Principles of Marketing
TARGET MARKETING: Market Segmentation, Targeting and Positioning
1. To succeed in today’s competitive marketplace, companies must be customer-centered, wining customers from competitors and keeping them by delivering greater value. a. Sound marketing requires a careful, deliberate analysis of consumers. b. Since companies cannot satisfy all consumers in a given market, they must divide up the total market (market segmentation), choose the best segments (market targeting), and design strategies for profitably serving chosen segments better than the competition (market positioning). 2. Market segmentation is the process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products or marketing mixes. c. Every market has market segments, but not all ways of segmenting market are equally useful. d. A market segment consists of consumers who respond in similar ways to a given set of marketing stimuli. e. Smart companies focus their efforts on meeting the distinct needs of one or more market segments. 3. Market targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. f. A company should target segments in which it can generate the greatest customer value and sustain it over time. g. A company may decide to serve only one or a few special segments, or perhaps it might decide to offer a complete range of products to serve all market segments. h. Most companies enter a new market by serving a single segment, and if this proves successful, they add segments. 4. Market positioning is arranging for a product to occupy a clear distinctive and desirable place in the minds of target consumers relative to competing products. i. In positioning a product, a company first needs to identify possible competitive advantages upon which to build the position. j. To gain competitive advantage, the company must offer greater competitive advantage to the target segment. k. The company’s entire marketing program should support the chosen positioning strategy.
Markets consist of buyers and buyers differ in one or more ways. They may differ in their wants, resources, locations, buying attitudes, and buying practices. Because buyers have unique needs and wants, each buyer is potentially a separate market. However, treating each buyer as a separate market is usually not practical or profitable. Therefore, the process of market segmentation is advised.
Levels of Market Segmentation
Three different levels of market segmentation are:
a. Mass marketing (no segmentation)
b. Complete segmentation (micromarketing)
c. Something in between (segment marketing or niche marketing)
For most of the last century, major consumer-products companies have held fast to mass marketing. This meant the companies mass produced, mass distributed, and mass promoted about the same product in about the same way to all consumers. The traditional argument for mass marketing is that it creates the largest potential market, which leads to the lowest costs, which in turn can translate into either lower prices or higher margins.
A company that practices segment marketing recognizes that buyers differ in their needs, perceptions, and buying behaviours. In this approach, the company tries to isolate broad segments that make up a market and adapts its offers to more closely match the needs of one or more segments. Segment marketing offers several benefits over mass marketing: a. The company can market more efficiently, targeting its products or services, channels, and communications programs toward only consumers that it can serve best. b. The company can market more effectively by fine-tuning its products, prices, and programs to the needs of...
Please join StudyMode to read the full document