Segmentation, targeting and positioning

19.1 Market segmentation

Market segmentation is the acknowledgement by companies that customers are not all the same.The market can be broken into smaller sections in which customers share common characteristics, from the same age group to a shared love of the same football team. Successful segmentation can increase customer satisfaction and provide scope for increasing company profits.

For new, small companies segmenation is a valuable strategy for breaking into an established market. For large companies, market segmentation involves two possibilities:

• Add one more niche product to a portfolio otherwise dominated by the mass market.
• Multiple segmentation, in which a wide portfolio of niche brands can add up to a market leading position. This approach would have risked being only marginally profitable in the past, but flexible high-tech manufacturing systems can make it cost-effective to produce differently targeted products on the same production line.

19.2 The process of segmentation

• Conduct research into the different types og customer within a marketplace; age, gender etc.
• See if they have common tastes/ habits.
• Identify the segment you wish to focus on, and then conduct som equalitative research into customer motivations and psychology.
• Devise a product designed not for the whole market, but for a particular segment. This may only achieve a 1% market share, but if the total market is big enough, that could be highly…