Why is segmentation targeting and positioning important in marketing?

Businesses sometimes formulate their targeting, positioning, or segmentation strategies individually, without considering how they affect each other as a part of a marketing strategy.

The problem with this is that they are intrinsically linked. Thus, they should not be formulated independently of each other.

In order to choose what customers to target, the market must first be segmented.

In order to make the brand as attractive as possible to the chosen segments in the target market, marketing positions the brand relative to the marketplace and its competitors.

Confused?

Read on to learn more about these components of a marketing strategy fit together.

Intrinsically Linked: Segmentation, Targeting, and Positioning

Segmentation, targeting, and positioning are all common marketing management tactics, often spoken independently over each other.

However, all three overlap considerably.

Positioning requires a good understanding of the market and its customer groups (segments), so a firm can strategically target marketing at them. Research provides direction for a tactical positioning strategy to target and attract chosen customer segments.

Before determining its position in the market, a firm should decide on a market segment that they want to target.

Marketing literature commonly discusses these three marketing processes with each others’ frameworks. For example, Dibb and Simkin (1991) use segmentation, targeting and positioning as a part of its segmentation process. You can see their model below.

Similarly, Camilleri (2018) use these factors for its three stages of target marketing.

Dibb & Simpkin, 1991 | Image Source

Market research: The foundation of marketing strategy

Without knowledge of a marketplace and its consumers, entering it is like walking across a desert without a map or compass.

Businesses need to understand customers' perceptions of the essential components of a product or service in their niche. Market research uncovers knowledge about the target market and customers' specific needs or goals.

As well as understanding customers better, research can identify market opportunities such as new technologies or a change in government regulations such as export markets.

Learnings can identify tweaks a product or service might require before coming to the market. Research also gains a better understanding of the most important marketing variables for those consumers.

• Analyse industry data
• Test new products with the target market
• Focus groups or surveys to test and understand consumer perceptions, wants, needs and other motivations.

The Target Marketing Process

Target marketing is a customer-centric strategy and the identification and specifications of the customer segments that a brand will attempt to serve and attract with effective positioning.

I will now discuss market segmentation, targeting, and positioning.

Market segmentation

Identifying target profitable groups of customers in a marketplace is called segmentation. These targeted customer groups have similar requirements and buying characteristics.

If there are customers inadequately served by competitors, for example, this becomes an opportunity.

“This identification of target customer groups is market segmentation, where customers are aggregated into groups with similar requirements and buying characteristics.” (Dibb & Simkin, 1991)

In a consumer-oriented process, the customer base for a certain market is divided into sub-groups of consumers. Trying to serve the entire market is impossible.

Variables often used for market segmentation include Demographic, Geographic, Psychographic, Behavioural and Product-Related Factors.

“Look for shared characteristics such as common needs, common interests, similar lifestyles or even similar demographic profiles.” Camilleri (2018)

When deciding which segment/s to target, a firm may choose to develop products or services to satisfy each selected segment or have an existing product or service cater to more than one segment.

The chosen segments are likely to be the most profitable or may hold growth potential. These segments become target markets.

Photo by Kampus Production from Pexels

Targeting

After research and the segmentation process provides a better understanding of the needs and wants of consumers in the marketplace, targeting aims a brand’s marketing and communication at the chosen market segments.

Segments to target are chosen for their potential for profitability. Is there a group of customers not satisfied by a competitor’s offering?

“Each target market needs to be addressed in different ways in order for a marketing campaign to be effective.” — Geraghty & Conway, 2016

Then, each segment will require a tweak to the marketing. Each segment will be unique in its behaviours; therefore, the best way to target each segment changes.

Marketing variables to consider include different offers, prices, promotions, and distribution.

How to Use Targeting for More Effective Marketing

Instead of trying to market to everybody, targeted marketing focuses on the customers you want.

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Positioning

The final stage in target marketing or segmentation is product positioning.

The goal of positioning is to influence customers' perceptions of a brand’s products or services by creating an image of the brand in the mind of consumers.

Positioning differentiates a product by defining how it is unique and how it provides a distinct benefit.

“A product’s positioning is the place a product occupies in a given market, as perceived by the relevant group of customers; that group of customers is known as the target segment of the market.” — Wind, 1980

The unique requirements of a targeted group of customers must dictate the marketing mix — product, price, promotion, and distribution.

Marketing communicates a brand’s positioning to the target market to influence these perceptions, so it must be attractive to these market segments. Each segment will have a slightly different need to satisfy.

Customers perceive positioning based on the sum of their brand associations, such as perceived reputation and quality. Consumers must see credibility in positioning, so evidence must justify a brand’s positioning claim.

The positioning also depends on a firm’s capabilities — they must have the relevant skills, resources, and credibility to deliver on this strategy.

A brand’s position is always relative to competitors’ products or services, which is why the research is so important. Customers continuously compare brands, even subconsciously.

“The challenge here is to translate the needs and wants of the targeted customers into a tangible mix of product, price, promotion, distribution and service levels with maximum appeal.” — Dibb and Simkin (1991)

A position in the market should also be defensible, meaning that a competitor aggressive in their marketing cannot target the same segment and meet their needs easily.

A positioning perceptual map to determine their ideal market position.

Custom image

Dibb and Simkin (1991) recommend seven steps in determining a Positioning Plan.

1. Define the segments in a particular market.
2. Decide on the segment to target.
3. Understand what the target consumers expect and believe to be most important when deciding on the purchase.
4. Develop a product or retail brand which caters specifically for these needs and expectations.
5. As the target customers perceive, evaluate the positioning and images of competing products/retail brands in the selected market segment (or segments).
6. With this knowledge, select a credible image that sets your brands apart from the competing brands, matching the aspirations of the target customers.
7. Promotion telling target consumers about the product and other marketing mix activities such as pricing.

As you can see, segmentation and targeting are the first two steps in defining a positioning strategy.

Positioning: 5 Strategies to Stand Out From Your Competitors

How a brand provides value to customers in a unique way.

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Final Thoughts

Segmentation, Targeting, and Positioning are three components of a marketing strategy that are interdependent.

However, sometimes they can be discussed and implemented in a marketing strategy without a holistic approach that strategically considers all three.

This article has explored how segmentation, targeting, and positioning require synergy to create a holistic marketing strategy.

A firm should invest in market research to uncover new knowledge and understanding of consumers that influence the strategic direction of its marketing.

Thank you for reading.

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The unique strengths and goals, as well as opportunities in the marketplace, shape a firm’s marketing strategy.

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