The process of (1) analyzing marketing opportunities; (2) selecting target markets; (3) developing the marketing mix; and (4) managing the marketing effort.
Dividing a market into distinct groups of buyers on the basis of needs, characteristics, or behavior who might require separate products or marketing mixes.
After a company has defined market segments, it can enter one or many segments of a given market. Marketing targeting involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. A company should target segments in which it can generate the greatest customer value and sustain it over time. A company with limited resources might decide to serve only one or a few special segments. This strategy limits sales but can be very profitable.
Marketing Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Thus, marketers plan positions that distinguish their products from competing brands and give them the greatest strategic advantage in their target markets.
In positioning its product, the company first identifies possible competitive advantages on which to built the position. To gain competitive advantage, the company must offer greater value to chosen target segments, either by charging lower prices than competitors do or by offering more benefits to justify higher prices.
Then if the company positions the product as offering greater value, it must deliver that greater value. Thus, effective positioning begins with actually differentiating the company’s marketing offer so that it gives consumers more value than they are offered by the competition. Once the company has chosen a desired position, it must take strong steps to deliver and communicate that position to target consumers. The company’s entire marketing program should support the chosen positioning strategy.
Developing the Marketing Mix
Once the company has decided on its overall competitive marketing strategy, it is ready to begin planning the details of the marketing mix, once of the major concepts in modern marketing. We define marketing mix as the set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the firm can do to influence the demand for its product. The many possibilities can be collected into four groups of variables known as the “four Ps”: product, price, place, and promotion.
Product means the goods-and-service combination the company offers to the target market. Thus, a Ford Taurus product consists of nuts and bolts, spark plugs, pistons, headlights, and thousands of other parts. Ford offers several Taurus styles and dozens of optional features. The car comes fully serviced and with a comprehensive warranty that is as much a part of the product as the tailpipe.
Price is the amount of money customers have to pay to obtain the product. Ford calculates suggested retail prices that its dealers might charge for each Taurus. But Ford dealers rarely charge the full sticker price. Instead, they negotiate the price with each customer, offering discounts, trade-in allowances, and credit terms to adjust for the current competitive situation and to bring the price into line with the buyer’s perception of the car’s value.
Place includes company activities that make the product available to target consumers. Ford maintains a large body of independently owned dealerships that sell the company’s many different models. Ford selects its dealers carefully and supports them strongly. The dealers keep in inventory of Ford automobiles, demonstrate them to potential buyers, negotiate prices, close sales, and service the cars after the sale.
Promotion means activities that communicate the merits of the product and persuade target customers to buy it. Ford spends almost $600 million each year on advertising to tell consumers about its Ford cars and trucks. Dealership salespeople assist potential buyers and persuade them that Ford is the best car for them. Ford and its dealers offer special promotions – sales, cash rebates, low financing rates – and added purchase incentives.