Market Segmentation Targeting Positioning Explained
Market Segmentation
Market Segmentation: The process of dividing the market into groups with similar purchasing patterns to better identify and satisfy needs and wants.
Market Segment
Market Segment: A group of consumers who share similar needs and wants with related consumption behaviour.
Segmentation Advantages and Limitations
Advantages of Segmentation
- Helps identify existing gaps and new opportunities in domestic as well as international markets.
- Designing products for a specific group of consumers can increase sales, therefore profit.
Limitations of Segmentation
Expensive in terms of research and development, production, and promotion as a firm attempts to reach a large segment of actual and potential consumers.
Market Targeting
Target Market
Target Market: A group of consumers with common needs and wants that a business decides to serve or sell to.
Types of Market Targeting
Undifferentiated Targeting
Undifferentiated Targeting: Firm ignores the differences in the specific market segments and targets the entire market. Businesses consider the common needs and wants of consumers in a market and aim to sell their products to a large number of customers in order to maximize sales.
Mass Market
Mass Market: A large or broad market that ignores specific market segments.
Segmented Marketing
Segmented Marketing: Targets several market segments and develops appropriate marketing mixes for each of these segments. Firms hope to gain a stronger position in each of their segments and so increase sales and market share of their brands.
Concentrated / Niche Marketing
Concentrated Marketing / Niche Marketing: Strategy that appeals to smaller and more specific market segments. Good strategy for smaller firms with limited resources. Firms may serve market niches where there are few competitors and take advantage of opportunities that may have been overlooked by larger firms. Businesses can market their products more efficiently and effectively by targeting consumers it can serve best and most profitably.
Market Positioning
Positioning Definition
Positioning: Analysing how consumers define or perceive a product compared to other products in the market. Consumers categorize products and position them accordingly. Marketers must plan positions that will give their products a competitive advantage in the market.
Competitive Advantage
Competitive Advantage: Factors that allow a company to produce their products better or more cheaply than its rivals. These factors allow firms to generate more sales or superior margins compared to its rivals. Competitive advantages are attributed to a variety of factors including cost structure, branding, the quality of product offered, the distribution network, intellectual property, and customer service.
Positioning Process
- Identify product aspects that consumers find important (quality, price, and image).
- Choose the key features on which to develop its positioning strategy.
- Communicate its desired position to its target customers through its marketing mix.
Position / Perception Map
Position/Perception Map: A visual representation of how consumers perceive a product in relation to other competing products. An effective tool for planning a firm’s positioning strategies.
Benefits of a Position Map
- Could help a firm to establish which are its close competitors or threats in the market.
- Helps identify gaps or opportunities.
- Simple and quick way of presenting sophisticated, research data.
- Helps in targeting.