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Segmenting, Targeting and Positioning

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Marketing and Promotions Process Model

Target Marketing Process

Introduction

Target marketing involves the identification of the needs and wants of specific groups of
people (or segments), selection of one or more of these groups as targets, and the
development of marketing strategies aimed at each. This process leads to a more
homogeneous grouping of potential customers, which allows the marketer to develop
more precise strategies designed to reach them.

Segmenting Markets

Once the manager has identified who it is that is to be targeted, these potential customers
are grouped based on the fact that they have similar needs and/or behaviors that are likely
to cause them to respond similarly to marketing actions. This breaking up of the market is
referred to as the market segmentation process.

The process includes five distinct steps:

1. Finding a way to group consumers according to their needs


2. Finding a way to group the marketing actions available to the organization --
usually the products offered
3. Developing a market-product grid to relate the market segments to the firm's
products or actions
4. Selecting the target segments toward which the firm directs its marketing actions
5. Taking these actions.
A number of bases for segmentation are available to the marketer including the
following:

1. Geographic: The market is divided into geographic units with alternative


marketing strategies targeted to each.
2. Demographic: Division involves demographic variables such as age, sex, family
size, income, education and social class among others.
3. Psychographic: Markets are divided based on the personalities and/or lifestyles
of consumers. Marketers commonly employ programs such as VALS, VISION,
and PRISM for this purpose.
4. Behavioristic: This form of segmentation divides consumers into groups
according to their usage, loyalties or buying responses to a product. These
characteristics are then usually combined with one of the previously mentioned
bases to develop segment profiles.
5. Benefits: Specific benefits offered by a product or service may also constitute a
basis for segmentation. In many instances a variety of benefits may be derived for
the same product among different groups.

Selecting a Market

Having conducted the segmentation analysis, the marketer will be faced with two
subsequent decisions:

1. Determining how many segments to enter; and


2. Determining which segments offer the most potential
§ Determine sales potential of the segment
§ Determine opportunities for growth of the market segment
§ Analyze the competition in the segment
§ Analyze the company’s ability to compete in the market segment
§ Decide how to compete in the market segment

The first of these decisions may lead the marketer to three potential strategies:

1. Undifferentiated marketing would involve the decision to ignore the segment


differences and develop one product for the entire market. It should be noted that
few firms pursue this strategy today.
2. Differentiated marketing involves the decision to compete in a number of
segments, developing different marketing strategies for each.
3. Concentrated marketing takes place when a firm decides to concentrate its efforts
on one specific segment in an attempt to capture a large share of that market.

Segmentation Decision Check List


• Can the size of the market segment be measured?
• Is the market segment large and profitable enough to serve?
• Is the segment identified accessible? Can it be reached effectively and
efficiently?
• Can effective marketing programs be developed to attract and serve the segment
identified?
Market Positioning

Positioning has been defined as "the art and science of fitting the product or service to
one or more segments of the broad market in such a way as to set it meaningfully apart
from the competition."

The Positioning Process

Developing Positioning Strategies

There are a number of approaches to positioning as well as a number of strategies for


developing a position.

The development of a positioning strategy involves six distinct steps:

1. Identifying competitors
2. Assessing consumers' perceptions of competitors
3. Determining competitors' positions
4. Analyzing consumers' preferences
5. Making the positioning decision
6. Monitoring the decision

Distinct positioning strategies include:

§ Positioning by product attribute


Setting a product apart by stressing a specific characteristic or benefit offered.

§ Positioning by price/quality
In this strategy price/quality characteristics are stressed. For example, some
products set themselves apart by assuming a very high price/quality association,
while others become "price products."

§ Positioning with respect to use or application


How a product is to be used may in itself lead to a positioning strategy
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§ Positioning by product class
The product is positioned against others that, while not exactly the same, provide
the same class of benefits.

§ Positioning by product user


In this strategy the product is positioned at a particular group of users.

§ Positioning by competitor
In many cases the competition may be used to define the positioning strategy.
Companies can position their products to set themselves apart from the
competition, show superiority, etc.

§ Positioning by cultural symbol


A symbol can be created and used to position products and services apart from
competitors.

Product/Service and Brand Positioning

Basic Questions to Ask


1. What position, if any do we currently hold in the mind of customers?
2. What position do we want to hold?
3. Whom do we have to compete against to establish this position?
4. Do we have the resources to occupy and hold the position?
5. Can we stay with one consistent positioning strategy?
6. Does our marketing and advertising match our positioning strategy?

Product Decisions
A product is a bundle of benefits or values that satisfies the needs of consumers
Product symbolism refers to what a product or brand means to customers
Product quality, branding, packaging, and company name contribute to product image

Branding:
– Brand name communicates attributes and meaning
– Advertising creates and maintains brand equity which results from the image and/or
impression of a brand
The Value of Strong Corporate and/or Brand Identity
Strong corporate/brand equity:
• Creates more options for competing against lower-priced competitors
• Builds customer loyalty
• Makes it easier to withstand economic fluctuations and marketing crises
• Allows companies to sell products/services at a premium price and maintain
larger
• profit margins
• Can facilitate brand and line extensions
• Makes customer response more inelastic to price increases and elastic to price
decreases

Packaging
Traditional functions of packaging:
§ Economy, protection, storage
§ Packaging has become increasingly important because:
– self service emphasis of many stores
– buying decisions made at point-of purchase
– often customers first exposure to product
§ Packaging is a way to communicate to consumers

Pricing Decisions
§ Price must be consistent with perceptions of the product
§ Higher prices communicate higher product quality
§ Lower prices often reflect bargain or “value” perceptions
§ A product positioned as high quality while carrying a lower price than
competitors may confuse customers
§ Price, advertising and distribution must be unified to create the position for the
product or service.

Distribution Channel Decisions


Channel decisions involve:

Determining the type of channel system:


Ø Direct channels
Ø Indirect channels

Selecting, managing and motivating marketing intermediaries such as


§ Wholesalers
§ Distributors
§ Brokers
§ Retailers

Push Vs Pull
"Push" Techniques
– Point of sale displays, racks, stands
– Trade deals, special displays
– Dealer premiums, prizes, gifts
– Cooperative advertising deals
– Advertising materials, mats, inserts
– Push money or "spiffs"
– Collaterals, catalogs, manuals
– Trade shows, conventions, meetings

"Pull" Techniques
– Sampling, free trial
– Coupons
– Premiums or gifts
– Contests, sweepstakes
– Price-off deals
– Refunds/rebates
– Frequency/loyalty programs
– Point-of-purchase advertising