Market Segmenting, Targeting, and Positioning.
Core marketing strategy disciplines include segmentation, targeting, and positioning for both domestic and international markets. Making the proper decisions is a crucial requirement for corporate success because errors in these areas are likely to be expensive and may lead to failure. Companies may now micro-segment, target, and position in seconds thanks to "Big Data" technology. Compared to conventional methods based on coarse-grained geographic, demographic, psychographic, and behavioral categorizations, this constitutes a significant advancement. The use of smartphones and the Internet are still uncommon in many parts of the world, and there are still few ways to segment consumers using big data. Also, our world is becoming more and more digitally divided, with search engines and applications that are not always available to everyone and governments and consumer rights groups worried about sending data across international borders. This chapter begins with a brief overview of conventional segmentation techniques followed by an explanation of how segmentation, targeting, and placement have been advanced by big data. The next section examines potential difficulties with segmentation, targeting, and positioning that businesses with global operations may encounter.
Market Segments .
Organizing potential customers into groups or segments with comparable demands and responses to marketing actions is referred to as market segmentation in marketing. Market segmentation helps businesses to target various customer groups who view the entire worth of particular goods and services in a variety of ways.
Knowing how to segment markets .
Three factors can typically be used by businesses to distinguish between various market segments:
Within a section, homogeneity or shared requirements
Differentiating oneself from other people or organizations
Reaction to the market, or a comparable response
For instance, a company that sells athletic footwear might have market segments for long-distance runners and basketball players. Basketball players and marathon runners react to commercials very differently as separate groups. The company that makes sports footwear is better able to promote its branding by having a thorough understanding of these various market niches.
Market segmentation is a development of market research that aims to pinpoint specific customer groups in order to develop products and branding that appeal to the group. By identifying which items have the best odds of capturing a share of a target market and figuring out the best approach to get those products to market, market segmentation aims to reduce risk. This enables the business to improve overall efficiency by concentrating scarce resources on initiatives that yield the highest rate of return on investment (ROI).
Market Segmentation Types.
The four main categories of market segmentation are as follows. One type, however, can typically be divided into individual and organizational segments. There are five typical categories of market segmentation listed below.
Demographic division. One of the straightforward, widely used techniques for market segmentation is demographic segmentation. It entails segmenting the market based on factors such as age, income, gender, race, education, and occupation of the target market. According to this market segmentation technique, people with comparable demographics will have comparable wants.
Company-Level segmentation. Demographic segmentation and firmographic segmentation are the same ideas. This technique examines organizations rather than individuals and considers a company's personnel count, clientele, number of locations, or annual revenue.
Geographic segmenting. Technically speaking, geographic segmentation is a subset of demographic segmentation. This strategy organizes clients according to their actual locations on the basis that it's likely that residents in the same region will have similar wants. For larger businesses looking to diversify into new branches, offices, or locations, this technique works better.
Behavioral segmenting. Consumer behavior, consumer activities, and customer decision-making patterns are all important components of behavioral segmentation. Based on their previous interactions with markets and products, this strategy divides consumers into categories. This strategy makes the assumption that consumers' past spending patterns predict what they would likely buy in the future, even if purchasing patterns can vary over time or in response to external factors.
Psychographic segmentation. Psychographic segmentation aims to categorize consumers based on their lifestyle, personality, attitudes, and interests. This technique to market segmentation is frequently the most challenging. As these features (1) could change easily and (2) would not have readily available objective data, doing this might be more challenging. Yet, because it organizes people based on inherent motivations rather than external data points, this strategy may produce the strongest market segment outcomes.
The Best Way to Choose Your Market Segment
There isn't a single, generally accepted method for segmenting the market. Along their market segmentation journey, businesses frequently ask themselves the following questions in order to define their market segments.
Specifying goals and expectations
- What is the aim or objective of market segmentation?
- What does the business intend to learn by segmenting its market?
- Does the business anticipate any potential market segments?
Establish Customer Segmentation
- Which market categories do the rival businesses serve?
- What data from the U.S. Census Bureau is available to the public that is pertinent to our market?
