Segmentation is the way large groups of customers can be divided into smaller groups of customers who want to buy similar products (known as “market segments”).
The Target Market is the group of consumers that you are going to target.
Positioning is when companies develop their products to match as closely as possible the needs of the Target Market.
Why segment? Some examples,
- Ireland is a market containing over 4 million customers, but it would be impossible to launch a product which would appeal to every customer! So market segmentation helps us to break down the market into groups of customers who have similar reasons for buying specific products or brands.
- The market segment for a baby food manufacturer is families with babies. It would be a waste of time, effort and money to try and sell to the whole of the “Irish market” when there is a distinct group of customers wanting to buy baby foods.
Segmentation, Target Marketing and Positioning are important for small to medium sized companies (SMEs), as they help focus limited resources into developing the right products for people who want to buy them. A mass-market approach is very expensive and will only work for very large companies with large advertising budgets.
It is essential for you to know WHO (the target market) will buy your products and WHY (positioning) they will buy them in preference to all the other products on the market.
In the following pages, we will provide you with information on: