A marketer is tasked with the responsibility of guiding a company’s marketing campaign. When a company is new and has few products, the campaign may be obvious and the attention of a marketer less necessary. Once the market becomes more competitive, it is imperative that a marketer be able to use the basic processes of segmenting, targeting, positioning, and differentiation to define the company’s marketing strategies. These processes not only help the market refine the marketing campaign, but also illuminate non-obvious opportunities.
Segmenting is the process of taking a disparate group of customers and potential customers and categorizing them into groups based on their similarities. Marketers assume that members of a segment will respond to a marketing strategy in a similar way. The challenge for the marketer is defining these segments in a usable fashion (Perreault, Cannon, & McCarthy, 2008). For example, the online retailer Amazon has foregone the usual methods of market segmentation based on gender or age, and instead focused on the buying habits of it’s customers. This sort of segmentation is really based on what customers want, rather than what customers are like (MacLeod, 2006). Once the marketer has broken the larger group into smaller segments, it is time to decide which segments to target.
Targeting segments is a simple concept in and of itself. A marketer must decide which segments will receive the company’s attention. It is the selection process that makes the practice of this concept so difficult. A marketer might choose to focus on a single target, multiple targets with multiple strategies, or multiple targets with a single strategy. Each approach has it’s strenths and weaknesses. Although using a single strategy to focus on mutliple target segments has the benefit of allowing the marketer to focus on one strategy, it also runs the risk of exposing the segment to marketers with a more focused strategy. In the end, marketers that focus individual strategies on individual segments will find more success (Perreault et al., 2008).
Although positioning sounds like something the company does, it is really a reflection of the customers’ view of the company and its products. Once the product’s position in the market is understood, the marketer can either use that position to focus the target strategy or attempt to influence that position into a more desirable market segment (Perreault et al., 2008). The Home Depot realized that its position in the building supply market was as a top-notch provider of supplies for the “do-it-yourself” segment. The decision was made that The Home Depot wanted to add to this position as the number one supplier for professionals. To satisify this goal, The Home Depot began acquiring various building supply distribution companies with good market standing (Young, n.d.).
Differentiation is another concept that centers around the customers’ view of the product. When a group of competing products are perceived as being very similar, the marketer will try to differentiate their product so that customers identify with the product more closely. This differentiation may better suit the customers’ needs (Perreault et al., 2008). Starbuck’s took this tack when it decided to differentiate its product on something other than price. By focusing instead on the quality of the coffee and the experience of drinking it, Starbuck’s elevated its brand to one that customers crave despite its price (Newton, 2003).
All of these processes — segmenting, targeting, positioning, and differentiation — are tools for the marketer to use. As markets become more competitive, it is important for marketers to use these tools to define their strategies. Additionally, these tools can be used to define opportunities that might be otherwise missed.
MacLeod, L. (2006). Amazon delivers lesson on powers of market segmentation. Portland Business Journal. Retrieved September 5, 2008.
Newton, D. (2003). The value of differentiation: A lesson from Starbucks. Retrieved September 5, 2008.
Perreault, Jr., W. D., Cannon, J. P., & McCarthy, E. J. (2008). Essentials of marketing: A marketing strategy planning approach, 11th ed. New York: McGraw-Hill Irwin.
Young, L. (n.d.). What is Home Depot’s impact? Retrieved September 5, 2008.