudes, and Lifestyles (VALS)
survey, a well-known psychographic survey (UMGC, 2022). Although the survey is used far
less today, it provides the framework required to group customers based on their consumption
behaviors. The primary segment demonstrates behaviors synonymous with experiences. This
category is known for being early adopters, trendsetters, and spontaneous and appreciative
visual stimulation.
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