Mastering Marketing Strategy: Segmentation, Targeting & Mix

Marketing Strategy and the Marketing Mix

A strategic plan defines a company's overall mission and objectives. Consumers are at the center. The goal is to create value for customers and build profitable customer relationships. Next comes the marketing strategy, which is the logic by which the company creates customer value and profitable customer relationships. The company decides which customers it will serve and how.

Customer-Driven Marketing Strategy

Market Segmentation

The marketer must determine which segments offer the best opportunities. Consumers can be grouped in various ways based on geographic, demographic, psychographic, and behavioral factors. The process of dividing a market into distinct groups of buyers is called market segmentation. A market segment consists of consumers who respond in a similar way to a given set of marketing efforts.

Market Targeting

This involves evaluating each market segment's attractiveness and selecting one or more segments to enter. A company should target segments in which it can profitably generate the greatest customer value and sustain it over time. A company with limited resources might decide to serve only one or a few special segments or market niches (segments that major competitors ignore). Most companies enter a new market by serving a single segment; if this proves successful, they add more segments.

Market Differentiation and Positioning

This involves offering for each targeted segment and what positions it wants to occupy in those segments. A product's position is the place it occupies relative to competitors' products in customers' minds. If a product is perceived to be exactly like others on the market, consumers would have no reason to buy it. Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers. Effective positioning begins with differentiation, differentiating the marketing offering to create superior customer value.

Developing an Integrated Marketing Mix

The marketing mix is the set of tactical marketing tools that the firm blends to produce the response it wants in the target market.

• Product: The goods and services combination that the company offers to the target market (e.g., Ford sells Escapes, engines, etc.).
• Price: The amount of money customers must pay to obtain the product. It can go up and down; those actions adjust prices for the current competitive and economic situations and bring them into line with the buyer's perception of the product's value.
• Place: Includes company activities that make the product available to target consumers. (e.g., Ford partners with a large number of dealers that sell the company's different models. The dealers keep an inventory of Ford cars, demonstrate them to potential buyers, negotiate prices, close sales, and service the cars after the sale.).
• Promotion: Refers to activities that communicate the merits of the products and persuade target customers to buy them. (e.g., Ford spends $1.9 billion each year on advertising).