Segmentation, targeting and positioning

Segmentation

A market segment is a sub-sector of a market made up of people and organisations, sharing one or more characteristics which causes them to demand a certain product based on its quality. The term 'market segmentation' is used whan a consumer with an identical product or service needs to be divided into groups so they can be charged different amounts. These can be known as 'positive' and 'negative' applications of the same idea, splitting up the market into smaller groups.



According to Brassington and Pettitt (2007) there are four different types of segmentation:

Geographic segmentation -Defines customers according to their location. This is effective for local businesses with limited resources, as they would target in their immediate locality.

Demographic segmentation - This can tell a business about the customer and the customers household on measurable criteria. They are largely descriptive, such as age, sex, income, occupation, socioeconomic status and family structure.

Geodemographic segmentation - Geodemographic can be defined as 'the analysis of people by where they live' (Sleight, 1997, p.16) as it combines geographic information with demographic and sometimes even lifestyle data about neighbourhoods.

Psychographic segmentation - The beliefs, attitudes and opinions of any potential customer. Therefore, this is difficult to gather and consequently to analyse.



Targeting

A target market is the market segment which a particular product is marketed to. It is defined by age, gender and/or socio economic group. Market targeting is the process in which intended actual markets are defined, analysed and evaluated just before the final decision to enter is made. Target marketing is a strategic approach to creating a marketing mix for a specific, targeted market segment and set of buyers.

It involves breaking a market breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and easier and more cost effective. It also provides a focus for all marketing activities.



Positioning

Market positioning is the process by which marketers try to create an image or identity in the minds of their target market for it's product, brand or oganisation. There are two parts of positioning:

Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market.

De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market.

Generally, the product positioning process involves:

1. Defining the market in which the product or brand will compete (who the relevant buyers are)
2. Identifying the attributes (also called dimensions) that define the product 'space'
3. Collecting information from a sample of customers about their perceptions of each product on the relevant attributes
4. Determine each product's share of mind
5. Determine each product's current location in the product space
6. Determine the target market's preferred combination of attributes (referred to as an ideal vector)
7. Examine the fit between - The position of your product and the position of the ideal sector
8. Position