the segmentation, targeting and positioning is central to effective strategic marketing. Segmentation: is concerned with the process of identifying different groups of customers whoare similar in ways that are relevant to marketing.Targeting: decisions can then be made based on range of identified segments.Positioning: refers to the way in which an organization tries to communicate its valueproposition to its target market in order toconvince customers that it has a distinct offer
Segmentation essentially a process whereby a provider of goods or services chooses to groupsprospective customers together on the basis of aset of common characteristics that havesignificant implications for its marketing activity.Common characteristics that might be used to segment a market include variables such as age,income, personality and lifestyle.Targeting is then concerned with the identification of an appropriate set of segmentswhich the organization will seek to serve.As one extreme, each individual customer could be presented as a segment of one because eachindividual has different needs.
1 it facilitates efficient resource utilization: a company is able to limit the scope of individual components of themix and thus reduce costs. 2 it allows effective targeting of new customers: nowadays, it is unusual for a company to have a completelyindiscriminate approach to targeting new customer. 3 it facilitate competitive advantage: the more specific an organizations approach to segmenting the market, theeasier it is to establish and maintain competitiveadvantage. 4 it directs the marketing mix: each target segment chosen by an organization should be subject to a specificand relevant marketing campaign.
5 it enhances customer satisfaction: the mix should achieve a close match with customerneeds and wants. The more precisely aproduct and its features reflect thecharacteristics of a given group ofindividuals, the greater the degree ofsatisfaction they should experience from itsconsumption.
There is no best way to segment a market. there is a variety of approaches that can beused with varying degrees of complexity andsophistication.For an organization to get an approach to segmentation that is right for it depends on agood understanding of the market, the rightskills and knowledge and carful evaluation ofdifferent options.
1 a sense of touch for the market: the understanding of the market should be based on the ability to integrate all relevantsources of knowledge, the whole picture of the market. 2 analytical skills and resources: access to appropriate data and the ability to manipulate and interpret it is vital. The more variedthe data about a market, the greater the number of options forsegmentation. 3 commercial judgment: common characteristics can be used in market segmentation. These vary from basic demographiccriteria, such as age and gender, through to subtle and complexcriteria based upon personality traits. 4 creative insight: to be successful, segmentation calls for a combination of elements of marketing as both art and science.Science is required in terms of gathering of factual information,its analysis and the use of various modeling and simulationprocesses.
1 measurability: this is concerned with the extent to which the preferences, size andpurchasing power of different segments canbe measured. 2 profitability: a segment should be the largest possible homogenous group worthgoing after with a tailored marketingprogramme.
3 accessibility: these refers to the degree to which the segments can be effectively reached and served.A bank that wishes to target individuals in social classAB will usually be to gather enough information aboutthe television programmers that such individualswatch and the newspaper that they read and thisshould make such a segment relatively accessible. 4 relevance: a segmentation system which groups individuals in terms of lifestyle and establishes thatthe type of credit card carried "standard, gold,platinum "depends on an individuals aspirations andself-concept uses a personality-based characteristicexplain preference.
8.4.1 customer characteristics "customer oriented segmentation":-1 demographic: age- gender- family relationship".2 socio- economic: income- financial assets- social class".3 geographic: region or locality. 4 psychographic: attitudes- beliefs- motives.
This approach comprises variables that define the nature of the utility that consumers seekto gain from the consumption of a product orservices.8.5 approaches to segmenting "business to business markets:-The cost of acquiring a new customer in the organizational business arena are usuallyconsiderably greater than in the consumerarena, and so too are the income flows.
Choices must be made regarding which segments to target. Choice of segmentationcriteria and choice of targets is an interactiveand interdependent set of processes whichmay well require a high degree of iterationbefore a final strategic position is arrived at. The basic of targeting strategies is as follow:-
8.6.1 undifferentiated targeting:- An analysis of customer characteristics may simply reveal the absence of a compellingvariable upon which segmentation could bebased.A range of development, such as the regulation induced increase in new customeracquisition cost, lower product margins andthe pressure to improve persistency rates,have all served to make the life insuranceindustry more discriminating in its allapproach to gaining new customers.
8.6.2 differentiate targeting:- This arises when a company has been able to identify a commercially valid basis uponwhich an aggregate market can be brokendown into segments.The fast moving consumer goods sector has probably been the best example ofdifferentiate targeting. 8.6.3 focused segmentation:- Company breaks a market down into a set of segments but chooses to target a smallsubset of available segments.
1 single segment concentration: theorganization focused only on a singlesegment in the market and supplies productto satisfy the needs of those customer group.2 selective specialization: other type of niche marketing. Focused only on one segment theorganization chooses to operate in severalsegments to less risk.
3 product specialization: most market can be seen as a different number of customergroups and a number of different but relatedproduct. The organization focused on presenta particular product type to a range ofcustomer groups. 4 market specialization: this approach is the opposite to product specialization. Theorganization chooses to specialize in meetingthe needs of a particular customer groups
8.6.4 customized targeting:- This approach represents the ultimate manifestation of the segmentation concept,based as it is upon a separate marketing mixfor each customer.
Positioning is a piece of marketing language that concerns the issue of perception.Positioning is about how a company or brands wants itself to be perceived in theminds of the individual who comprise itstarget segments.The objective of positioning is to generate and maintain a clear value proposition tocustomers, creating a distinctive place in themarket for the brand or organization.
Positioning should be based upon product and services characteristics that:Are relevant to the target segment. Achieve differentiation from the competition. Can be communicated clearly to the market. Can be sustained. Positioning is a truly strategic concept that requires a considerable investment over aprolonged of time.The brand characteristics upon which positioning may be built can related to demonstrable productand services attributes or image related factors.Positioning is less well developed as a concept in the field of financial services than in the field ofconsumer goods.
Relies primarily on information about consumer perceptions of both the organization and itscompetitors. This information may be basedupon either quantitative research based data orsubjective judgments.Trough the research and evaluation process, the organization typically tries to identify two majordimensions of itself or its product that couldfrom the basis of competitive advantage. Whatever position is decided upon, it must satisfy some basic tests of its likelyeffectiveness:-
1 clarity: is the basis of the position clear and straightforward to grasp?2 credibility: can the position be justified and validated by the evidence available?3 consistency: is the essence of the position communicated consistent over time in allelements of the marketing mix?4 competitiveness: does the position result in benefits to the consumer that aredemonstrably superior to those provided byits competitors?
as any aspects of marketing strategy, positioning needs to be reviewed on anappropriate basis to ensure that it deliversthe required differentiation. Over time,market forces may exert pressures thatthreaten the relevance and value of theposition.