Market Segmentation and Product Positioning
Market Segmentation and Positioning
Marketing specialists are not always aware of how to contact buyers from the market or in the same way, because there are many, they are geographically scattered and therefore have different needs. That’s why companies prefer market segmentation and mass marketing to develop market products and strategies to measure success/profitability. This way, vendors target the right audience, adjust price, distribution channels, and promotion.
What is Market Segmentation?
Market segmentation: divide the market into different groups of buyers with similar needs, characteristics, or behavior, for whom a separate marketing product mix is needed. After defining these groups, assess the attractiveness of each segment and suggest penetration of the most attractive segments (publicly define target audience).
Defining Positioning Strategy
The positioning strategy defines the desired location of the product in the minds of customers and creates a communication plan to achieve it.
Segmentation Variables and Effectiveness
There is only one way to segment the market, so the marketing specialist tests different variables to determine which present the best segmentation opportunities (geographic, demographic, psychographic, and behavioral variables).
Consumer Segmentation Variables
In demographic market segmentation, divide by age, sex, size and family life cycle, and so on. Psychographic segmentation is by social class, life style, or personality of the consumer. Behavioral segmentation is by knowledge, attitudes, or response towards the product.
Corporate Segmentation Variables
This also works in corporate markets, and these variables are used in addition to demographic factors (sector, company size), operating variables, purchasing approach, status, and personal characteristics.
Effective Segmentation Criteria
The effectiveness analysis of segmentation depends on identifying segments that are:
- Measurable
- Accessible
- Substantial
- Differentiable
- Actionable
Selecting and Targeting Segments
Evaluating Segment Attractiveness
To select the most appropriate market segments, the company must assess the growth characteristics of each, structural attractiveness, and compatibility with the objectives and enterprise resources.
Target Market Strategies
Afterwards, they must select 1 of 4 target audience selection strategies (from very wide selection to a more limited one). The seller can overlook differences between segments and address the full market (undifferentiated mass marketing), which is the production, distribution, and mass promotion of the product for all consumers alike. There is also differentiated marketing, which develops different offers for different segments. Concentrated marketing targets niches where the company focuses on 1 or 2 segments and creates micromarketing that adapts to customer tastes or specific places (this includes local and individual marketing).
The appropriate strategy will depend on the company’s resources, product variability, product life cycle phase, market variability, and competitors’ marketing strategies.
Product Positioning for Advantage
When the company decides which target audience it wants to aim at, it must decide which positioning strategy to adopt.
The Positioning Process Steps
Positioning tasks have 3 phases:
- Identification of a set of potential competitive advantages
- Strategy elaboration for positioning
- Selecting appropriate competitive advantages and general positioning strategy elaboration
Common Value Propositions
Value proposition: general mix of benefits where the brand is positioned. Generally, the company can choose between 5 different value propositions to position its product value:
- More for more
- More for the same
- The same for less
- Less for much less
- More for less
The company and brand positioning strategy has to set the target audience and needs, the positioning concept points, and differentiators. Afterwards, the company communicates and implements the selected position in the market.