Market Segmentation: Targeting and Positioning

Market Segmentation

• Market segmentation, targeting, differentiation, and positioning are steps in designing a customer-driven marketing strategy.
• Market segmentation divides a market into smaller segments of buyers and considers their distinct needs and behaviors, which may require separate marketing strategies.
• Companies have moved away from mass marketing in favor of target marketing.

Bases for Segmenting Consumer Markets

• Consumer markets can be segmented through: demographics, geographics, psychographics and behaviors
• Geographic segmentation divides the market into different geographical units like nations, states, regions, cities or even neighborhoods.
• Demographic segmentation divides the market based on variables like age, gender, income, occupation, education, religion, and race.
• Psychographic segmentation divides a market into different segments based on social class, lifestyle, or personality characteristics.
• Behavioral segmentation separates customers into groups based on their product, knowledge, attitudes, usage, or responses.
• Occasion segmentation divides the market based on occasions, such as regular and special events, user status and loyalty.
• Marketers use multiple segmentation bases to identify smaller, well-defined target groups.

Requirements for Effective Segmentation

• Market segments must be measurable, accessible, substantial, differentiable and actionable
• Measurable segments can have their size, purchasing power, and profiles easily measured.
• Accessible segments can be effectively reached and served.
• Substantial segments are large or profitable enough to serve and are the largest possible homogeneous group worth pursuing with a tailored marketing program.
• Differentiable segments are conceptually distinguishable and respond differently to marketing mix elements and programs.
• Actionable segments allow for the design of effective programs for attracting and serving the segments.

Market Targeting

• Market targeting involves evaluating each market segment's attractiveness and selecting one or more segments to enter.
• When evaluating market segments, a firm must consider the segment size and growth rate, and structural attractiveness.
• Structural attractiveness refers to how attractive the segment is in terms of potential profits.
• A company's objectives and resources must align with them being able to deal with segments both financially, physically and with resources.
• A target market consists of buyers who share common needs.

Market Targeting Strategies

• Undifferentiated strategies do not acknowledge differences among market segments.
• The company focuses on similarities in consumers' needs and wants, using a single offer to serve the market.
• They select more than one market segment, dealing with at least two segments.
• Concentrated strategy involves segmenting the market first, and then only one segment is selected to be served.

Differentiation and Positioning

• Positioning fits the product or service to one or more segments of the broad market in such a way as to set it meaningfully apart from competition.
• A brand's position is the image that comes to mind and the attributes consumers perceive as related to it.
• Marketers seek distinct market positioning for their goods.
• Brands are created in consumers' minds
• Product attributes describe its features and are concrete, objective, and observable.
• You can show different attributes depending on the campaign, customer, or brand.

Positioning Strategies

• Some approaches include: positioning by product attributes and benefits, price/quality, use or application, product class and competitor.
• Positioning by product attributes and benefits occurs when you set the brand apart from competitors based on characteristics or benefits offered.
• Marketers identify salient attributes that are important to consumers and which are fundamental in their purchase decision.
• Positioning by price or quality uses ads to reflect the image of a high-quality brand, where cost is secondary to quality benefits.
• The focus can also be on quality or value offered by the brand at a competitive price.
• Positioning by use or application associates a brand with a specific use or application.
• Positioning by product class occurs when the competition for a product comes from outside the product class.
• Positioning by competitor may be as important to positioning strategy as a firm's own product or services.