Market Segmentation, Targeting, Positioning & Product Strategy

Posted on Mar 5, 2025 in Marketing

Understanding Customer Demands and Market Segmentation

Customers’ demands encompass their needs, attitudes, behaviors, tastes, and interests.

Steps in the Segmentation Process:

  1. Select the Market: Eliminate markets that have no need for the product or are inappropriate for other reasons (Market definition, situational analysis, SWOT).
  2. Apply Segmentation Variables:
    • Behavioral: Analyze the specific value that a particular group expects from the offering. Consider usage occasion, status, loyalty status, and technological orientation.
    • Demographics
    • Geography
    • Psychography
  3. Target Market: The segment of the overall market that a company chooses to pursue. Each potential segment must be evaluated based upon fit with the firm’s:
    • Resources
    • Goals
    • Mission
    • Priorities

Assessing Segment Attractiveness:

  • Market factors
  • Economic & Technological factors
  • Competitive factors
  • Business environment factors

Difference Between B2B and B2C:

  • B2B markets have multiple decision-makers.
  • B2B products and services are often more complex.
  • B2B decision-makers go through a more rational process.
  • The buying cycle is different.
  • B2B target audiences are smaller.
  • Personal relationships matter more.

Marketing Approaches:

  • Concentrated Marketing
  • Undifferentiated Marketing
  • Differentiated Marketing

Positioning:

Differentiation on the basis of attributes that customers find meaningful.

  • Conveys the value that the brand provides and sets the brand apart.
  • Sets the tone for the marketing plan.
  • Should be reevaluated periodically.

STP (Segmentation, Targeting, Positioning):

  1. Market Segmentation:
    1. Identify bases for segmenting the market.
    2. Develop profiles of resulting segments.
  2. Market Targeting:
    1. Develop measures of segment attractiveness.
    2. Select the target segment.
  3. Market Positioning:
    1. Develop the positioning for each target segment.
    2. Develop marketing mix for each segment.

Product Strategy

“Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. It includes physical objects, services, people, places, organizations, and ideas.”

Planning for Services:

Services differ from products in four important ways:

  • Intangibility
  • Variability
  • Inseparability
  • Perishability

Three Levels of Products:

  1. Core Product: Consists of the problem-solving benefits that satisfy customer needs.
  2. Actual Product: Convert the core benefits into a physical or actual product with attributes to satisfy customer needs (names, parts, packaging, features, and style).
  3. Augmented Product: Includes after-sales service, installation, or warranty.

Features: Specific attributes that enable a product or service to perform its function.

Benefits: Need-satisfaction outcomes.

Quality: How well the product satisfies customers.

Design: Includes “emotional quality” – the impact of design on how it makes the customer feel.

Packaging: Keeps products safe. Helps companies burnish their brand imagery and highlight points of differentiation.

Labeling: Communicates product contents, uses, and warnings.

The Product Life Cycle:

  • Introduction
  • Growth
  • Maturity
  • Decline

Steps in the Product Development Process:

  1. Idea generation
  2. Screening of new ideas
  3. Initial concept testing
  4. Business analysis
  5. Prototype design
  6. Market testing
  7. Commercialization
  8. Monitoring of customer reaction

Cannibalization: What occurs when sales of a new product “eat into” sales of one or more existing products.

Product Mix: All products that an organization offers to the market.

Product Lines: Groups of associated products.

Product Mix Width: The number of product lines.

Product Line Depth: The number of products within each product line.

Line Extension: Putting an established brand on a new product and adding it to an existing product line.

Brand Extension: Putting an established brand on a new product in a different category for a new customer segment.

Branding

Brand Equity: The extra value customers perceive that enhances their long-term loyalty to a brand.

  • Boosts customer lifetime value.
  • Can insulate a company against competitive threats.
  • Can help new products achieve acceptance.

Brands Should Be:

  • Recognizable and memorable
  • Meaningful and appealing
  • Capable of being legally protected
  • Suitable for international markets

Branding not only identifies a particular product but also sets it apart from the competition (both direct and indirect). It can make the product both distinctive and competitively superior.

Positioning: What the target group perceives about your brand relative to how they perceive the competition.