- What information do we need to gather, and how can we do that?
- Which of the five market sector kinds should we divide up?
Analyze Possible Markets
- What chances exist that our statistics won't accurately reflect the various market segments?
- Why should we favor one kind of clientele over another?
- What long-term effects might selecting one market segment over another have?
- What is the ideal client profile for the organization, and which market groups most closely match this "perfect customer"
Create a segmentation plan
- How can the business test its theories on a representative test market?
- What attributes make a marketing segmentation plan effective?
- How will the business know if the plan is effective?
launch and observe
- Who are the important parties who can offer comments once the market segmentation approach has been revealed?
- What obstacles stand in the way of implementation, and how may they be removed?
- How should internal communication for the marketing campaign's launch be handled?
Market segmentation advantages. Implementing marketing segmentation requires time and money. Successful marketing segmentation strategies, however, can improve a company's long-term profitability and health.
Market segmentation offers a number of advantages, such as:
- Improved use of resources. Marketing segmentation enables management to concentrate on particular customer or demographic groups. Marketing segmentation enables a targeted, precise approach that frequently costs less than a broad reach approach, as opposed to attempting to offer products to the entire market.
- Greater brand recognition. Management must think about how it wants to be regarded by a certain group of people due to marketing segmentation. Management must decide what message to produce after identifying the market niche. The fact that this message is intended for a specific audience suggests that a company's branding and marketing are more likely to be very deliberate. This can also have the unintended consequence of improving customer interactions with the business.
- Increased likelihood of brand loyalty. Marketing segmentation gives customers more chances to establish enduring relationships with a business. Customers may respond favorably to more direct, personable marketing strategies that encourage a sense of inclusion, community, and belonging. Market segmentation also boosts your chance of finding the ideal customer that fits your product line and demographic.
- Bigger differences between markets. A corporation may pinpoint the precise message it wants to send to the market and to competitors thanks to market segmentation. By clearly stating how a business differs from its rivals, this can also aid in product differentiation. Management creates a specific image that is more likely to be memorable and specific than a general approach to marketing.
Improved digital advertising targeting. A corporation can implement more effective customized advertising methods thanks to marketing segmentation. This includes social media marketing strategies that target people of a certain age, area, or behavior.
Improved digital advertising targeting. A corporation can implement more effective customized advertising methods thanks to marketing segmentation. This includes social media marketing strategies that target people of a certain age, area, or behavior.
Market segmentation has some limitations. Without any potential drawbacks, the aforementioned advantages cannot be realized. Here are several drawbacks to take into account before putting market segmentation tactics into practice.
Targeting.
In marketing, targeting is segmenting your target market and creating marketing campaigns that will reach the groups that are most likely to respond to your efforts. The success you have in reaching potential clients can be significantly improved with target marketing.
In marketing, the term "targeting" typically refers to a three-step procedure used by marketers to identify the ideal segment to target. This method is known as STP in marketing, which stands for segmentation, targeting, and promotion. Advertisers divide their target audience into segments based on demographics like age, geography, interests, hobbies, or past purchasing patterns.
Marketers evaluate which section best fits their offerings, values, and products after creating various segments. Marketing professionals will find it much simpler to reach potential customers and persuade them to buy the good or service if they can select the appropriate audience segments to target.
The third step, promotion, is developing customized communications and messaging especially for the selected target group. A marketing team can get the most of their investment by creating marketing plans that will engage the target audience through the media channels that they are most likely to use. With 53% of the world's population using sites like Facebook, Instagram, Twitter, and others, digital channels and social media are currently the most successful type of promotion.
Social media platforms, such as Facebook, LinkedIn, Twitter, and Instagram, have sophisticated options to allow businesses to target users based on market segments. A bed-and-breakfast business, for example, could target married Facebook followers with an ad for a romantic weekend getaway package. LinkedIn, on the other hand, is more B2B (Business to Business) oriented, so you can target businesses using a variety of criteria such as the number of employees, industry, geographic location, and so on.
Marketing Analytics for Targeting.
