Segmentation, targeting and positioning

Segmentation

What is Segmentation? "Market segmentation is the process of partitioning markets into groups of potential customers with similar needs or characteristics who are likely to exhibit similar purchase behaviour". (www.marketresearchlatinamerica.com) 2010. 

Basically its the way in which business outline the characteristics of the customers, once they have worked out what these characteristics are they can target their products in different ways to different people so that they selling techniques are more efficient. Instead of offering the same "Marketing Mix" to a large number of different customers, Market Segmentation allows the business to tailor the products to a specific "Target Market" therefore this will mean better customer satisfaction as their needs have been met. Market Segmentation doesn't mean that the entire marketing mix will change so that it applies to a different type of customer, the most effective way in targeting to a specific customer would be by changing the promotional campaigns. By doing this not only will they keep their existing customer but they will also brunch out at try to attract a specific market i.e. Males-Females, a certain age group, the type of person they would like to purchase their product based on wealth etc.

There are two market types: Consumer Products and Business Products. 

Customer Products are products which a purchased by the customer for the own personal use i.e. the customer will purchase everyday products so that they can use on an everyday bases. Whereas Business Products are goods or services purchased for production of other goods and services for resale.

The customer market segmentation can be split up into four primary bases on which to segment a consumer market:

• Geographic Segmentation: The geographical segmentation is based on where you live, factors which can affect this is religious beliefs within the area and therefore some product would be more successful than others, and some products could be very offensive therefore business have to be careful when religious beliefs can affect their product or service. Climate is another big factor, because some product need different climates in order to work therefore so that their product/s are successful they will have to research the climate within that area. For example sun cream is not going to be of much use in cold countries such as: Finland, Sweden Norway and Russia and therefore the company will need to be aware that this product will not be very effective within this climate. Population Density and Population Growth can also have in impact on market segmentation, i.e. places such as Antarctica hasvery little people living there and therefore its not an efficient place to sell specific product such as a Ferrari in Antarctica i would be useless because you would not be able to use it. Population Growth effect the market segmentation because if there is a growth in a certain age group then a business can target that age group and therefore aim the products towards that age group which would appeal a large amount of people and this could lead to a successful product.
• Demographic Segmentation: Age is a big factor in demographic segmentation because if you are aiming your product/s at a certain age group therefore the business will have to research into the different age groups that are within that area and then business will need to decide whether that area has the age group in which they are looking for. Gender plays a large role in demographic segmentation too as depending on the product the business will want to apply to a certain gender and therefore they will need to once again research on which gender if any is higher and therefore possibly target either males or females. Ethnicity plays a role too i.e. if you are trying to open a Polish Shop selling polish food and other everyday things, you would have to see whether the area you have select has a demand for this product/service. Other factors that can also effect will be education, occupation, income, and family status.
• Psychraphic Segmentation: This includes things such as people Values and how they can affect their buying behaviours and depending on their values what types of products do they tend to purchase. Attitude/s can affect you buying patterns it can be something as simple as you opinion or your attitude toward the manufacture that would stop you from purchasing products from them. Lifestyle can effect product you purchase, if you have to money to live a "lavish lifestyle" then you will want "the better things in life" and you will have to money to purchase them so things as simple as lifestyle can also have a big impact on the way in which business use their product in target you.
• Behavioral Segmentation: is based on variables such as Usage rate so if a product is a product in which the average consumer would use on a daily bases then the usage rate is going to be of a high and therefore the packaging in which the product is packed in should contain a good amount so that the customer/s will be satisfied with how much they have to use, price sensitivity, brand loyalty, and benefits sought. Price is a big factor because if the price is not right customers will be reluctant to purchase from there. Brand Loyalty also plays a big role in our behaviour to purchase products because due to their brand image we believe are better.

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Business Market Segmentation is slightly different to the customer segmentation as the different business markets often leads to segmentation on the following bases:

• Geographic segmentation - regional variables such as customer concentration, this means that the more potential customers that the business is located within the higher to concentration and therefore the business i located within a good or a bad area to what potential customer its aiming to attract i.e. "Target Market", other factors that will affect the Geographic Segmentation of the business is the industrial growth rate, therefore if the area in which they are working in has a fast growth rate then they will need to be able to meet the customers’ needs.

• Customer type - The size of the organization plays a big part with this section as if the business is a recognised business then they will have a large span of customer and therefore a company such as Mc Donald’s appeals to all customer from the very young with the "Happy Meal" to the very old with just standard verity of meals which could appeal to everyone because they have a vast amount of options for all potential customers.

• Buyer behaviour - business also have buyers behaviour’s and therefore they will have Loyal Suppliers in which they purchase their goods and services from, there could be other supplier which could offer the same products for a cheaper price but once a business has made a relationship with a supplier/s they are reluctant to change supplier as they have to put their trust into them because it’s like a "you help me, I help you" because the supplier gets money from the business but if the supplier cannot provide the business with the good therefore this could mean that the business is not able to provide their customers with the product or service and therefore this could lead to the business losing customers. The Business may have a Usage Pattern  contract and this means that if we purchase this many products from the supplier they will get those goods for a better prices and therefore this will increase the profit growth. 

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Targeting

Target market means business break up their customers into different segments and then concentrating on certain segments so that they can go and work further into them, this could be because they want to branch out into a new market or this could be because of a high interest in to this specific segment they need to work out how to deal with the interest and how they can expand and build on this. Target marketing can be key to small businesses succeeding as if they target the correct customers this will earn them income and therefore allow the business to move forward. 

Target Marketing makes a lot of things easier i.e. this makes it easier to promote you product or service to a certain “market” and this also makes easier the pricing and how the product is going to be disturbed from the business to the customer. 

If I was to open a new catering business, I could advertise the new service on the newspaper which would go out to the whole borough but to target a specific market I will distribute leaflets in order to make people which are located near the business aware and therefore next time they are interesting in having a take-away my business will be the business that will come to mind, and as the business will be located near the business this will also save the business transport cost as some customer could pick of their food whereas others could have theirs delivered.   

• Geographic segmentation: Location can be key to how a business targets potential customer, using my catering business as an example, I will target people which are with 5-7 mile radius of the business because anything more than that will not be cost effective as I will be wasting money on petrol and the food could possibly become cold and that time and this could cause the customers to be unsatisfied with the service they’ve be provided with.

• Demographic segmentation: is based on statistics i.e. what types of age groups live surrounding your business and which of those age groups do you want to specifically target. What the income rate, this could be judged by the price of the houses within that area or what the unemployment levels and therefore this could outline what prices you could charge for your product or service.

• Psychographic segmentation: is the lifestyle preferences i.e. are the people within the local community pet lovers and if so this could mean a dog walking business could be effective especially if these people tend to be in employment and therefore have very little time for the dog/s.

There is also something called Niche Marketing and these are products which are very rare and specific and there are very few Niche products left because they've just been exposed and then tried to be applied to the everyday customer. But products which are Niche are target towards a very specific audience as they are very exclusive and these products tend to be very expensive as they are rare and hard to find products.

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Brand Positioning 

Brand positioning is where the business wants the brand to be in regard to its customers and what type of image it’s trying to portray to potential customer i.e. cheap and cheerful, or whether it business wants its products to be the very best they can offer such a Apple products(iPhone, iMac, iPod etc). Brand can be positioned using a perceptual map, this map allows for business to plot other competitors and then decide on where they want their brand to be in regard of the price they will charge the people they want using the product/s etc.

 Product Positioning

Once a business has a product there are 8 stages in which they have to go through in selecting where they want to position their product and how they want them as a business as well as the new or existing product perceived by potential buyers.

1. Outline the market which the product or brand will compete (who the relevant buyers are)
   
   
2. What makes the product different from existing product and why is this better (is there a space in the market for this product)
   
   
3. Sample to product to potential customer as see what they think of the product and whether they would purchase it, or do they believe other people would
   
   
4. What image is your product trying to portray.
   
   
5. Where in the market will this product be found
   
   
6. Who are the people that will be using your product
   
   
7. Where is the product going to be positioned, where in the market will the product be situated in a dream scenario.
   
   
8. Position.