Marketing theory for the last half century has emphasized segmentation, targeting and positioning as important parts of a marketing plan. These three steps make the core of target market selection process. Segmentation is a process of dividing the market into smaller segments that might require different marketing mixes and respond to different marketing strategies. Targeting is the process of evaluating the attractiveness and selecting the segments. Finally, the positioning is the process of arranging for market offerings that are aligned with the needs of the chosen segments and occupy a distinctive place in the minds of target customers (Kotler, et al., 2013). Market segmentation, targeting and positioning answer a fundamental question: what customers we are going to serve, and how are we going to serve them?
Customers differ in many ways, and the segments can be created in many ways as well. Major segmentation variables include geographic, demographic, psychographic, and behavioural (Kotler, et al., 2013). No company can serve all customers in a given market – not in the same way at least. Bruce McColl, the Global CMO of Mars, surprised the audience when he told that he is not a great believer of targeting. He highlighted that their target is all seven billion people on this planet (Ritson, 2016). However, this does not mean that the strategy of segmentation, targeting and positioning is becoming obsolete. In fact, when large companies serve a large market, it may seem that everyone is their target customer. Looking at the comments of Bruce McColl, it may seem that Mars is targeting everyone on this planet in the same way. However, there are many health-conscious people who will not buy high-calorie Mars products. That’s why a sizable market of protein bars exists, and that’s why Mars also offers protein bars and low-calorie bars to health conscious people (Gray, 2012).
In fact, market segmentation is becoming more and more relevant today. Customers have varied interests and buying behaviours and these factors change very rapidly nowadays, as compared to the past. This implies that there is an opportunity for marketers to understand these factors, do segmentation, and align their offerings to the needs and wants of these segments. However, keeping an eye and responding to these changing factors is challenging.
Fortunately, the availability of new market intelligence tools of the digital age has enabled marketers to gather a tremendous amount of useful data. This data is available through digital channels like website visits and social media. The marketers can use this data to create and test their market segments in a cost effective manner. This opportunity is either unavailable or requires significant time and resources using traditional methods.
With the help of analytics and other related tools offered by search engines and social media networks, marketers have access to a large dataset to work with. Marketers can analyse the consumer decision-making process from the beginning to end. In the online world, the buying process of a consumer often starts with an online search. By analysing the search terms typed by users, related to business and its offerings, a smart marketer can ‘read’ the customers’ minds. The marketers can analyse the behaviour of the consumer further by looking at the analytics data of their website. Analytics data refers to the details of website visitors, like which keywords led them to the website, which pages they visited, and whether their visit resulted in revenue for the company.
This data needs to be processed in order to draw actionable conclusions. Fortunately, web analytics provide advanced tools that enable marketers to convert this data into actionable information. Marketers can group the data according to the geographic, demographic, psychographic, and behavioural attributes of the visitors (Google, 2016). They can create small or large segments of their potential customers and design their offerings according to these attributes.
The marketers are increasingly using technology, especially the web technology, to know the needs, wants, and preferences of their customers. This knowledge enables them to create segments, target these segments, and positions themselves. The use of web and technology does not end here. The marketers extend it by testing the effectiveness and fine-tune their segmentation strategy. Unlike traditional advertisement channels like print and TV, web and technology enable marketers to show different ads and different content to different market segments. For example, a marketer can show different ads text in response to typed text in a search engine. Similarly, the marketer can lead the visitor to different content on their company website depending on which ad the user clicked. Web technology also enables them to measure the effectiveness their marketing and segmentation strategy. They can see which ads resulted in more revenue and which segments are more profitable.
Google is a good example to demonstrate the use of web data. Google uses its analytics program to know a number of variables about the visitors of its web sites. These variables include gender, age, interests, locations and more. This data helps Google to understand its audience and serve a targeted content to each user. A large amount of data enables Google to create numerous segments. In fact, it enables Google to profile each visitor and serve content that is unique to each visitor.
