Target markets positioning and segmentation


A marketer can rarely satisfy everyone in a market. Not everyone likes the same cereal, hotel room, restaurant automobile, college, or movie. Therefore, marketers start by dividing up the market into segments. They identify and profile distinct groups who might prefer or require varying products and services mixes by examining demographic, psychographic, and behavioral differences among buyers. The marketer then decides which segments present the greatest opportunity—which are its target markets.

For each chosen target market, the firm develops a market offering. The offering is positioned in the minds of the target buyers as delivering some central benefit(s). For example, Volvo develops its cars for buyers to whom automobile safety is a major concern. Volvo, therefore, positions its car as the safest a customer can buy. Companies do best when they choose their target market(s) carefully and prepare tailored marketing programs.

Value and Satisfaction

The offering will be successful if it delivers value and satisfaction to the target buyer. The buyer chooses between different offerings on the basis of his perception that a particular offering delivers the most value. Value reflects the perceived tangible and intangible benefits and costs to customers. Value can be seen as primarily a combination of quality, service, and price (qsp), called the “customer value triad.� Value increases with quality and service and decrease in price, although other factors can also play an important role.

Value is a central marketing concept. Marketing can be seen as the identification, creation, communication, delivery, and monitoring of customer value. Satisfaction reflects a person’s comparative judgment resulting from a product’s perceived performance in relation to his or her expectations. If the performance falls short of expectations, the customer is dissatisfied and disappointed. If the performance matches the expectations, the customer is satisfied. If the performance exceeds expectation, the customer is highly satisfied or delighted.

Supply Chain

Marketing channels connect the marketer to the target buyers. The supply chain describes a longer channel stretching from raw materials to components to final products that are carried to final buyers.

We are giving here an example of the supply chain for leather purses. It starts with hides, and moves through tanning, cutting and the manufacturing operations. Last step in the chain are the marketing channels bringing products to customers. The supply chain represents a value delivery system. Each company captures only a certain percentage of the total value generated by the supply chain. When a company acquires competitors or moves upstream or downstream, its aim is to capture a higher percentage of supply chain value.


Competition includes all the actual and potential rival offerings and substitutes that a buyer might consider. Suppose an automobile company is planning to buy steel for its cars. There are several possible levels of competitors. The car manufacturer can buy steel from integrated steel mills in India or abroad or buy steel from a mini-mill in India itself at a cost savings. The automobile manufacturer can resort to alternatives like buying aluminum for certain parts of the car to lighten the car’s weight or buy engineered plastics for bumpers instead of steel. Clearly, Indian Steel would be thinking too narrowly of competition if it thought only of other integrated steel companies. In fact, Steel is more likely to be hurt in the long run by substitute products than by its immediate steel company rivals. It must also consider whether to make substitute materials or stick only to those applications where steel offers superior performance.

Marketing Environment

Competition represents only one force in the environment in which the marketer operates. The marketing environment consists of the task environment and the broad environment.

The task environment includes the immediate actors involved in producing, distributing, and promoting the offering. The main actors are the company, suppliers, distributors, dealers, and the target customers. Included in the supplier group are material suppliers and service suppliers such as marketing research agencies, advertising agencies, banking and insurance companies, transportation companies, and telecommunications companies. Distributors, dealers, agents, brokers, manufacturer representatives, and others who facilitate finding and selling to customers are also considered as task environment immediate actors for the product to finally reach the customer.

The broad environment consists of six components: demographic environment, economic environment, physical environment, technological environment, political-legal environment, and social-cultural environment. These environments contain forces that can have a major impact on the actors in the task environment. Market actors must pay close attention to the trends and developments in these environments and make timely adjustments to their marketing strategies.

The marketing strategy consists of analyzing marketing opportunities; selecting target markets, developing marketing programs and managing the marketing effort.