Targeting and Positioning

1. Targeting and Positioning

Marketers need to identify their consumers to ensure that they develop optimal messaging, design, and experiences. This process involves four steps. First, marketers segment a market based on a customer profile of needs, wants, and motivations. Market segmentation is the process of dividing a target market into smaller, more precisely defined groups of consumers or organizations who have common needs and are expected to respond similarly to a marketing action. Second, marketers target a specific market based on demographic, psychographic, and other attributes. A target market is a group of people with some shared characteristics that a company has identified as potential customers for its products. Third, marketers create a product position that will resonate with the target market to attract them to a product, service, or experience. Product positioning is the process of deciding and communicating how an organization wants its market to think and feel about a product or service. Fourth, marketers create a marketing plan. A marketing plan will set forth the specific actions that marketing team members need to take in order to reach target customers, build brand awareness, and of course, generate increased revenue.

terms to know

Target Market

A group of people with some shared characteristics that a company has identified as potential customers for its products.

Product Positioning

The process of deciding and communicating how an organization wants its market to think and feel about a product or service.

1a. Target Marketing Process

Here are some prompts and examples to help work through the target marketing process.

step by step

Step 1: Describe the Customer Needs Your Product Will Fulfill. This step requires identifying how the products and services the firm sells uniquely meet the needs of some specific customer group. Describe who the firm currently works with, and which customers would be a natural extension of the current client list. Here's an example. Suppose you are selling books. Is your target anyone who buys books? Or are you focusing your efforts on a tightly defined market segment of people that need help in identifying which books are new, fit a specific author profile, or are vintage and hard to find?

Step 2: Break the Total Market of Potential Customers Into Smaller Segments. Next, consider the overall target market for the goods the firm sells. There are a number of different methods to divide a large, total market into smaller market segments. Firms should only choose those market groups that are able to uniquely enjoy the firm’s products or services. It’s important to conduct research to determine that there are enough customers that a firm will be profitable over the long term. This research will help identify unique attributes of potential customers that will come to a firm’s business instead of selecting another retailer to visit. Here's an example. In this case, a firm can segment by book buyers and related behavior. A firm owner will recognize that all book buyers won’t be very interested in their products and that some will choose to buy online with no service. After conducting further research, it becomes clear that the firm’s buyers are interested in vintage books that are hard to find in other places and need information to help them determine if a book is truly an original edition or a cheap copy.

Step 3: Develop a Detailed Buyer Profile of the Target Customer. The next step is developing a fact sheet or buyer profile that identifies their characteristics, behavior, and buyer preferences. Consider ages, interests, media usage, finances, and brand affinities. The age (or age range) of a profile allows for understanding generation-specific characteristics. Consumers within the same age group tend to share characteristics and purchase preferences. The interests of the buyer profile describe things like hobbies or what they do in their spare time. For media usage, what media platforms does the buyer use? Television, radio, the internet? This is important because the marketer wants to know where to reach these buyers with their marketing messages. The income and other financial characteristics of the buyers help marketers glean insights as to what types of products or services will capture the interests of these buyers. Buyer financial characteristics also assist in making decisions about price points and promotions that would be successful in reaching these customers. Do they like certain brands? If so, this can provide the marketer with valuable information about the type of content to which they best respond.

Step 4: Conduct Research to Determine That the Prospective Market Segment Is Interested. It is important for marketers to conduct research with prospective customers to determine if the buyer profile is accurate. This may include offering some books to choose from, providing descriptions of how the bookseller will provide unique services for vintage book lovers, and exploring promotions and pricing with prospective customers one-on-one before even opening the store. It is important to use primary (original) research conducted by the marketer as well as considering secondary (already published) data about vintage book buyers. Be sure to consider all of the firms that will compete with the bookseller. Then calculate market share, which is the percent of the bookselling market in the defined location (and online) that is willing and able to buy from the vintage bookseller. Knowing this information is critical to developing a marketing plan.

1b. Product Positioning Process

So far, you’ve segmented the market by dividing the market into distinct groups of customers using the segmentation process, and you’ve determined which customer group(s) you want to focus your marketing efforts on—the target marketing process. Product positioning is the process of deciding and communicating how an organization wants its market to think and feel about a product or service. Marketers need to effectively position their product and services in the minds of their consumers. This ensures that when vintage book buyers want to acquire new titles, they know which bookseller will provide the best offering. Marketers use five steps to conduct this process.

step by step

Step 1: Identify How to Attract the Target Market. Here are some questions to consider. Which product, service, or market category needs positioning? Which target segment needs to understand and relate to the positioning? What factors do buyers consider when evaluating a brand’s position? What competitors are most influential in the product category?

Step 2: Identify Your Competitive Advantage. Marketers work to identify and communicate a product’s competitive advantage that provides a firm with a unique position and captures customer interest from competitors. A firm’s competitive advantage can be based on price, features, or benefits. For example, a firm may have a more local and efficient supply chain than any other firm, which allows it to keep its costs low and its value chain more profitable than its competitors. Or a firm’s product may offer features such as better design, expert and unlimited after-purchase service, or free upgrades. Or perhaps a product offers benefits that include a wider variety of options or is more convenient, provides a higher level of status, or improves a customer’s perception of themselves. Marketers should create a list of how their offerings provide unique experiences that give them an advantage over competitors. When firms have patented products, that’s even better, because that means they are protected from competitors who would like to steal their competitive advantage.

Step 3: Position a Brand With Competitive Advantages. Marketers need to position their products or services using those options, features, benefits, or experiences that match the target market’s needs and wants. It is critical to find a way to communicate a promise that is different in some way from what competitors offer. That could be that the product offers everything a competitor’s product does, plus a patented design (referred to as head-to-head positioning). Or the messaging could identify how the customer experience is customized and based on each buyer’s unique needs and wants (referred to as differentiation positioning).

Step 4: Define Your Positioning Strategy. Marketers apply their competitive advantages to create a positioning strategy, a set of plans, actions, and goals that outlines how a business will compete based on their competitive advantages. It’s said that there are two basic types of positioning strategies: a product-driven, “build-it-and-they-will-come” strategy and a customer-driven strategy, in which marketers analyze prospective consumers and then—and only then—create something that they want or need. What happens in a customer-driven positioning strategy is that the company shifts the focus from the product or service itself to its users. Customers’ needs are the central focus and the point of beginning, not an afterthought. The primary goal in a customer-driven positioning strategy is to determine what users want and/or need and then satisfy those users by communicating how the firm’s competitive advantages meet those needs and wants.

Step 5: Communicate and Deliver on Your Positioning Strategy. Marketers do this by developing a positioning statement that briefly describes the brand, product, service, and target market. Not only does it define how the brand meets the customer’s needs, but it also tries to clarify why it does so better than the competition. It answers the question, “What experience do you want your customers to have with this product or service?”

big idea

The marketing mix provides the set of coordinated tools you use to execute on your positioning strategy. You might think of your positioning strategy as the tune you want your target segment to hear. The marketing mix is how you orchestrate and harmonize that tune, making it a memorable, preferred choice for your target customers.

terms to know

Positioning Strategy

A set of plans, actions, and goals that outlines how a business will compete based on their competitive advantages.

Positioning Statement

A statement that briefly describes the brand, product, service, and target market.

REFERENCES

Hanlon, A. (2022). The Segmentation, Targeting, Positioning (STP) Marketing Model. Retrieved from www.smartinsights.com/digital-marketing-strategy/customer-segmentation-targeting/segmentation-targeting-and-positioning/