Targeting in marketing benefits from the use of marketing analytics in various ways. Analytics are necessary for marketers to comprehend the behavior of the prospective target markets they decide to segment. Marketing teams will be able to develop these segments and evaluate how well they fit with the team's predetermined marketing personas thanks to marketing analytics. The ideal consumer of the organization, including their age and income ranges, gender, location, and interests, is represented by marketing personas or buyer personas. Marketers will be able to determine the ideal group for targeting by using marketing analytics to discover which buyer personas it best represents.
The most effective platforms and channels to target the chosen segments are determined by marketers using marketing analytics. You can select the age range, gender, location, and other factors to specifically reach individuals in your target audience with the built-in targeting options that are available on many social media and paid advertisement channels.
Marketing departments will need to choose target categories and then develop customized messaging that will best appeal to that demographic. With the use of a variety of marketing tools, marketers may test different messages to see which generates the most conversions from their target market.
Making the most of your marketing efforts requires knowing which audiences you want to convert through market targeting. Use market targeting strategy as a technique to expand and succeed if your business is trying to stand out in a sea of competitors. A strategy as effective as market targeting is worth twice as much as you spend.
In summary, market targeting is a tried-and-true strategy to increase conversion rates, boost brand recognition, and forge enduring bonds with customers.
Market Positioning.
Market positioning is the capacity to shape consumers' perceptions of a brand or product in comparison to rivals. Establishing a brand's identity or image with the intention of influencing how consumers view it is the goal of market positioning.
Product managers should prepare for market perceptions of their products since, in reality, customer perceptions are the only ones that matter because a product has a life of its own. If a consumer isn't considering it, then your product isn't there. Effective positioning strategies concentrate not just on the product's current state but also on how it might develop in the direction of your ideal future state.
Companies use marketing to explain their position in the market to consumers and shape how they view the goods and services offered by the brand. The brand identity is established through marketing, which also affects how customers perceive the brand's position in relation to competing products.
Positioning is not messaging. The positioning of your product explains how it differs from competing products on the market. What you'll do to fulfill the commitments made in your positioning statement is described in your messaging to your target demographics.
Positioning is not value proposition. Because it is a promise you make to your customer and outlines the advantages your product or service will provide for them, a value proposition differs from positioning.
Positioning is not differentiation. Positioning is the process of claiming territory in the consumer's mind. Differentiation, on the other hand, is a strategy that businesses frequently employ to make their offering stand out and better appeal to their target market.
Positioning is not branding. When a business uses a combination of logos, taglines, slogans, and different advertising techniques, it is said to be branding a product. Nike, for instance, is known for its tick logo, "Just Do It" tagline, and a number of motivational advertising campaigns. But, positioning is primarily concerned with how a product is seen by the consumer in relation to competing brands.
The types of Positioning.
- Consumer needs. Understanding your target market and how to meet their unique requirements.
- Product price. Presenting your company's or product's price as reasonable.
- Promotion. Promote your brand's or product's high quality by emphasizing its quality.
- Utilization and application of the product. Connecting your brand or product with a certain usage.
- Brand. Putting your brand in the position of being superior to your competitors.
Market positioning is a tactical exercise we undertake to forge a consumer's perception of a brand or product. The four Ps—promotion, pricing, venue, and product—are used to accomplish this. Your positioning strategy will be more successful if it defines the Ps in greater detail.
A product's positioning may make or break it; if done well, it will create an audience that is open to your message and confident in their choice despite the abundance of alternatives. If you get it wrong, you'll be lucky if your product gains any traction with customers. The branding of your business and how your target market views you depend on your market positioning. It should reflect your basic beliefs and convey your values to clients. One of the most important aspects of marketing is creating a good product positioning plan since it gives your company the chance to stand out from the competition. An increase in customer retention and increased advocacy are frequently the results of well-executed product positioning, which also aids internal teams such as sales, marketing, and customer success in providing compelling customer experiences.
The goal of market positioning is to influence consumers to see your brand and product as the market leader. You have the chance to engage with your customers when market positioning is properly carried out and performed. Products that appeal to consumers are those that they are interested in buying. Customers are more likely to choose to purchase your product over competing ones if they believe it can provide them with the benefits they seek.
Brand positioning. Brand positioning is the process through which a business positions its name in the minds of its clients.
Comparative positioning. Comparative positioning is the process through which a business assesses alternatives that are accessible to its target market.
This demonstrates their value in comparison to competing companies on the market and helps establish their USPs.
Differentiation positioning. When a business concentrates on qualities that market rivals can't imitate, or when they utilize the feature to "differentiate" themselves from rivals, the business is said to be using differentiation positioning. This strategy is advantageous because it enables businesses to focus on a certain characteristic they can provide that others cannot.
Segmentation positioning. Segmentation positioning is advantageous if a corporation is addressing more than one target audience because it helps satisfy the particular needs of each group.
The importance of brand positioning. In order to distinguish your business from others selling comparable goods, brand positioning is crucial.
Product positioning. Finding a product or service's position in the market is a deliberate activity called product positioning. In order to concentrate on messaging and convince potential buyers of the benefits of your product, positioning establishes what sets it apart from competing products on the market.
What constitutes a product positioning statement's four primary parts?
The four components of a positioning statement are the target, the category, the differentiator, and the payout.
1. The target - When you start working on your marketing activity, it's vital to decide on the aim. The target market should be determined by key factors including demographics, geography, psychographics, pain points, client needs, and so forth.
2. Category - Prospective buyers require a frame of reference when assessing a transaction. The category in which your brand will compete needs to be described. Technology, fashion, etc. are a few examples. For your customer, providing context will help develop brand relevance. ensures that the brand is relevant to the consumer.
3. Differentiation - One element of differentiation should be mentioned in your positioning statement; it is generally accepted that your product shouldn't have many benefits or characteristics that make it stand out from the competition. This is so that the distinctive qualities or advantages of your good or service can support the key differentiator. Don't forget to avoid using the strong assertion that your product is "the global leader" as your point of differentiation. Instead, elaborate on why you are the world leader. Make sure to differentiate your goods from the viewpoint of your customers rather than from a business perspective. While having a sizable turnover or a big market share may be appealing to you, your consumer doesn't care about these things.
4. The payout - In this section of your positioning statement, you differentiate yourself from the target market's wants or objectives. It's crucial to explain to your target personas how your differentiator will meet their user needs in this case. A solid understanding of your target market is essential for developing a compelling positioning statement, which supports our earlier claim. Never rely on internal assumptions when making any kind of understanding; always use real market research as a foundation.
How to create marketing strategies using segmentation, targeting, and positioning (STP)
The segmentation, targeting, and positioning (STP) marketing model is a well-known strategic method in contemporary marketing today. It is one of the marketing models that is used in practice the most frequently, and marketing leaders credit it for effective, streamlined communications.
With an emphasis on commercial effectiveness, STP marketing identifies a company's most lucrative market segments before creating a marketing mix and product positioning strategy for each one.
STP Marketing Strategy.
While designing marketing communications plans, the STP model is helpful since it enables marketers to prioritize propositions before developing and delivering individualized and pertinent messages to engage with various audiences. Market segmentation, market targeting, and product positioning make up the three steps of the funnel.
You want to develop a foundation for the segmentation of your target market during the research-based market segmentation phase. You also want to identify key traits that will distinguish each market group from the others.
You must assess each segment's potential and commercial attractiveness when developing your targeting and positioning strategy. You must then develop a detailed product positioning strategy for each segment you have chosen, as well as a customized marketing mix based on your understanding of that segment.
Segmentation, targeting, and positioning is an audience-focused rather than product-focused approach to marketing communications which helps deliver more relevant messages to commercially appealing audiences.
At a more tactical communications level, STP marketing is also relevant to digital marketing. For instance, as demonstrated by these alternative tactical email customer segmentation tactics, implementing marketing personas can assist in creating more pertinent digital messages.
You may locate niches with particular demands through segmentation, mature marketplaces to find new clients, and provide more targeted and powerful marketing messages.