Definitely, there are several ways for segmenting the market, but not all segmentation are efficient and effective. For example, buyers of table salt can be divided into blond and brunette customers. But hair color definitely does not affect the purchase of salt. If all the buyers of salt bought the same amount of salt every month, believed that all the salt is the same, and willing to pay the same price, the firm would not benefit from segmenting this market. Market segments must have following things in order to be more useful.
Purchasing power, size, and profiles of the segments could be measured. Certain variables of segmentation are difficult to measure. For example, there are about 30.5 million left-handed people in the US, which is nearly equal to the entire population of Canada. Yet few of the products are targeted toward this left-handed customer segment. The main problem might be that the segment is difficult to identify and measure.
The market segments could be effectively reached as well as served. Suppose a fragrance firm finds that most of the users of its brand are single men and women who stay out late and socialize more. Unless this group lives or shops at certain places and is exposed to certain media, its members would be difficult to reach.
Market segments are huge or profitable enough to serve. A segment must be the largest possible homogeneous group worth pursuing with a tailored marketing program. It won’t pay, for example, for an automobile producer to develop cars especially for those people whose height is greater than seven feet.
The market segments are conceptually distinguishable and respond differently to various marketing mix programs and components. If both men and women respond similarly to marketing efforts for soft drinks, they don’t constitute separate segments.
Effective programs could be designed for serving and attracting the segments.
For example, although one of the small airlines identified seven market segments, its staff was very small to establish separate marketing programs for each segment.
Beyond deciding the segments of the market it will target, the organization must decide on value proposition—how it will generate differentiated value for targeted segments and what positions it wants to occupy in those segments. A product’s position simply defined as the way the product is defined by customers on necessary attributes—the place the product occupies in customer’ minds relative to competing products. Products are produced in factories, but brands happen in the minds of customers.
Tide is positioned as one of the powerful, all-purpose family detergents. In the market of automobile, the Nissan Versa and Honda Fit are positioned on economy, Mercedes and Cadillac are positioned on luxury, and Porsche and BMW are positioned on performance.
Consumers are overloaded with information of products and services. They could not reevaluate products every time while making a buying decision. To simplify the process of buying, consumers organize products, services, and firms into categories and “position” them in their brain. A product’s position is the complex set of perceptions, impressions, and feelings that customers have for the product compared with competing products.
Consumers sometimes position products with the help of marketers and sometimes without the help of marketers. But marketers don’t want to leave their products’ positions to chance. They should plan positions which will give their products the greatest advantage in selected target markets, and they should design marketing mixes for creating these planned positions.
While planning their differentiation and positioning strategies, marketers usually prepare perceptual positioning maps that show the perceptions of consumer of their brands versus competing products on the important buying attributes.
In the figure, each circle position on the map indicates the brand’s perceived positioning on two dimensions i.e. price and orientation (luxury versus performance). The size of the each circle indicates the relative market share of brand.
Some companies find it easy for choosing a differentiation and positioning strategy. For example, a company well known for quality in certain segments will go for this position in a new segment if there are sufficient buyers seeking quality. But in several cases, two or more companies will go after the same position. Then each company will have to find another ways to set itself apart. Each company should differentiate its offer by developing a unique bundle of benefits that appeals to a substantial group within the segment.
Once it has chosen a position, the firm must have to take stronger steps for delivering and communicating the desired position to its target consumers. All the organization’s marketing mix efforts should support the positioning strategy. Positioning the firm calls for concrete action, not just talk. If the firm decides to develop a position on better quality and service, it should first deliver that position. Designing the marketing mix—product, price, place, and promotion—involves working out the strategic details of the positioning strategy. Hence, a company that seizes on a more-for-more position knows that it must have to produce high-quality products, charge a high price, distribute via high-quality dealers, and advertise through high-quality media. It must have to hire and train more service people, find retailers who have a good reputation for service, and flourish sales and advertising messages that broadcast its superior service. This is the only way for building a consistent and believable more-for-more position.
Firms usually find it easier to come up with a good positioning strategy than to implement it. Establishing a position or changing the position normally takes a long time. In contrast, positions which have taken years to build can be lost quickly. Once an organization has built the desired position, it should take care to maintain the position through consistent performance as well as communication. It must have to monitor closely and adapt the position over time to match changes in consumer wants and competitors’ strategies. However, the firm should avoid abrupt changes that may confuse consumers.
Kotler, P., & Armstrong, G. (2013).Principles of Marketing.Chennai: Pearson India Education Services Pvt Ltd.