Market Segmentation and Targeting Strategies

Study Notes

Businesses can optimize their offerings by segmenting markets and tailoring strategies.
Mass Marketing targets all customers with a single product, while Targeted Marketing tailors offerings to specific segments.
Mass Customization balances efficiency and personalization by allowing mass-produced items to be customized.

Strategic Targeting aligns customer needs with the company's capabilities by considering target compatibility (ability to meet needs better than competitors) and target attractiveness (value gained from serving a segment).
Tactical Targeting uses data to build customer profiles based on demographic, geographic, behavioral, and psychographic factors.

Demographic: Age, income, and life stage.
Geographic: Location-based preferences.
Behavioral: Purchasing habits and loyalty.
Psychographic: Values, attitudes, and lifestyle.
Personas are fictional representations of ideal customers to anticipate needs and preferences.

Single-Segment Targeting (Niche Marketing): Focuses on one specific segment, maximizing relevance and impact.
Targeting Multiple Segments: Companies can use product specialization (custom products for each segment) or market specialization (focusing on one market but addressing multiple needs within it).

Demographic Segmentation: Influences purchasing behavior based on age, gender, income, and cultural background.
Geographic Segmentation: Uses tools like PRIZM to target based on location for detailed geographic and demographic insights.
Behavioral Segmentation: Considers factors like user status, loyalty, and spending habits.

Business-to-business (B2B) Segmentation: Defined by demographic factors, operating variables, purchasing approaches, and more.

Value Proposition: The promise of benefits that attracts and retains customers.
- Functional Value: Practical benefits (e.g., energy savings).
- Psychological Value: Emotional benefits (e.g., brand status).
- Monetary Value: Financial savings over time.
Customer Value Analysis Steps:
- Identify valuable attributes and benefits.
- Assess the importance of these attributes.
- Compare company and competitor performance.
- Track changes to improve offerings.

Aims to create a unique image in customers' minds.
- Frame of Reference: Sets a comparison baseline against competitors.
- Points of Difference (PODs): Unique, superior brand attributes that are desirable, deliverable, and defensible.
- Points of Parity (POPs): Attributes that are similar or equal to competitors.