Market segmentation, product/service differentiation and positioning

Market segmentation involves dividing the total market into segments. Once the market has been segmented, the marketing manager selects one of these segments to become the target market.

Why do businesses segment the market?

• Increased understanding of customer wants and needs
• Different products for different groups
• Better match between customer wants and product benefits
• Maximise the use available resources
• Competitive advantage

Example: Ebay pg 201/229 complete Q2-4

Segmenting consumer markets

1. Demographic - is the process of dividing the total market according to particular features of a population, including the size of the population, age, sex, income, cultural background and family size. E.g. Coke
2. Geographic -is the process of dividing the total market according to geographic locations. E.g. NorthFace
3. Psychographic - is the process of dividing the total market according to personality characteristics, motives, opinions, socioeconomic group and lifestyles. E.g.
4. Behavioural - is the process of dividing the total market according to the customers’ relationship to the product e.g Shampoo

Product/service differentiation - Is the process of developing and promoting differences between the business’s products or services and those of its competitors.

• Customer Service
• Environmental
• Convenience
• Social and ethical issues - Fair trade, animal free make up , GMOs

Product positioning - refers to the technique in which marketers try to create an image or identity for a product/service compared with the image of competing products/services.