Marketing segmentation and targeting strategies

Market Segmentation and Targeting

The March 1-2, 2008 edition of The Weekend Australian contained a story by John Murphy on Nissan's use of market segmentation and targeting to combat declining domestic sales in Japan. The downturn in sales was attributed to higher fuel prices, an aging population and the changing attitudes of young consumers.

The goal of market segmentation is to identify buyers with similar needs. Based on sales results, Nissan segmented its market geographically and demographically -- domestic vs. foreign markets, consumers under 30 and consumers over 30.

With the use of qualitative and quantitative research methodologies, Nissan was able to narrow the segments into specific targets identified by psychographics. The survey found differences by age, gender and interaction with the Internet and digital electronics.

Nissan identified that young men and women had different needs - young women wanted an easy, stress-less method of transportation and young men wanted a way to hang out with their friends. Additionally, Nissan found significant differences based upon the buyer's living environments; urban consumers felt cars were unnecessary and un-cool. Young urban consumers used public transportation and the Internet to conduct their daily lives.

From this information, Nissan decided to create two prototype cars for two target markets: one for young urban women with accessories for easy parking and traffic management and one for young urban men with interactive internet capabilities. Having identified their target markets with targeted solutions, Nissan introduced a model called "Cube."

While market segments and targets will naturally emerge from research, it is important to acknowledge that all segments or targets are not of equal value. Each segment needs to be evaluated: how large is the segment and can a single solution distributed through a specific set of channels be profitably? (Lecture Notes/textbook) In addition to market sizing and profit potential, a target market should also be evaluated from a long-term perspective: will people who buy their cars as young consumers, continue to buy the Nissan brand as they progress through their life stages?