Importance Of Segmentation Targeting And Positioning In Marketing Pdf
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What is STP marketing and what role does it play in boosting conversions and revenue? We look at the Segmentation, Targeting, Positioning framework illustrated by real-life examples.
- The Complete Guide to STP Marketing: Segmentation, Targeting & Positioning
- Marketing Reading: Segmentation and Targeting
- Segmentation, Targeting, and Positioning
The Complete Guide to STP Marketing: Segmentation, Targeting & Positioning
A target market is a group of customers within a business 's serviceable available market at which a business aims its marketing efforts and resources. A target market is a subset of the total market for a product or service.
The target market typically consists of consumers who exhibit similar characteristics such as age, location, income or lifestyle and are considered most likely to buy a business's market offerings or are likely to be the most profitable segments for the business to service. Once the target market s have been identified, the business will normally tailor the marketing mix 4 Ps with the needs and expectations of the target in mind.
This may involve carrying out additional consumer research in order to gain deep insights into the typical consumer's motivations, purchasing habits and media usage patterns. The choice of a suitable target market is one of the final steps in the market segmentation process. The choice of a target market relies heavily on the marketer's judgement, after carrying out basic research to identify those segments with the greatest potential for the business.
Occasionally a business may select more than one segment as the focus of its activities, in which case, it would normally identify a primary target and a secondary target.
Primary target markets are those market segments to which marketing efforts are primarily directed and where more of the business's resources are allocated, while secondary markets are often smaller segments or less vital to a product's success.
Selecting the "right" target market is a complex and difficult decision. However, a number of heuristics have been developed to assist with making this decision. A target market is a group of customers individuals, households or organisations , for which an organisation designs, implements and maintains a marketing mix suitable for the needs and preferences of that group. Target marketing goes against the grain of mass marketing. It involves identifying and selecting specific segments for special attention.
Examples of target markets used in practice include: . Before a business can develop a positioning strategy, it must first segment the market and identify the target or targets for the positioning strategy.
This allows the business to tailor its marketing activities with the needs, wants, aspirations and expectations of target customers in mind.
It allows for a richer understanding of customers and therefore enables the creation of marketing strategies and tactics, such as product design, pricing and promotion, that will connect with customers' hearts and minds. Also, targeting makes it possible to collect more precise data about customer needs and behaviors and then analyze that information over time in order to refine market strategies effectively.
The first step in the S-T-P process is market segmentation. In this phase of the planning process, the business identifies the market potential or the total available market TAM. This is the total number of existing customers plus potential customers, and may also include important influencers. For example, the potential market or TAM for feminine sanitary products might be defined as all women aged 14—50 years. Given that this is a very broad market in terms of both its demographic composition and its needs, this market can be segmented to ascertain whether internal groups with different product needs can be identified.
Markets generally fall into two broad types, namely consumer markets and business markets. A consumer market consists of individuals or households who purchase goods for private consumption and do not intend to resell those goods for a profit. A business market consists of individuals or organisations who purchase goods for one of three main purposes; a for resale; b for use in producing other goods or services and; c for general use in daily business operations.
Market segmentation is the process of dividing a total available market, using one of a number of key bases for segmenting such as demographic, geographic, psychographic, behavioural or needs-based segments. Whereas a psychographic segmentation might yield segments such as Young Singles, Traditional Families, Socially Awares and Conservatives.
Identifying consumer demand and opportunity within these segments should assist the marketer to identify the most profitable segments. Although there are many different ways to segment a market, the most common bases used in practice are: . During the market segmentation process, the marketing analyst will have developed detailed profiles for each segment formed. This profile typically describes the similarities between consumers within each segment and the differences between consumers across each of the segments.
The primary use of the segment profile is to assess the extent to which a firm's offerings meet the needs of different segments. A profile will include all such information as is relevant for the product or service and may include basic demographic descriptors, purchasing habits, disposition to spend, benefits-sought, brand preferences, loyalty behavior, usage frequency and any other information deemed relevant to the subject at hand.
The segment profile assists in the decision-making process and has a number of specific benefits: . After profiling all the market segments formed during the segmentation process, detailed market analysis is carried out to identify one or more segments that are worthy of further investigation. Additional research may be undertaken at this juncture to ascertain which segments require detailed analysis with the potential to become target segments.
A key consideration in selecting the target markets is whether customer needs are sufficiently different to warrant segmentation and targeting. In the event that customer needs across the entire market are relatively similar, then the business may decide to use an undifferentiated approach.
On the other hand, when customer needs are different across segments, then a differentiated i. In certain circumstances, the segmentation analysis may reveal that none of the segments offer genuine opportunities and the firm may decide not to enter the market.
When a marketer enters more than one market, the segments are often labeled the primary target market and the secondary target market. The primary market is the target market selected as the main focus of marketing activities and most of the firm's resources are allocated to the primary target.
The secondary target market is likely to be a segment that is not as large as the primary market, but may have growth potential. Alternatively, the secondary target group might consist of a small number of purchasers that account for a relatively high proportion of sales volume perhaps due to purchase value, purchase frequency or loyalty. In terms of evaluating markets, three core considerations are essential: . However, these considerations are somewhat subjective and call for high levels of managerial judgement.
Accordingly, analysts have turned to more objective measures of segment attractiveness. Historically a number of different approaches have been used to select target markets. These include: . Segmentation and targeting for international markets is a critical success factor in international expansion. Yet, the diversity of foreign markets in terms of their market attractiveness and risk profile, complicates the process of selecting which markets to enter and which consumers to target.
