Important Differences Between Segmentation and Targeting

Segmentation

Segmentation is the process of dividing a market into smaller groups of consumers with similar needs or characteristics. This helps a company to identify specific groups of customers and develop tailored products and marketing strategies to target them. The goal of market segmentation is to identify high yield segments – that is, subgroups of consumers who are likely to be the most profitable or who are likely to be the most responsive to a specific marketing strategy.

Once the market is segmented, a company can target specific segments with tailored products and marketing messages, resulting in a more efficient and effective use of resources.

Examples of Segmentation

There are many different examples of segmentation in marketing, and the specific segments used will depend on the industry and product or service being offered. Below are a few examples:

• A car company might use demographic segmentation to target different segments of the population with different types of vehicles, such as compact cars for young professionals and minivans for families.
• A clothing retailer might use geographic segmentation to tailor their marketing efforts to different regions, offering heavier coats in colder climates and lighter clothing in warmer climates.
• A luxury spa might use psychographic segmentation to target affluent customers looking for a relaxing and upscale experience.
• A fast-food chain might use behavioral segmentation to target customers who frequently visit their restaurants with special deals and promotions.
• A fitness and wellness company might use a combination of demographic, geographic and behavioral segmentation to target young professionals with a busy lifestyle, living in urban areas who are looking for a convenient and time-saving workout solution.

Types of Market Segmentation

There are several different types of segmentation that can be used in marketing to divide a market into smaller groups of customers with similar needs or characteristics. The most common types include:

1. Demographic segmentation: This divides the market into groups based on variables such as age, gender, income, education, occupation, religion, race, and nationality.
2. Geographic segmentation: This divides the market into different geographic units such as nations, states, regions, counties, or cities.
3. Psychographic segmentation: This divides the market into different groups based on lifestyle, values, personality, and interests.
4. Behavioral Segmentation: This divides the market into groups based on consumer knowledge, attitudes, usage, or loyalty to a product or service.
5. Benefit Segmentation: This is based on the specific benefits that a customer is looking for in a product or service.
6. Firmographic Segmentation: This is based on the characteristics of a business, such as size, industry, and location.
7. Technographic Segmentation: This is based on the technology usage, adoption and infrastructure of a business.
8. Value-based Segmentation: This is based on the customer’s willingness to pay for a product or service.

Effective market Segmentation

Effective market segmentation is a crucial step in developing successful marketing strategies and targeting specific groups of customers. Below are a few key factors that can help ensure effective market segmentation:

• Identify the target market: A clear understanding of the target market is essential for effective segmentation. This includes understanding the demographics, needs, and preferences of the target customer.
• Use relevant criteria: Different types of products or services may require different criteria for segmentation. For example, geographic segmentation may be more relevant for a fast-food chain than for an online retailer.
• Consider size and growth potential: Segments should be large enough to be profitable, but not so large as to be impossible to reach or service. Additionally, segments with high growth potential are more attractive than those that are declining.
• Use multiple segmentation variables: A combination of different segmentation variables can provide a more detailed and accurate picture of the target market.
• Be measurable and actionable: Segments should be measurable and actionable, meaning that the company should be able to gather data to determine the size and characteristics of the segment, and then develop and execute marketing strategies to target that segment.
• Be stable: Segments should be relatively stable over time so that the company can effectively plan and execute strategies.
• Be accessible: The company should be able to reach the segment through communication and distribution channels.

Targeting

Targeting refers to the process of identifying specific groups of customers (or “segments“) within a market and developing marketing strategies to appeal to those segments. It is a key aspect of the overall marketing process, as it allows a company to focus its resources on the most promising segments of the market.

After a company has segmented its market, it can then select one or more segments to target. This selection process is called targeting, and it is based on the company’s resources, capabilities and the attractiveness of the segments.

The targeting process involves evaluating the company’s strengths and weaknesses and the opportunities and threats presented by the market segments. The company then chooses segments that it can serve best and in which it can create a sustainable competitive advantage.

There are three main types of targeting strategies:

• Single-segment concentration: This strategy involves targeting a single segment of the market and trying to become the market leader in that segment.
• Selective specialization: This strategy involves targeting several segments of the market, but only those in which the company can achieve a competitive advantage.
• Market specialization: This strategy involves targeting a specific niche market, in which the company can achieve a sustainable competitive advantage by understanding the specific needs of the niche market.

