Market Segmentation, Targeting, and Positioning

Learning Outcomes

1. Segmentation.  Students can use the segmentation characteristics to identify and describe market segments
2. Target Market. Students can identify a usable market segment to be a target market
3. Target-market strategy. Students can determine an appropriate target-market strategy.
4. Positioning.  Students can develop and interpret a perceptual map.

Directions

• Thus far you have only been considering the customers of your product or service as one big group, or a mass market.  More astute marketing breaks down this large group into smaller market segments of consumers who have like characteristics.  For any given product or service there could be numerous market segments.  However, company resources may only allow a company to pursue one or two or these market segments, which then become target market(s).  Your job here is to break down the mass market for your product or service into at least two market segments and then pick one target market you think would have the most potential for future growth.  This target market does not have to be the one the company would have actually picked, or is currently pursuing, there is no way for you or your faculty to know based on public information.  So, once again the literature will not give you the ‘right’ answer.  Your brain will help you reason your way through.  

• Think outside your own box.  Chances are good you picked a product with which you are familiar.  That is a good starting point, and you may represent one target market.  But you may represent a target market that is saturated and therefore not the best target market to pick for the remainder of the semester.  So be sure your second target market is different enough and represents growth potential. 

• If you did not do a thorough analysis of the competition in the prior writing assignments, you may need to go back and figure out the nature of the product or service’s competition.  This will be important when you address the positioning of your product for your newly identified target market inasmuch as positioning is a competition-based concept.  

• We understand you are not an employee of the company and do not have access to the data that you feel will allow you to discuss the questions to the degree you would like.  Take your best educated and reasoned guesses whenever you need to do so.

• Otherwise, you do not need to do any external research for this writing assignment. Your job will be to critically examine all of the segmentation bases and arrive at your own description of potential market segments for your product or service.  

• Remember, you have a two-page limit so be judicious in your responses, do not report anything the company is or has done. You are now in charge at your company. We (your boss) are only interested in your thoughts at this point.

• Prepare your assignment by answering the following four areas of inquiry related to the learning outcomes noted above. 

1. Segmentation.  Using the various criteria of the segmentation bases described in the week’s readings and in Table 4.1, identify at least two distinct market segments for your product or service.  Each market segment description must include at least three (more if needed) of the characteristics from amongst any of the four bases categories, e.g. one from demographic variables, one or two from psychographic variables, and one from behavioral variables, or a similar scheme.  Be sure to explain your choices based on what customer need the product or service offering can fill for each segment. 
2. Target market.  Select one of the market segments you described in (1) above as the one you believe is or can be the most profitable for your product or service offering and explain why you feel they can represent growth for the company.  Refer to the six criteria for an attractive market segment as described in course content under ‘Selecting Target Markets’.  Name your target market so you can use this name throughout all of your remaining writing assignments.  Your name should be descriptive of the segments characteristics like ‘savvy young shoppers’ or ‘educated baby boomers’, or ‘urban hipsters’, or the like.  The goal is for your faculty member to get a mental image of your target market for the remainder of the semester.
3. Target market strategy.  Should the company focus all their resources on this new target market (concentrated marketing) or should they continue to pursue both the new and the existing target market as well as other market segments (multi-segment marketing)?  Alternatively, is the market so saturated might they be more successful by focusing solely on an even more narrow market segment, perhaps an even narrower version (niche marketing) of your selected target market, as their best chance for growth?  What is your reasoning?
4. Positioning.  Draw yourself a perceptual map as illustrated in the week’s readings or use the websites noted in the directions. Be sure to pick two criteria that are important to your new target market for your two axes, perhaps two of the criteria you used in Week 1 in your competitive analysis.  Map at least the two major competitors you noted in Week 1 and add any others that you may have discovered since then.  Describe what the perceptual map is telling you regarding how each product is perceived in the minds of the new target market you described above.  You may have to make a series of educated guesses for some of the data points.  Ideally, you want to find uncontested space. If your product overlaps with a competing offering discuss whether or not your product or service should try for an ‘uncontested’ space on the map and ‘reposition’ itself; or if it should keep the same position and compete head on with the other product.   (You will have a chance to make changes to the product, the pricing and the distribution to change the product’s positioning and find uncontested space in the coming weeks).  

Be sure to follow all of the submission requirements outlined in the syllabus and provided below again for your easy reference:

• Prepare as a word processed document (such as Microsoft Word). 

• Your assignment should be the equivalent of two pages of double spaced text, approximately 1/2 page for each of the four questions.

• Be sure your name, writing assignment number, and the name of your product or service are on the first page of your writing assignment.

• Use a simple 12-point font such as Times New Roman.  Use black ink for majority of your work and only use colors if it enhances your ability to communicate your thoughts.  

• If the writing assignment requires external research, be sure to use footnotes and include a bibliography.  You may use MLA or APA style, or any other college-level style guide. More information about using a style guide can be found in the UMUC’s virtual library accessible from your LEO classroom or at umuc.edu/library.