Market Segmentation and Positioning Strategies

Posted on Jan 31, 2025 in Marketing

Market Segmentation: Definition and Process

Market segmentation is the process of dividing a potential market into various consumer groups and selecting one or more target market segments to communicate a marketing strategy.

Requirements for Effective Market Segments

  • Identification: Segments should be separated by common features.
  • Sufficiency: Each segment should cover a sufficient number of people.
  • Stability: Segments should be reasonably stable over time.
  • Accessibility: Marketers should be able to reach the segments effectively.

Key Requirements for Any Group to Be Considered a Market Segment

  • Should be specifically identified and measured.
  • Must show adequate potential.
  • Must react uniquely to marketing efforts.
  • Should be reasonably stable over time.

Market Segmentation Process Steps

  1. Identify variables for segmenting the market.
  2. Define the profile of the segments identified.
  3. Measure the attractiveness of the identified segments.
  4. Select the target audience.
  5. Establish the proper marketing mix.

Market Segmentation Strategies

  • Mass or Undifferentiated Marketing: No segmentation; one product or service is marketed to the entire market.
  • Differentiated or Segmented Marketing: Each segment is targeted with a different marketing mix.
  • Niche or Concentrated Marketing: Focus on one segment and specialize in it.

Types of Market Segmentation

  • Geographic: Identification, qualification, and selection of geographical areas of interest.
  • Demographic: Quantifying the population of a market into more or less homogeneous groups based on demographic variables that create a common bond.
  • Psychographic: Grouping of a market population according to certain human characteristics, attitudes, and values.
  • Product: Grouping of like-minded individuals based on the perceived characteristics of a particular product.
  • By Market:
    • Real: Current clients.
    • Potential: Clients of the competition.
    • Latent: Those who do not currently use any institution.
  • Socioeconomic Level / Social Class

Product Positioning

Product positioning is the process of designing and representing a product or service so that it occupies a significant place in the minds of consumers. It involves creating a distinct identity for the product or brand to differentiate it from the competition. This is especially important in saturated markets where products are almost identical.

Key Considerations for Choosing a Positioning Strategy

  1. Consumer Needs: Research consumer needs and align them with product characteristics to identify which needs can be met.
  2. Product Attributes: Evaluate a variety of possible attributes (tangible and intangible) to determine which will define the product’s personality.
  3. Market Situation: Select a position that differentiates the product from competitors.

Types of Product Positioning

  • Positioning by Attributes: Focus on functional or physical attributes. Example: Duracell’s focus on hardness.
  • Positioning by Price-Quality Relationship: Use price as a differentiating element. Example: Turron 1880.
  • Positioning by Use or Application: Highlight specific applications of the product. Example: Precooked meals.
  • Positioning Based on Consumer: Use the characteristics of the consumer group to create the product’s image.
  • Positioning Based on Product Category: Use a characteristic to create a new category. Example: Cola Light.
  • Positioning by Cultural Symbols: Use cultural symbols or dress to position the product. Example: Osborne-Toro.
  • Positioning Based on Competition: Establish a position in reference to direct competitors. Example: 7Up versus Coca-Cola.