Targeting decisions in international markets have an additional layer of complexity. An established stream of literature focussing on International Market Segmentation IMS suggests that international segmentation and targeting decisions employ a two-stage process: .
Analysis carried out in the first stage focuses involves the collection of comparative information about different countries with a view to identifying the most valuable markets to enter. This is facilitated by the relatively wide data availability for macro-variables. Most government departments collect business census data as well as data for a broad range of economic and social indicators that can be used to gauge the attractiveness of various destinations.
During the research and analysis carried out during the segmentation and targeting process, the marketer will have gained insights into what motivates consumers to purchase a product or brand. These insights can be used to inform the development of the positioning strategy.
Firms typically develop a detailed positioning statement which includes the target market definition, the market need, the product name and category, the key benefit delivered and the basis of the product's differentiation from any competing alternatives.
The communications strategy is the primary means by which businesses communicate their positioning statement to target audiences. Once the segmentation has been carried out, target markets selected and the positioning strategy developed, the marketer can begin to shape the marketing mix or marketing program around the needs, wants and motivations of the target audience. The four core marketing activities include: product, price, place and promotion.
The marketing mix is the combination of all of the factors at the command of a marketing manager to satisfy the target market. Price , is a reference to the sacrifices made by a consumer to acquire a product and may include both monetary and psychological costs such as the combination of the ticket price, payment methods and other associated acquisition costs.
Place refers to the way that a product physically reaches the consumer — where the service or item is sold; it also includes the distribution channels in which the company uses to get products or services to market. Finally, Promotion refers to marketing communications used to convey the offer to consumers and may include; personal selling, advertising, public and customer relations, sales promotion and any other activities to communicate with target markets.
The first reference to the term, the 'marketing mix' was claimed to be in around by Neil H. For instance, he is known to have used the term 'marketing mix' in his presidential address given to the American Marketing Association in Instead, they relied on checklists or lengthy classifications of factors that needed to be considered to understand consumer responses. Jerome McCarthy published his now-classic work, Basic Marketing: A Managerial Approach that the discipline accepted the 4 Ps as constituting the core elements of the marketing mix.
The commonly accepted 7Ps of services marketing include: the original four Ps of product, price, place, promotion plus participants people , physical evidence and process. The product is the primary means of demonstrating how a company differentiates itself from competitive market offerings.
The differences can include quality, reputation, product benefits, product features, brand name or packaging. Price provides customers with an objective measure of value.
Virvilaite et al. Price can be an important signal of product quality. Prices can also attract specific market segments. For instance, premium pricing is used when a more affluent segment is the target, but a lower-priced strategy might be used when price-conscious consumers are the target.
Price can also be used tactically, as a means to advertise, short stints of lower prices increase sales for a variety of reasons such as to shift product over-runs or out of season goods. So a product or company doesn't have to be close to where its customer base is but instead they just have to make their product as available as possible.
For maximum efficiency, distribution channels must identify where the target market are most likely to make purchases or access the product. Distribution or place may also need to consider the needs of special-interest segments such as the elderly or those who are confined to wheelchairs.
For instance, businesses may need to provide ramps for wheelchair access or baby change rooms for mothers. Promotion refers to "the marketing communication used to make the offer known to potential customers and persuade them to investigate it further". Target marketing allows the marketer or sales team to customize their message to the targeted group of consumers in a focused manner.
Research has shown that racial similarity, role congruence, labeling intensity of ethnic identification, shared knowledge and ethnic salience all promote positive effects on the target market. Research has generally shown that target marketing strategies are constructed from consumer inferences of similarities between some aspects of the advertisement e. Consumers are persuaded by the characteristics in the advertisement and those of the consumer.
Marketers have outlined five basic strategies to the segmentation and the identification of target markets: undifferentiated marketing or mass marketing , differentiated marketing, concentrated marketing niche marketing and micromarketing hyper-segmentation.
When television first came out, undifferentiated marketing was used in almost all commercial campaigns to spread one message across to a mass of people. Differentiated marketing however is a method which requires a lot of money to pull off. Due to messages being changed each time to advertise different messages it is extremely expensive to do as it would cost every time to promote a different message. Differentiated marketing also requires a lot time and energy as it takes time to come up with ideas and presentation to market the many different messages, it also requires a lot of resources to use this method.
Niche marketing is a term used in business that focuses on selling its products and services solely on a specific target market. Despite being attractive for small businesses, niche marketing is highly considered to be a difficult marketing strategy as businesses may need thorough and in-depth research to reach its specific target market in order to succeed. Niche marketing, is also primarily known as concentrated marketing, which means that firms are using all their resources and skills on one particular niche.
Niche marketing has become one of the most successful marketing strategies for many firms as it identifies key resources and gives the marketer a specific category to focus on and present information to.
Marketing Reading: Segmentation and Targeting
is essentially about dividing up the market; targeting is about the practicalities of important also to look at the causes underlying the segmentation.4 This.
Segmentation, Targeting, and Positioning
Customers have unique requirements, aspirations and satisfaction levels. Each customer group — or market segment — has specific expectations and retail marketers must develop retail brands and concepts which cater for the needs of the segment targeted. Having decided on which segment or segments to target, retailers position their brands with an image with which the targeted customers identify. Market segmentation, targeting and positioning is a fundamental process in modern retail marketing strategy.
Learn more. The latest revision December features new topics such as demand space segmentation and segmentation based on multiple consumer channels and touchpoints. The revision also expands on examples of how segmentation and targeting can heavily impact an organizations' product offerings and corporate structure. Learn more: bit. Core Curriculum Readings in Marketing cover fundamental concepts, theories, and frameworks in marketing.
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