Segmentation, Targeting & Positioning in the Real World

Saturday, 10 November 2012

There's a lot that's been said and written about marketing strategy already, so why this post, you may ask. Well, frankly this post isn't really the best source in case you're looking to learn the very basic concepts of marketing strategy, but what it is good for is understanding the kind of hard choices and robust logic that goes behind it in the real-world.
Most of you would remember those early morning (or any other equally sleepy hour) lectures when your marketing professor used to harp on and on about the customer being the be-all and end-all of marketing, and by the end of the course some of you probably were even convinced that it was true. But then work caught on and you got so focussed internally on your processes, protocols, etc. that you forgot that learning and started ignoring that customer. That's exactly where your marketing starts to falter.

Now as much as you'd like to focus only on making a great product (or service), and hope that everybody buys it, unfortunately that's not how it works in the real-world. People, right from the DNA level above, are quite dissimilar from each other, and while most of them may agree that a higher resolution camera is better than a lower resolution one, they may not feel the same way for a higher sized shoe, or a shirt, as that's a preference based on 'fit!' Because of that reason your product would be the 'perfect fit' only for one category of people, while for many others it may not and they'll never buy it. Question is, can you still make money and grow?

That's why segmentation should really start by understanding the potential sources of growth - grouping customers into multiple buckets based on the choices that they make. And to understand those customer choices, is by no means an easy task. It's a thorough process involving referring to multiple data sources, and often involving primary market research, meaning it requires hard cash! And spending a lot of hard cash on something suboptimal isn't going to help much with your popularity. And thus to make solid business sense your segmentation study should actually try to answer not just who (socio-demographic) your customers are or what (behavioural) they do, but go beyond and answer that why (attitudes and needs) they make such choices.

So now that you've understood the various groups which can be your potential sources of growth, you need to choose from them the ones against which you'll direct your marketing resources. One of the temptations marketers tend to give in is to go blindly after the biggest segment (in volume or value). While it can be the segment with the biggest potential in itself, but the question to ask oneself is that can you even begin to serve the specific needs of that segment, and are you, given your present strengths, well placed to succeed in that segment, which will be targeted by multiple other competitors for obvious reasons. So even though some segments may be big and very attractive, but your likelihood of succeeding with them may be very slim. You understood their attitudes in the segmentation study, but you also further need to understand what will their attitude be towards the product you have conceptualised. You also need to be clear that you have a competitive advantage for the target segment and that your choices are driven by robust data, and not merely intuition. Hence, targeting is more about in-depth analysis and making the right (and sometimes very hard) choices and sacrifices. You MUST match your target segment's needs with your own strengths (likelihood to win) by making informed choices about your target audience, and IGNORE the others.

Targeting your Customer Segment
Copyright (c) 123RF Stock Photos

So now that you've put in so much of hard work into heavy-duty data analysis focusing on your potential customer and making some very tough choices, you'd now probably want to take some rest by shutting that customer out and finding peace in your internal protocols and processes. But, tough luck mate! Now is when the real thing begins...

Positioning is something which isn't done to your product, but actually in the mind of your prospect (as most people use their minds, rather than their brains, to make a lot of choices). It is the space you want to own in the mind of the prospect and as the name suggests, the process involves positioning your brand of the product in a unique way within the mind of your target audience. Notice the operating word 'unique' in the last sentence. You cannot have two brands share the same position in the prospect's mind. It's like parking two cars in the same spot...quite impossible, right? The second operating word is 'differentiated'. If your smartphone isn't different from the others, then it's simply a product... just another smartphone. I'm sure you don't feel the same way about a Samsung Galaxy or an Apple iPhone (which are differentiated brands of smartphones). The third operating word is 'ownable'. Is your smartphone's differentiation based on the fact that it's an Android device. Well sorry, in that case you're again one of those hundreds of others based on Android ('cause hello, you don't own it)'s not your phone that's differentiated, but rather it's actually Android! Probably not something you wanted, right? And it's difficult to own something of that much criticality, unless protected by law, lest you'll have hundreds of other copies in the market in no time. That's done by using IPRs, which we'll discuss in a later post. And finally the last operating word is 'sustainable'. Can you deliver a pizza in under 30 minutes? Well, you might, but can you do it over and over again, hundreds of times (can you sustain it)? If not, then probably not a good idea to position yourself on the basis of a 30-minute delivery. Because even though you may claim that positioning for your product, but the customers would only remember the one who can actually DO that kind of thing repeatedly (remember what I earlier mentioned about positioning being what you do in the mind of the prospect). These four operating words drive the positioning of a brand. And thus, for conceptualizing and executing a successful positioning strategy you need to decide on a positioning that's unique, differentiated, ownable and sustainable over the long-term, while keeping in mind your target audience's profile, the competitive frame in which you operate, and your key point of differentiation.

It's a challenging task to summarise all that goes behind formulating a successful marketing strategy in this short post, but this should help you understand the kind of effort and resources it takes to formulate one. There are whole lot of intermediate processes and activities involved, like insight generation, setting up specific business and strategic objectives, developing a strong value proposition, etc. which need to be executed in just the right manner in order to succeed in the market.

How has your marketing experience been lately, and what real world challenges did you face? Let us know in comments...

© Jayant Rana, 2012-Present


  1. [...] This post was in the works for a long long time, but I only completed it after reading my friend Jayant Rana’s post “Segmentation, Targeting & Positioning in the Real World“. [...]

  2. Insightful as usual. Keep 'em coming.


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