Market Segmentation and Targeting Strategies

Market Segmentation Bases

Geographic Segmentation

Where is the segment or market located? This may be split by country, region, city/rural, or climate.

Demographic Segmentation

Demographics include age, gender, income, family life cycle/stage, race, and religion. It is important to think about the number of elderly people or children within a specific segment or market.

Psychographic Segmentation

This looks at lifestyle, social class, and personality. For example, personality is reflected in certain types of behavior. One example is the tendency to haggle; haggling in a country such as Turkey is almost a national pastime.

Behavioural Segmentation

This category looks at occasions, benefits, usage, and user status. Consider religious or cultural festivals, such as Christmas or Chinese New Year. Customers are often influenced by key features or Unique Selling Points (USPs).

Targeting and Market Selection

How do you decide on your target market? Once you have a solid list of potential segments or markets (having completed micro-segmentation), you need to evaluate each segment using several criteria. The outcome of this evaluation determines the final target market.

Selection Criteria

• Measurable: Can the segment be measured? Is the information easy to obtain?
• Substantial: Assess the segment for size and profitability.
• Accessible: Can the segment be reached easily? Is the infrastructure there to serve customers well?
• Actionable: Can the marketing activities and campaigns be implemented?
• Differentiable: Segments can be distinguished from each other and are responsive to specific marketing.

Targeting Strategies

You may choose more than one segment to target and can apply different targeting strategies. Each strategy influences marketing activity and business decisions.

Differentiated (Multi-segment)

A differentiated strategy targets several different market segments and designs separate offers or marketing campaigns for each. The goal is to achieve higher sales and a stronger position, though it is more expensive than undifferentiated marketing.

Concentrated (Niche)

A concentrated strategy targets a small share of a large market. This is useful if there are limited company resources. It requires good knowledge of the market and can be highly effective and efficient.

Undifferentiated (Mass Market)

An undifferentiated strategy targets the whole market with one offer or marketing campaign. Known as mass marketing, it focuses on common needs rather than differentiation.

Place and Distribution

Areas to consider regarding distribution include:

• Transportation (International and local freight carriers)
• Freight (goods/products)
• Insurance and documentation
• Customs clearance
• Logistics management
• Currency risk
• Market coverage

Market Coverage Types

There are three main types of coverage:

• Intensive: Distributing the product through the largest number of different intermediaries.
• Selective: Choosing a specific number of intermediaries for each area.
• Exclusive: This involves choosing only one intermediary.

Promotion

The promotional mix includes various elements designed to communicate with the target audience.