Market Segmentation, Targeting And Product Positioning

Market Segmentation, Targeting And Product Positioning

Mass Marketing: Offering the same product to all customers with only one advertising campaign, to sell to the entire population. The opposite is Market Segmentation.

Market Segmentation: Identifying distinct segments within a market, targeting it, and creating a marketing mix (4 P’s) for each selected segment.

A Market Segment is a sub-set of people with similar characteristics that cause them to demand similar products / services based on the qualities of that product / service.

Each market segment is distinct (different segments have different needs), homogeneous (exhibit common needs within the segment), and respond similarly to a market stimulus.

Why Market Segmentation is Necessary

- Different customers have different needs

- Companies can differentiate their products, and focus on the benefits the segment desires

- Helps companies identify which media channel to target that segment

- Enable companies to avoid head-on competition

- More important for smaller players, as they have less resources to challenge bigger players head-on

- Easier market entry / survival if small players can identify a segment that is missed, or a segment that big players consider as too small to service profitably

How to Segment - Examples
Consumer Rooted:
  • Demographics
  • Psychographics
  • Geographic
  • Socio-Cultural 

Consumption Specific:
  • Usage Rate – Heavy, Medium, Light users
  • Usage Situation – Special Occasions, Festive Seasons
  • Benefits – What benefit each segment wants eg: Students, Environmentalists, etc.
  • Perceived Brand Loyalty – How the customer feels about the brand

Market Segmentation Targeting 
To be an effective target, a market segment must have 5 factors: 
1.    Identifiable: A Marketer must be able to find characteristics they have chosen for segmentation. Eg: Age.

2.    Sizeable: The segment must be large enough to be profitable. How many Consumers within the segment are likely to buy?

3.    Stable or Growing: The consumers aren’t likely to change very quickly, or there are more consumers coming into the segment. Eg: Senior citizens.

4.    Accessible: Marketers must be able to reach the segment in an affordable way, and interact in their language and culture.

5.    Congruent with Company Objectives & Resources: In-line with overall company agenda.

Product Positioning

Positioning: Establishing a DISTINCT image for the product / service in the mind of the consumer from the target segment that will DIFFERENTIATE the offering from competing offerings.

Product Differentiation: A part of positioning, the process of distinguishing a product / service from others, to make it more attractive to a target market segment.

Has a Unique Selling Point (USP) – Distinct and simple to understand (1 sentence long).

Successful positioning creates a distinct, positive brand image.

The first company to create a USP tends to own the image in the consumer’s mind. Eg: Xerox (Paper), Pampers (Diapers); Head & Shoulders (Dandruff), Johnson & Johnson’s (Baby)

The 4 P’s can be used as positioning elements.

Drawbacks of Only using Low Price as a Positioning Element:
- Hard to raise prices later
- Easy model to copy and replicate
- May suggest low quality
- May not be sustainable

Perceptual Mapping 
Allows Marketers to identify gaps in the positioning of all competing products / services. This enables Marketers to better position their product / service.