Segmentation

Segmentation, targeting and positioning, why companies do it

Market segmentation is vital for company success; it is defined as the process of dividing the total market for a particular product or product category into relatively homogeneous segments or groups. Without a clear idea of the nature of the target segment, the firm is forced to use a scatter-shot approach to marketing strategic decision-making, with little chance for success. Dividing the market up into reasonable segments is only a starting point. The firm then must develop a series of strategic goals and strategies for effectively reaching those identified segments. Targeting requires the firm not only to aim at but hopefully to hits its target segments. Positioning is the final important aspect which involves the establishment of an important perceptual position in the mind of the consumer. More specifically, it refers to creating a mental image of the product offering and its differentiating features in the minds of the target market. The company whose brand comes immediately to mind when a need arises in a particular product/service class has a distinct advantage over its competitors.

The segmentation strategy examines the different factors that can be used to divide the markets into homogenous grouping, including demographics (such as gender, age and education), psychographics (such as motives, attitudes, opinions, values, lifestyles, interests and personality), behavioural characteristics and benefits sought. Behaviour segmentation is the most powerful type of segmentation because it ties to the reasons that customers buy and use products. Moreover, it is most closely associated with consumer needs compare with other types of segmentation. Companies like Godiva chocolates use this strategy based on product usage occasions or special situations. The corporate segment consists of two key groups for specific purposes. The first group is for business gift giving which is an all-year round market...