Market Segmentation and Target Marketing

¶ … Market segmentation and target marketing are the foundational concepts upon which marketing strategic plans, strategies and tactics are based. Segmentation looks to classify customers into broader groups, while target marketing concentrates on defining specific audiences of consumers or prospects. Market segmentation is often based on demographics or interests, sometimes called the study of psychographics. Examples of market segmentation include Lexus advertising to high income families who can afford their cars, or McDonald's advertising to families with younger children. Target marketing examples include airlines that specifically target their frequent flyers with loyalty programs. While all air travelers are their segment, their specific audience of interest is those flyers who travel the majority of the time for business. Another example of target marketing is seen in how retailers focus on small and highly targeted groups of teens who are interested in specific styles of clothing. Limited Too vs. Abercrombie are cases in point of how granular and focused target marketing has become in retailing.

Differential advantage achieved through product positioning and the extending of a products lifecycle are in many industries directly related. An example of this is in the game console industry where Microsoft re-launched their X-Box product line as X-Box360 only after investing heavily in the development of entirely new groups and classes of games. The Nintendo Wii is also experiencing the dual effects of differential advantage and product positioning with the global launch of Wii Fit in addition to dozens of games that in essence differentiate this game console while also extending its product life at the same time. The continual challenge for marketers is to constantly add uniqueness and differentiation to their products as competitors imitate them.

Article 2 Summary

Proctor & Gamble (P&G) owes much of its success to how insightfully its many brands have been aligned to consumers' needs, preferences and wants. The article discusses Coppertone ands Dove, yet if one considers the nearly two dozen brands that comprise P&G, there are multitudes of opportunity to see how market segmentation and the concept of target markets are used as essential parts of a broader marketing strategy. The commercially successful Swiffer product line illustrates how market segmentation has successfully been executed to make the home cleaning product appeal to busy, young singles on their own, with another campaign aimed at working moms and still a third aimed at retirees who have physical limitations and find cleaning difficult. Defining target audiences within P&G is managed as part of their market research function, which is given the task of first ascertaining and discovering unmet needs, then creating knowledge the marketers and product developers in P&G can use in creating products that precisely align to the unmet needs, preferences and wants of the organization. The greatest challenge in all of these processes is their synchronization as consumers' needs, preferences, and wants are changing. The delicate balance between investing in new product development while also striving to keep segmentation and audience definitions in balance is one of the most difficult aspects of the marketing equation in many organizations. For consumer products companies the need for speed of execution and accuracy just makes this more difficult. The concepts of market segmentation and target markets comprised of consumers sharing comparable interests in addition to common demographics is the basis of nearly every consumer product good produced globally today. Alignment to these groups is crucial for the success of any product or service as well.