Chapter 06 - Identifying Market Segments and Targets, Positioning

 

Success of a business can be derived from implementing the correct marketing strategy at the correct time to the correct set of customers with the desired value to them. To construct a good marketing strategy marketers should be able to identify their distinct target market through number of customer segments in the market. Identifying the correct target market segment is not an easy task. Because different individuals have different requirements and perceptions on their needs. We are in the 20^th century, and it is further difficult to understand the real requirements of the customers with the development of new technology and different generations in society.

Example

The family lives of our parents or grandparents were totally different from ours. During their era, they had limited requirements and they fulfilled them with the available products and services at that time, but they enjoyed their lives. But today, we are in an environment where everyone’s life is complex and there is not much time to relax. And, we have immense needs and wants backed by thousands of products and services. However, we could manage with those options to satisfy our needs and wants since, marketers have identified our requirements and given their solutions.

 

What is STP?

Segmentation

“Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing strategies or mixes” (Kotler et al, 2018. p75). Before constructing any marketing strategy, marketers need to identify what types of customer segments are available in the market.

Targeting

“Evaluating each market segment’s attractiveness and selecting one or more segments to serve” (Kotler et al, 2018. p75). After identifying the market segments, the company can decide whether to select one segment or more segments for their offerings.

Positioning

“Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers” (Kotler et al, 2018. p75). Positioning the product or the service in the customers’ minds is a crucial process. Because the company must deliver a superb quality product or service to the customer at the initial stage to attract them over competitor offerings.

Segmentation variables

Marketers can segment the whole market based on different variables as follows.

• Geographic
• Geodemographic
• Behavioral
• Demographic
• Psychographic

 

When analyzing the segments of the market, we as marketers can identify there are some segments which are combinations of two or more above variables, and some are not. Hence, as marketers we must pay our attention when deciding to whom to serve because, there are several factors to be considered when customizing our main product line. After analyzing the different segments in the market, the marketers can decide their target markets based on their products and their value additions.

 

Effective targeting

Effective targeting requires the following steps:

• Identify and profile distinct groups of buyers who differ in their needs and preferences.
• Select one or more segments to enter
• Establish and communicate the distinctive benefits of the market offerings.

 

After the segmentation, marketers can identify the target market/s by following the above steps to implement the market targeting strategies. There are 3 main types of targeting strategies that marketers can select. They are:

• Undifferentiated (Mass)
• Multisegmented (differentiated)
• Concentration (Niche)

 

Positioning

Every business organization aims to grab a place in customers’ mind with their products and services.  To position the product in the customers’ mind, marketers need to enhance the quality of their products and services to satisfy the customer with greater experience. In addition to that marketers can add after sales services, customer feedback, loyalty services to etc. to reach the augmented level of the product which exceeds the expectation of the customer. If there is an old product which does not have a good place on the market, the company can reposition the product by changing the features, quality, attributes, benefits etc. to match the requirements of the target market.

 

Example

I will share my experience from the banking industry which is very familiar to me.

In Sri Lanka, there are several banks which are pioneers in innovations. A few private sector banks introduced new ATM cards some time ago which was a new experience to their customers. In my bank there was also the very first ATM card which was called “CAT card – Commercial bank Automated Teller card”. CAT cards provided cash withdrawals only and no online payments were allowed. Customers used to get those cards and experienced the new version of banking during that time. As a result, still there are customers who visit the branch asking for “new CAT card”, instead of saying a Debit card. During that era, the bank did not have lot of banking products like today. So, they were able to manage their customers with a single product. But today, this bank has many more products aimed at different segments in the market from children to senior citizens. When they introduce a new product to the market, they always consider different segmentation variables which are mentioned in this blog and sometimes they need to adhere to some religious factors also. Since the banking is a service, the employees give their 100% contribution to provide a quality service to the customers with desired value.

References

1. Kotler, P. & Armstrong, G. (2018). Principles of Marketing, Seventeenth edition. Pearson.

2. Avgeropoulos, I. (n.d.). Marketing Planning: Identifying Market Segments and Targeting, Positioning (PPT) Chapter 6 - Identifying Market Segments and Targets.pptx (sharepoint.com)