“Market Segmentation” Selecting Target Markets - Positioning

What Is Market Segmentation? When you are in a market with your product or service, you are trying to win (sales, share of market, growth) The success or failure in this is measured by how well you are at satisfying people's needs and wants, solving their consumption problems, and delivering bundles of benefits. However, in our modern age, buyers differ greatly. As a business person you need to find out where the differences are and why. This is the logic behind market segmentation. Typically, detailed market-segmentation analyses requires large samples of consumers and lots of cash. But even if you do not have the information or a lot of money, you can at least do some market-segmentation-analysis using what information you have (and your own reasoning about that information).

If you can determine how potential buyers in the total market for your product differ, you may be able to divide the total into two (or more) segments, or groups of similar consumers. As a business person you can them stratagise if you want to attempt to target one, some or all of the market segments with different marketing strategies (product, price, promotion, distribution). The ability to describe markets accurately and in detail and to explain why buyers behave as they do is a characteristic of successful marketers. If you are able to describe your markets and explain how they work, you are better able to predict the impact of any changes to your markets. This way you are better able to control your own fate and, to a lesser extent, the marketplace itself.

Definitions Market: A market is the people or organizations with needs to be satisfied, money to spend, and the willingness to spend it. There are six distinct markets that may be potential sources of customers for your product: 1.The retail or consumer market (households, families) 2. The institutional market (hospitals, schools, prisons, day-care centres) 3. The commercial market (retailers, wholesalers, and business-to-business services) and the industrial market (manufacturers, processors, and natural resources) 4. The government market (municipal, provincial, and federal departments and agencies) 5. The agribusiness market (farms) 6. The export market (other countries)

Segmentation: Are the sub groups that may exist within potential markets. Each may represent a particular type of customer, however, more commonly, customers fall within more than one market segmentation. There are about two dozen ways the consumer market might be meaningfully segmented. (Not all of fit into every business). 1. Age (age-group) 2. Gender 3. Size of household 4. Marital status 5. Presence of children 6. Family life cycle 7. Education level 8. Occupation 9. Religion 10. Language(s) spoken 11. Race 12. Nationality 13. Geography (region, province, urban, rural, climate) 14. Personal or family income 15. Social class, life style 16. Behaviour 17. Benefits sought (e.g., for toothpaste... whiter teeth, no cavities, fresher breath; what different needs exist) 18. Usage level (light, medium, heavy) 19. User status/patronage level (non-user, ex-user, potential use, regular user) 20. Readiness level/intention to purchase (unaware,'aware, informed, interested). 21. Current ownership (have none, one, two, etc., plus types or brands owned) 22. Loyalty status (brand loyal, store loyal, "deal" loyal, switcher)

An ideal market segementation marketing plan will focus on more than one element. You may be limited however, by the size of your market and your budget.

Selecting Target Markets There are many reasons why you undertake segmentation analyses. One of the key ones is to permit you to identify and select potential customers within: your unique package of benefits the packages of benefits of direct and indirect competitors the size of various buyer groups (segments) the needs of various buyer groups (segments) your resources relative to the resources of competitors the ability to select and then reach efficiently any particular buyer group (segment)

What you want out of market segmentation is to be able to identify one or more groups that are: –big enough to consider (not fully exploited) –not as satisfied in some fashion as they want to be –relatively easy to identify and reach via available channels of distribution and advertising media The biggest mistake as a business is to put the cart before the horse. You must identify your potential customers after the research, not the other way around. You must let the research tell you what the truth rather than try to have the research confirm your predetermined notions of who your customers are. Remember each target market is unique and requires its own package of benefits or market positioning and marketing mix. Selecting target markets defines the who, when, and where of marketing strategy is hard to do but it does pay dividends through increased, and sustained, sales.

Positioning A key thing to remember is that you will likely be more successful if your package of benefits-product, price, place, promotion--offers some advantage over the competition in a way that matters to a particular target market. –Does your toothpaste reduce cavities better than other brands? –Is your accounting software package fully compatible with the leading data-base software? –Is your ice cream really richer or more flavourful? –Can your product be on any customer's doorstep in 24 hours? –Do you offer unique sizes? –Is the image or personality of your store or product appealing to a large group of buyers?

These statements help you identify your competitive advantage and your market positioning. Your market positioning defines the why of marketing strategy. Market positioning for your product, service, or store is how you wish to be seen in the eyes of members of your target market compared to other products, services, or stores. Your positioning statement combines buyer (segmentation) and product (differentiation) information to indicate how you are different from, and in some way better than, available alternatives. Frequently market-positioning statements are revealed in advertising slogans. The market positioning you select and the sustainable competitive advantage you provide are presented and delivered to your target market via your marketing mix. Your marketing mix is your recipe for success.