Market Segmentation, Target Market Selection & Positioning – My Takeaways

1)    Market Segmentation: Dividing market into groups of potential customers called market segments

2)    Two types of segmentation:

a.    Segmentation based on benefits sought by customers

b.    Segmentation based on observable characteristics of customers

3)    Target Market Selection: Evaluation of each market segment’s attractiveness and selection of one or more segments to enter

4)    Key to target market selection is understanding differentiation – This involves:

a.    Collecting and comparing data on the company and each of its competitors

b.    Synthesizing collected data into competitor capability matrices

                                               i.    Items of evaluation are listed as rows

                                              ii.    The company and its competitors are listed as columns

                                             iii.    Each entry is a rating corresponding to the item being evaluated

c.    Evaluating and determining which of the identified segments is most likely to succeed

5)    Positioning: Identification of a clear, distinctive and unique selling proposition for the product

6)    Differentiation: Clearly articulating to the customer as to the benefits that the product fulfills – clearly stating how it differs from the competitor offerings

a.    Vertical Differentiation – Differentiation based on quality – exploits customer’s willingness to pay for quality

b.    Horizontal Differentiation – Differentiation not based on the judgment of quality levels

c.    Differentiation can be achieved via any element of marketing mix – Product, Price, Place or Promotion