Examples of Targeting

There are many examples of targeting in marketing across various industries. Here are a few examples:

• A clothing retailer targeting young professional women with a marketing campaign featuring career-oriented clothing and advertising in professional women’s magazines and social media platforms.
• A car manufacturer targeting families with a marketing campaign featuring spacious interiors, safety features, and family-friendly activities or events.
• A smartphone company targeting young adults with a marketing campaign featuring the latest technology, sleek designs, and features that align with the lifestyle of this segment.
• A financial institution targeting retirees with a marketing campaign featuring investment options for retirement and account services that are tailored to their specific needs.
• A fast food chain targeting students with a marketing campaign featuring value menus, discounts and special offers, and advertising on college campus and nearby areas.
• A beauty company targeting people with sensitive skin with a marketing campaign featuring hypoallergenic and natural products, and advertising on platforms that are popular with this segment.
• A fitness center targeting seniors with a marketing campaign featuring classes and programs tailored to their specific needs, such as low-impact aerobics, and advertising on platforms that are popular with this segment.

Types of Targeting

There are several types of targeting strategies that companies can use to reach specific segments of the market. Here are a few examples:

1. Demographic targeting: This type of targeting involves segmenting the market based on characteristics such as age, gender, income, education, and occupation.
2. Geographic targeting: This type of targeting involves segmenting the market based on geographic location, such as region, city, or neighborhood.
3. Psychographic targeting: This type of targeting involves segmenting the market based on lifestyle, personality, values, and interests.
4. Behavioral targeting: This type of targeting involves segmenting the market based on consumer behavior, such as purchasing habits, brand loyalty, and usage rate.
5. Value-based targeting: This type of targeting involves segmenting the market based on the value that consumers place on a product or service.
6. Product-based targeting: This type of targeting involves segmenting the market based on the type of product or service being offered.
7. Cultural-based targeting: This type of targeting involves segmenting the market based on cultural values, beliefs, customs, and practices.
8. Event-based targeting: This type of targeting involves segmenting the market based on specific events, such as holidays, seasons, or life events.

Targeting Strategies

There are several targeting strategies that companies can use to reach specific segments of the market. Here are a few examples:

• Mass marketing: This strategy involves developing a product or service that appeals to a wide range of consumers and promoting it through a wide range of channels. This strategy is often used for products or services with a wide appeal, such as fast food chains or supermarkets.
• Niche marketing: This strategy involves developing a product or service that appeals to a specific, well-defined segment of the market and promoting it through channels that reach that segment. This strategy is often used for products or services with a narrow appeal, such as artisanal cheeses or custom-made clothing.
• Concentrated marketing: This strategy involves developing a product or service that appeals to a single segment of the market and promoting it through channels that reach that segment. This strategy is often used for products or services with a very narrow appeal, such as specialized medical equipment or luxury cars.
• Undifferentiated marketing: This strategy involves developing a product or service that appeals to a broad range of consumers and promoting it through a single, generic marketing campaign. This strategy is often used for products or services with a wide appeal, such as consumer packaged goods or fast food chains.
• Differentiated marketing: This strategy involves developing a product or service that appeals to a specific segment of the market and promoting it through a unique marketing campaign that is tailored to that segment. This strategy is often used for products or services with a narrow appeal, such as luxury cars or high-end fashion.
• Micro-Targeting: This strategy involves identifying small groups of people who share certain characteristics and tailoring marketing efforts to reach them. This strategy is often used for products or services that have a very specific appeal, such as luxury products, or political campaign.

Comparison Between Segmentation and Targeting

Here’s a table that illustrates the key differences between segmentation and targeting in marketing:

Important Differences Between Segmentation and Targeting

Here are some important differences between segmentation and targeting:

1. Purpose: Segmentation is used to understand the market and identify opportunities for growth, while targeting is used to focus marketing efforts on specific segments of the market that are most likely to respond to the company’s offerings.
2. Process: Segmentation involves dividing the market into smaller groups of consumers with similar needs or characteristics, while targeting involves selecting specific segments of the market to target with a marketing campaign.
3. Information: Segmentation is based on information about the market and its consumers, while targeting is based on information about the specific segments of the market that a company plans to target.
4. Output: Segmentation results in a better understanding of the market and its consumers, while targeting results in a more effective marketing strategy.
5. Flexibility: Segmentation is more flexible than targeting as it allows a company to adjust its strategy based on new information, while targeting is more specific and a company has to be more cautious in changing its strategy.
6. Cost: Segmentation is a more in-depth and costly process as compared to targeting, as it requires a company to gather and analyze more information about the market.

Conclusion

In conclusion, segmentation and targeting are both important strategies for a successful marketing campaign. Segmentation is the process of dividing the market into smaller groups of consumers with similar needs or characteristics. It helps companies understand the needs and preferences of different groups of consumers, and identify opportunities and potential areas for growth. Targeting, on the other hand, is the process of selecting specific segments of the market to target with a marketing campaign. It helps companies develop marketing strategies that are tailored to specific segments of the market, and reach the most promising segments of the market.

Both segmentation and targeting are important steps in the marketing process, and they complement each other. Segmentation provides the necessary information to develop effective targeting strategies, and targeting allows companies to focus their efforts on the most promising segments of the market. Companies must first understand their market and customer needs by segmentation, then they can focus their efforts on the most profitable segments by targeting.