Market segmentation, targeting and positioning - Marketing Management

In the example of the hypothetical supplier of medical drugs, the market served consisted of just one cell or segment. The total market, however, comprises several market segments. In other words, the market is not homogeneous, but rather is made up of separate cells of demand preferences. As Proctor4 points out, the marketer’s approach must be based on the acceptance that ‘there are different demands in the market place’. It is this heterogeneity of markets that gives rise to the need for effective segmentation, targeting and positioning; three distinct steps in the process of what is known collectively as target marketing.

The meaning and importance of target marketing

The concept of target marketing is a logical interpretation of the basic philosophy of marketing. Essentially, it comprises the identification of different needs for specific groups or segments of customers, deciding which of these groups the organization should target or serve (and on what basis) and then designing marketing mix programmes so the needs of these targeted groups are then more closely met.

As explained above target marketing derives from the fact that demand within markets is heterogeneous. In the ‘total’ market for a product or service, different groups of customers will be looking for different clusters of benefits. In order to understand this better, you should reflect on the products and services you purchase. Do you purchase exactly the same kind of products as your friends and neighbours? Are your specific requirements with respect to purchasing certain products and brands different? Perhaps your friends and neighbours have different tastes in clothes or in the type of holidays they take. Perhaps they purchase and drive different cars or use different brands of toothpaste or breakfast cereals. Market segmentation, targeting and positioning starts by recognizing that within the total demand and market for a product, specific tastes and requirements often differ. We refer to a market that is characterized by differing specific preferences as being heterogeneous.

Market segmentation therefore breaks down the total market for a product or service into distinct patterns or segments of customers who share similar demand preferences within each segment.

there is no market segmentation. Each and every customer in the total market is assumed to have similar demand preferences and wants, i.e. demand is homogeneous. In fact demand in most markets is heterogeneous as we have already explained. Hence, the total market can be broken down into segments of customers.

Effective segmentation is achieved when we group together customers who share similar patterns of demand and where we can differentiate each segment in the pattern of demand from other segments in the market. In other words, effective segmentation is achieved when the clustering gives rise to homogeneous demand within, and heterogeneous demand between, each segment. Most markets are capable of being segmented.

The meaning of market segments

meaning of market segments


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