Week 4 – Segmentation, Targeting, Differentiation, and Positioning

Reflections from the readings

Programmed Personas evaluating a Tablet?

Obsessing on the consumer, what better way than to offer a product specifically suited for a particular consumer’s needs? Or rather, a large group of consumers’ needs… after all, a company will want to sell as many as possible! Segmentation is the method used to hone in on a group of consumers’ needs. Here is where the obsession begins – companies and consulting firms desperately want to know what makes consumers tick. Determining the differentiation of need, likes, and behaviors entails vast data collection about consumers’ preferences vs. characteristics. For example, age is a segment. What do we know about age? We know that the younger and older generations behave differently on many levels, have ingrained life experiences, habits and societal norms about behaviors, and therefore choose products that fit an expected pattern. Obsessing on the consumer means that a firm understands that marketing and selling high tech computer products at an event attended by mostly elderly consumers is not going to yield as much in the way of sales of those items, since the elderly do not generally crave the latest gadgets. In fact, some companies are creating personas, fictional representations of customers in particular segments and how they behave, live and buy. I wonder if these are virtual programs in a simulation? I would categorize this as just a little obsessive…  

I was very interested to learn from the readings about the process firms use to determine which segments to target. Bottom line, firms want to target segments that are most profitable for them.  The firm must evaluate a particular segment as to feasibility and fit of the firm’s resources, mission, technologies and/or skills to deliver to that segment.  The firm will prefer to target those segments that are larger, or more profitable, and/or faster growing.  It must consider how well it will compete in the segment – how many other products/firms in the segment, barriers to entry, ability to differentiate will be critical factors. External environment will factor into the segment selection, such as government regulations, economic conditions of the segment and public perception of entering the segment. There are many methods for determining criteria and ranking the various segments under consideration, such as competitor capability matrices.

It gets more complicated. Once the segment(s) are selected, the firm must decide if they are going to concentrate efforts at a particular chosen segment, perform mass marketing at the segments (undifferentiated), or use differentiated approaches to cater specifically to multiple segments. In The Fashion Channel (TFC) case, this is exactly the decision faced by the firm – historically they used an undifferentiated broad approach for all segments in their market. As competition started peeling away customers by focusing more on specific segments, TFC must reevaluate whether they want to differentiate their marketing segment strategy.



Probably not the best way to woo the female segment, eh?



Positioning then, is the strategy used to differentiate the product to appeal to that targeted segment. Much study is done to determine what customers value most and where this need is either underserved, or where more value over competition can be exploited.  



Next week I'll focus on a few segmentation examples of companies and their products.