Question

What is the role of segmentation and targeting in marketing?

Answer 1

Market segmentation and targeting refers to the process of identifying potential customers of a company, selecting the customers to seek, and generating value for the customers targeted. It's done through the process of segmentation, targeting, and positioning (STP).

The first phase of the process is segmentation. This co-groups consumers with common needs and then defines consumer functionality. An automotive business, for example, may divide clients into two categories: price-sensitive and price-insensitive. The price-sensitive group can be defined as one with a lower disposable income, and reliability issues.

The second step is to taget whereby the company chooses the consumer segment they will concentrate on. Companies must assess the basis on the segment's attractiveness. Attractiveness depends on scale, competitiveness, competitive strength and the company's ability to satisfy the segment's customers. The most popular approach to classify customers is to look at the sought-after geography, demographics, psychography, attitudes and benefits. Psychographics is a consumer's lifestyle, desires, beliefs and personality. Behavior is the buyer's loyalty, purchasing incentive, and use rate and the benefits sought are the qualities that the customer desires such as ease, quality, and product-related status. Another way to segment customers is by asking why, when, and how.

Targeting is the method of measuring market product attractiveness as well as deciding how customers can be drawn. A company's choice of customer segment depends primarily on the product and service it provides. This also decides the marketing plan which will be used by the client. Undifferentiated markets are ideal for the mass marketing. Large businesses like Microsoft, for example, would use the same interface and identical advertising for all clients. Single-to-one strategy is more suitable for other markets. One example will be Dairy Queen, where customers can design their own cake and make them.