Segmentation, Targeting and Positioning;
This essay will illustrate the extent to which effective marketing must incorporate Segmentation, Targeting and Positioning. Marketing effectively differs from one organization to another as each has their own separate goals, which they pursue. To answer how important each of the afore mentioned marketing tools are, one must define what Marketing is and then take into account how each is applied and why if not applied in an organizations approach to selling could mean abrupt failure, or maybe that they do not matter at all.
It begs the question; why segment the market instead of mass marketing the same product? The best-known example of Mass Marketing or Undifferentiated Marketing is told by Kotler and Armstrong (2001). They go on to use the example of Henry Ford’s marketing strategy of the Model T Ford. When he put the car into production, he told the consumers, they could have the car “in any colour as long as it is black”. This though was many years ago; Ford has progressed and produces many different models today. An example of a company who still uses the Mass Marketing technique is outlined by Wilson and Gilligan (1997). Black & Decker faced a drop in its worldwide share of the power tool market from 20% to 15% as more Japanese firms began to compete by marketing in a more ‘aggressive’ manner than Black & Decker. As a result of this Black & Decker moved away from a policy of customized products for each market and instead focused making a smaller amount of products that could be sold everywhere which the same basic marketing approach. From this example it can be seen that not breaking down the market in terms of product, works for some companies whilst also satisfying customers, hence the increase in market share for Black & Decker.
Ultimately segmenting the market is the first step to giving the firm the ability to better match the customer needs, enhance profits, enhance opportunities for growth, retain customers and target communications (Doyle 1994). Being able to satisfy more customers with your brand or brands, brings one back to the definition offered by the CIM. More customers satisfied equals marketing more effectively. An example of a company, which uses segmentation within the USA, is Proctor & Gamble. They manufacture many products including washing detergent.
‘To some people, cleaning and bleaching power are most important; to others, fabric softening matters most; still others want mild, fresh-scented detergent’ (Kotler & Armstrong 2001, p.244)
Hence there are different groups or segments of the washing detergent buyers and each of these seek a different combination of benefits. Proctor & Gamble have recognised this and have gone on to produce eight different brands of detergent to satisfy these markets (Kotler & Armstrong 2001). Lesser and Hughes (1986, The Generalizability of Psychographic Market Segments Across Geographic Locations. Journal of Marketing. 50(January) 18-27) study summarises that segmentation plays a vital role in contributing to corporate planning, but there has not enough research into it to make enough generalizations to contribute to the advancement of ‘Segmentation Theory’.
Having segmented the market the strategist is faced with a series of decisions on the amount of and which segments to approach. The Strategists main concern is choosing a target would be profitable (Wilson & Gilligan 1997). Three factors which the strategist will have to consider are ‘the size and growth potential of each segment, their structural attractiveness and the organisation’s objectives and resources’ in coming to a final decision on which segments to target (Wilson & Gilligan 1997, p.297). Referring back to the AMA definition of marketing, they say that marketing involves satisfying organisation objectives. The importance of targeting is so choose the correct segment(s), which fulfil the company objectives. Effective marketing would be achieved...
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