Q.
(a) Elaborate the differences between market segmentation, targeting, differentiation and positioning. (20 marks)
(b) Discuss the importance of these concepts in marketing strategy. (5 marks)
(25 marks, 2016 Q2)
A.
(a) Differences Segmentation, Targeting, Differentiation & Positioning
With reference to 'Difference between Market Segmentation, Targeting and Positioning', by MSG Management Guide, verbatim below,
A market refers to a set up where two or more parties are involved in transaction of goods and services in exchange of money. The two parties here are known as sellers and buyers.
It is the responsibility of the marketers to create awareness of their products amongst the consumers. It is essential for the individuals to be aware of the brand’s existence. The USPs of the brands must be communicated well to the end-users.
An organization can’t afford to have similar strategies for product promotion amongst all individuals. Not every individual has the same requirement and demand.
The marketers thus came with the concept of STP.
STP stands for:
S - Segmentation
T - Targeting
P - Positioning
The first step in the process of product promotion is Segmentation
The division of a broad market into small segments comprising of individuals who think on the same lines and show inclination towards similar products and brands is called Market Segmentation.
Market Segmentation refers to the process of creation of small groups (segments) within a large market to bring together consumers who have similar requirements, needs and interests.
The individuals in a particular segment respond to similar market fluctuations and require identical products.
In simpler words market segmentation can also be called as Grouping.
Kids form one segment; males can be part of a similar segment while females form another segment. Students belong to a particular segment whereas professionals and office goers can be kept in one segment.
Once the marketer creates different segments within the market, he then devises various marketing strategies and promotional schemes according to the tastes of the individuals of particular segment. This process is called targeting. Once market segments are created, organization then targets them.
Targeting is the second stage and is done once the markets have been segmented.
Organizations with the help of various marketing plans and schemes target their products amongst the various segments.
Nokia offers handsets for almost all the segments. They understand their target audience well and each of their handsets fulfils the needs and expectations of the target market.
Tata Motors launched Tata Nano especially for the lower income group.
Positioning is the last stage in the Segmentation Targeting Positioning Cycle.
Once the organization decides on its target market, it strives hard to create an image of its product in the minds of the consumers. The marketers create a first impression of the product in the minds of consumers through positioning.
Positioning helps organizations to create a perception of the products in the minds of target audience.
Ray Ban and Police Sunglasses cater to the premium segment while Vintage or Fastrack sunglasses target the middle income group. Ray Ban sunglasses have no takers amongst the lower income group.
Garnier offers wide range of merchandise for both men and women.
Each of their brands has been targeted well amongst the specific market segments. (Men, women, teenagers as well as older generation)
Men - Sunscreen lotions, Deodorant
Women - Daily skin care products, hair care products
Teenagers - Hair colour products, Garnier Light (Fairness cream)
Older Generation - Cream to fight signs of ageing, wrinkles
A female would never purchase a sunscreen lotion meant for men and vice a versa. That’s brand positioning.
Key Differences
While target marketing and brand positioning are closely related, they are not the same process. Targeting a market is the larger process of marketing to a target consumer -- it includes both the research of market segmentation and the practice of brand positioning. Positioning involves only the various strategies and projects that the company initiates to communicate a brand to the target market. To succeed in target marketing, a business must be able to both target a consumer and position their brand. A business can know exactly which segments of consumers are interested in their product and still not be successful in achieving recognition for their brand with those consumers.
Product differentiation is the incorporation of attributes, such as quality or price, into a product to encourage the intended customers to perceive it as different and desirable. For example, if your company sells seat belts to automotive manufacturers, perhaps your unique value is never-fail, on-time delivery with no rejected belts. If other seat belt manufacturers are not meeting these desired goals, you will have a unique advantage against your competition, and will have differentiated your seat belts from those of your competitors.
Product Positioning
Positioning is how you provide your product or service brand identification as you go to market. It is the next step after you have determined how to differentiate your product or service. In the seat belt example, the seat belt manufacturer can market itself on the premise that it does not miss delivery times and that its products are free of flaws. The product is positioned against those of competitors on the basis of timely delivery and excellence in manufacturing. All of the seat belt manufacturer's major marketing efforts should emphasize this positioning in the marketplace.
Product differentiation vs Product Positioning
Product differentiation is very similar to positioning. Here, however, you are using devices to communicate the position or identity, usually intended to allow the customer to find and pick out your offerings from the competitive clutter.
Common ways to do this include:
- Brand Names
- Logos
- Packaging
- Labeling
- Timing
- Location
- Distribution
- Price
- Price/Quality relationships
Market Segmentation vs Product Differentiation
Product differentiation and market segmentation are two distinct, important marketing strategy concepts. Product differentiation refers to the basic need to have product-related qualities that set your brand apart from the competition. Market segmentation is the breakdown of a large target audience into smaller, more homogeneous groups of customers.
Similarly, differentiation and positioning also involves this concept. Product differentiated for certain competence of that products in its market place. Among its competitors, positioning would be the action to best place the product among its competitors for the best differentiated advantages it possessed.
(b) The importance of these concepts in strategic marketing.
Strategic marketing
Identification of one or more sustainable competitive advantages a firm has in the markets it serves (or intends to serve), and allocation of resources to exploit them.
The product competition in the market place requires analysis of strength of own product versus competition. The understanding of own product features and how is it different from competition is differentiation and how the product would choose to place its strength in the mind of consumers is positioning. In this way, the differentiated product is entrenched in its chosen position in the perception of consumers.
Ref:
http://managementstudyguide.com/marketing-segmentation-targeting-positioning.htm
Key Differences from,
http://smallbusiness.chron.com/differences-between-brand-positioning-target-marketing-24167.html
Marketing 91 from,
http://www.marketing91.com/difference-segmentation-targeting-positioning/
Product differentiation v Product Positioning from
http://www.cabrillo.edu/~dambrosini/50Web/classsessions/session16positioning.htm
Market Segmentation v Product Differentiation from
http://yourbusiness.azcentral.com/differences-between-product-differentiation-market-segmentation-9535.html
Strategic marketing from,
http://www.businessdictionary.com/definition/strategic-marketing.html