Market Segmentation and Positioning Strategies in Marketing

80/20 Principle

A concept that 20% of all customers generate 80% of the demand.

Target Market

A group of people or organizations for which an organization designs, implements, and maintains a marketing mix.

Perceptual Mapping

A means of displaying or graphing the location of products, brands, or groups of products in customers' minds.

Product Differentiation

A positioning strategy that emphasizes real or perceived differences between competing products.

Household Life Cycle (HLC)

A series of stages determined by a combination of age, marital status, and presence or absence of children.

Cannibalization

A situation where new products cut into the sales of a firm's existing products.

Niche

A small, specialized segment of the market.

Market Segment

A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.

Optimizers

Business customers who consider numerous suppliers, solicit bids, and study all proposals before selecting one.

Satisficers

Business customers who place an order with the first familiar supplier that satisfies product and delivery requirements.

Buying Processes

Businesses can also be segmented by how they buy (e.g., satisficers vs. optimizers).

Company Characteristics

Businesses can be segmented by geographic location, type of company, company size, and product use.

CRM

CRM customizes goods and services based on data generated through interactions between carefully defined groups of customers and the company.

Repositioning

Changing consumers' perceptions of a brand or product to sustain growth or correct a positioning mistake.

Segmentation Bases (Variables)

Characteristics of individuals, groups, or organizations used to divide a total market into segments.

Multi-Segment Targeting Strategy

Chooses two or more well-defined market segments and develops a distinct marketing mix for each.

Geodemographic Segmentation

Combines geographic, demographic, and lifestyle variables to segment markets.

Positioning

Developing a specific marketing mix to influence potential customers' overall perception of a brand, product line, or organization.

Behavioral Segmentation

Divides consumers based on their use of the product, loyalty, or buying responses.

Benefit Segmentation

Dividing the market according to the benefits consumers seek from the product.

Geographic Segmentation

Dividing the market by region, market size, market density, or climate.

Concentrated Targeting Strategy

Focuses marketing efforts on a single market segment.

Psychographic Segmentation

Market segmentation based on personality, motives, lifestyles, and social class.

Market

People or organizations with needs or wants and the ability and willingness to buy.

Gender Identity

Recognizing differences in self-perceived gender and marketing accordingly.

Identifiability and Measurability

Segment characteristics must be measurable.

Substantiality

Segment must be large enough to be profitable.

Accessibility

Segment must be reachable by marketing efforts.

Responsiveness

Segment must respond differently to different marketing mixes.

Ethnicity

Segmenting markets based on cultural background or ethnic heritage.

Demographic Segmentation

Segmenting markets by age, gender, income, ethnicity, and family life cycle.

Position

The place a product, brand, or group of products occupies in consumers' minds relative to competing offerings.

Market Segmentation

The process of dividing a market into meaningful, relatively similar, and identifiable groups.

Undifferentiated Targeting Strategy

Views the market as one big market with no individual segments and uses a single marketing mix.