Target Market Selection and Positioning for Competitive Advantage

Posted on Nov 26, 2024 in Economy

Market Segmentation, Target Markets, and Positioning for Competitive Advantage

Markets

Organizations selling to consumer markets understand they cannot satisfy all buyers uniformly. Buyers have diverse needs and buying habits.

Stages of Marketing

Mass Marketing: The seller mass produces, distributes, and promotes one product for all buyers, aiming to minimize costs and maximize market reach.
Differentiated Product Marketing: The seller offers various products with different features, styles, quality, and sizes to cater to diverse consumer tastes and preferences.
Target Market Marketing: The seller identifies market segments, selects one or more, and develops tailored marketing mixes for each. This approach allows for precise product development, pricing, distribution, and promotion strategies.
Micromarketing: Companies tailor marketing programs to the needs and desires of very narrow, geographically or behaviorally defined segments.

Steps in Target Market Selection

Market Segmentation: Dividing the market into distinct groups of buyers with different needs, characteristics, or behaviors.
Target Market Selection: Evaluating the attractiveness of each market segment and selecting one or more to enter.
Market Positioning: Developing a competitive product positioning and creating a detailed marketing mix.

Market Segmentation

Buyers differ in desires, resources, location, attitudes, and buying habits.

Bases for Segmenting Consumer Markets

Marketers use various variables, singly or in combination, to segment markets effectively.

Geographic Segmentation: Dividing the market based on geographical units like countries, states, regions, or cities.
Demographic Segmentation: Dividing the market based on demographics such as age, family size, income, occupation, education, and nationality. This is a widely used segmentation method.
Age and Life-Cycle Stage Segmentation: Recognizing that consumer needs and desires change with age and tailoring marketing efforts accordingly.
Gender Segmentation: Used for products like clothing, cosmetics, and magazines.
Income Segmentation: Targeting products and services like cars, boats, and luxury goods to specific income groups.
Multivariate Demographic Segmentation: Combining two or more demographic variables for more precise targeting.

Psychographic Segmentation

Dividing buyers based on social class, lifestyle, and personality characteristics.

Behavioral Segmentation

Dividing buyers based on their knowledge, attitude, use, or response to a product.
Occasion Segmentation: Linking product use to specific occasions.
Benefit Segmentation: Identifying the benefits consumers seek in a product category and targeting those seeking specific benefits.
User Status: Segmenting based on non-users, ex-users, potential users, first-time users, and regular users.
Usage Rate: Segmenting based on light, medium, and heavy users.
Loyalty Status: Segmenting based on customer loyalty.
Buyer Readiness Stage: Segmenting based on consumer readiness to purchase.
Attitude Toward Product: Segmenting based on consumer attitudes (enthusiastic, positive, indifferent, negative, hostile).

Segmenting Business Markets

Similar variables are used for segmenting both consumer and business markets, including operating characteristics, purchasing approaches, situational factors, and personal characteristics.

Requirements for Effective Segmentation

Measurability: Segment size, purchasing power, and profiles can be measured.
Accessibility: Segments can be effectively reached and served.
Substantiality: Segments are large or profitable enough to serve.
Actionability: Effective programs can be designed to attract and serve the segments.