Marketing strategy consists of three major steps; market segmentation, market targeting and positioning

Market segmentation is the process of placing buyers in a market into subgroups in a way that members of each segment display similar responsiveness to a particular positioning strategy.

The process begins with the definition of market to be segmented. After defining which market to segment, the second step is to decide how to segment this market. The third step in segmentation is to form segments. After completing the formation of segments, the company can now utilize finer segmentation strategies. At the final step, companies need to decide which segmentation approach they should use and evaluate the segments.

Companies can use one or more variables to segment a market. There are four main types of segmentation variables used in consumer markets; geographic, demographic, psychographic and behavioral variables.

Micro segmentation and mass customization are major approaches used in finer segmentation opportunities. Micro segmentation aims to identify very narrow segments by using some segmentation variables and the main difference is that micro segmentation produces a large number of very small segments. On the other hand, mass customization aims to produce customized products in a mass production line by using computer-aided manufacturing and supply systems.

Market segments must be measurable, accessible, substantial, differential and actionable in order to be evaluated as useful.

Geographic segmentation calls for dividing the market into different geographical units, such as nations, regions, states, counties, cities, or even neighborhoods.

Geo targeting is offering different contents to different users based on the location of Internet users.

Demographic segmentation uses variables such as age, life-cycle stage, gender, income, occupation, education, ethnicity and generation to define segments. These are the most used variables since they are easy to measure and consumer needs are very closely related to their demographic characteristics.

Psychographic segmentation divides consumers into different segments based on their lifestyles and personality variables.

Trait theory in psychology is an approach studying human personality that identifies and measures the degree to which certain personality traits – recurring patterns of thought and behavior, such as anxiousness, shyness, and openness to new things – exist from individual to individual.

The Big 5 Personality Traits or OCEAN is the five factors or traits that psychologists mostly agree on that constitute personality. These five factors are openness to experience, conscientiousness, extraversion, agreeableness and neuroticism.

Behavioral Segmentation divides buyers into segments based on their knowledge, attitudes, uses, or responses to a product.

There are so many factors that may affect market segment attractiveness. We can categorize these factors under four main themes  

• Market factors
• Economic and technological factors
• Competitive factors
• Environmental factors.

Some of the market factors that affect market segment attractiveness can be summarized as follows;

Size of the segment, Segment growth rate, Stage of industry evolution, Predictability, Price elasticity and sensitivity, Bargaining power of customers, Seasonality and cyclicality of demand.

Issues related to the general economic conditions and the technological factors are; Barriers to entry, Barriers to exist, Bargaining power of suppliers, Level of technology utilization, Investment required, Margins available.

Target market is a set of buyers with common needs or characteristics that a company decides to serve.

Undifferentiated (mass) marketing is a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.

Differentiated (segmented) marketing is a market-coverage strategy in which a firm targets several market segments and designs separate offers for each.

Concentrated (niche) marketing is a market-coverage strategy in which a firm goes after a large share of one or a few segments or niches.

Micromarketing is tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments.

Local Marketing involves tailoring brands and promotions to the needs and wants of local customers.

SoLoMo (social+local+mobile) marketing combines social media, location-based marketing and mobile commerce to develop a more targeted and powerful marketing strategy.

Individual marketing –also labeled as one-to-one marketing, mass customization, and markets-of-one marketing- is tailoring products and marketing programs to the needs and preferences of individual customers.

Positioning is differentiating the brand from other brands in consumer minds. Positioning is not what you produce in the factory but it is all about what you do in the minds of prospects.

Channel differentiation is gaining competitive advantage with offering different delivery options.

Clear and strong positioning is a very important part of marketing strategy as faulty positioning may damage all the marketing strategy. There are 4 main positioning errors that companies may face: Underpositioning, Overpositioning, Confused positioning and Doubtful positioning.

• Underpositioning: When customers have only vague ideas about the company and its products and do not perceive anything dis­tinctive about them.
• Overpositioning: When customers have too narrow understanding of the company, product, and brand.
• Confused positioning: When frequent changes and contradictory messages con­fuse customers regarding the positioning of the brand.
• Doubtful positioning: When the claims made for the product or brand are not re­garded as credible by the customer.