Lektion 5: Market Segmentation, Targeting and Positioning

The process of dividing a total market into distinct groups of buyers with different needs, characteristics, or behaviours.

Dividing car buyers into "Family Safety" vs. "Sports Performance."

The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

Choosing to sell only to the luxury segment.

Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

Keys to Successful Positioning

• Clarity: The idea must be simple and clear (e.g., BMW = Driving Machine)

• Consistency: The message must be consistent over time (don’t change it every year)

• Credibility: The claim must be believable

• Competitiveness: The position must offer a differential advantage that customers value

Volvo = Safety; BMW = Driving Machine.

A strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.

Mass marketing (e.g., basic salt or sugar).

A strategy in which a firm targets several market segments and designs separate offers for each.

L'Oréal offering different shampoos for dry, oily, and colored hair.

A strategy in which a firm goes after a large share of one or a few submarkets.

Left-handed store; Vegan dog food.

Dividing a market into groups based on consumer knowledge, attitude, use, or response to a product.

Frequent flyers vs. occasional travelers.

Dividing a market into different groups based on social class, lifestyle, or personality characteristics.

"Outdoorsy" people vs. "Homebodies."

Grouping consumers based on observable characteristics such as demographics, socio-economics, and geography.

Segmenting by "High-income earners in London" (Geography + Income).

Dividing a market into different geographical units such as nations, states, regions, or cities.

McDonald's offering different menus in India vs. USA.

The process of dividing business (B2B) markets into segments based on criteria like industry size, location, and purchasing approach.

The degree to which a segment is large enough and profitable enough to serve.

Don't target "Left-handed people named Bob" (too small).

The degree to which the size, purchasing power, and profile of the segment can be measured.

You can measure how many left-handed golfers exist, but it's hard to measure how many "people who dream of flying" exist.

The degree to which the market segment can be reached and served effectively.

Targeting "hermits living off the grid" is not accessible because you can't show them ads or deliver goods easily.

The degree to which effective programs can be designed for attracting and serving the segment, given the company's resources.

A small airline identifying a global segment of travellers but lacking the fleet to serve them (not actionable).

The degree to which a segment is large or profitable enough to serve. (Often combined with "Effective" or "Substantial").

A car manufacturer won't build a factory for a segment of only 50 people.

Changing the market position of a product or brand.

Lucozade shifting from a medical recovery drink to a sports energy drink.

A visual representation of consumer perceptions of the brand and its competitors, usually on two dimensions.

High Price/Low Quality vs. Low Price/High Quality axes.

Keeping the product and target market the same, but changing the image or perception of the brand.

Old Spice changing from "Granddad's aftershave" to a "cool/humorous" brand for young men without changing the scent much initially.

Changing the product (features, quality, design) to better appeal to the same target market.

A smartphone manufacturer upgrading the camera and battery to keep its current tech-savvy customers happy.

Targeting a different market segment with the same product (often by changing the marketing message).

Lucozade moving from a "sickness recovery aid" to a "sports energy drink."

Changing both the product and the target market.

Samsung shifting from making cheap, low-end electronics to high-end, premium smartphones.