Strategic Case Analysis
8
positioning is tactical in nature, where the rubber meets the
road. Targeting is both strategic and tactical. Please read
through the descriptions below to understand why.
Segmenting
Segmenting a market helps a company target its products and
solutions better to its customers. It is a strategic approach
midway between mass marketing and individual marketing.
Segmentation is based on the concept that customers in a
specific segment have similar needs, purchasing power,
geographic location, etc.
A market can be segmented according to customer needs. For
example, car manufacturers can segment the car market into
two broad segments: basic cars and luxury cars. They can
have separate product lines for each segment. For example,
for the luxury car segment, Toyota has the Lexus product line,
Honda has Acura, and Nissan has Infiniti.
Market segmentation can be quite complex. For an example
of a psychographic segmentation of American consumers,
please refer to the established VALS-2 Segmentation
methodology in the chapter on “Advanced Frameworks.”
Also see the STP best practices below on how to go beyond
demographics while segmenting industrial / business
customers.
Targeting
Targeting is a process of prioritizing target segments based on
the firm’s core competencies or capabilities, and other
researched factors including segmented market size, growth
potential of the segmented market, competitive dynamics, etc.
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