Marketing 8: Marketing Segmentation, Targeting, and Positioning

Market Segmentation

Involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action.

Segmentation Strategies

one product multiple market segments, multiple products, multiple market segments, mass customization (segments of one)

Mass Customization

tailoring products or services to individual customers at a high volume scale

Build-to-buy

manufacturing a product only when it is ordered by a customer

5 Steps of selecting target market

Group potential buyers into segments, group products into categories, develop market product grid and estimate size of market, select target markets, take marketing actions to reach target markets

Segmentation Criteria

Simplicity and cost effectiveness, potential for increased profit, similarity of needs, difference of needs, potential of marketing action to reach a segment

4 segmentation bases

geographic, demographic, psychographic, behavioral

Behavioral Segmentation

based on observable actions like buying behavior

Geographic segmentation

segmenting based on where buyers live

Demographic segmentation

segmenting based on physical or measurable traits like age, gender, race

Psychographic segmentation

segmentation based on subjective mental traits like lifestyle, personality, and needs

Customer lifetime value (CLV)

Represents the financial worth of a customer to a company over the course of their relationship.

Personas

Character descriptions of a typical customer in the form of fictional character narratives, complete with images that capture the personalities, values, attitudes, beliefs, demographics, and expected interactions with a brand.

Market product grid

framework where market segments relate to products

Marketing Synergies

Working horizontally on the grid, focusing on a market

Product synergies

working vertically on the grid, focusing on a product and making it more efficient

Product Positioning

The place a product occupies in consumers’ minds based on important attributes relative to competitive products.

Head to head positioning

competing directly with other businesses for the same target market

Differentiation positioning

seeking a less competitive and smaller market

Product Positioning Statement

Includes target market, what the product is, and what it offers

4 steps of product positioning

1. Identify important attributes of product

2. Discover how people view the product against competition

3. Discover how people think of the product

4. Reposition the product in the mind of consumers