A definition of market segmentation is groups of potential buyers that have two things in common, similar needs and a reaction to the marketing strategy. (Kerin, 188) There are four different segments to the market. They are geographic area, demographic focus, psychographic referring to lifestyle and behavioral which refers to where the person makes purchases, what they are looking for, how often they shop, and their reason for purchasing. Kerin, 193)
A definition of target market is one or more groups of consumers that a company uses for purposes of market focus. The five criteria for selecting a target segment are, market size, growth expectation, competitive position, cost associated with reaching the segment, and compatibility with the objectives and resources of the organization. (Kerin, 198-199) where a target market is groups selected for company focus, market segmentation is used to divide potential buyers into more specific groups.
The statement, “ Sometimes a firm can achieve a key differential advantage by simply emphasizing how its offering satisfies existing consumer demands/desires and needs better than its competitors” can be very true in that a company can use what is already known about their customer base to identify their products best focus group. Companies can use this advantage to instill positive feeling about their products to their already existing customer base as well as competitor clientele.
A marketing strategy called product repositioning can help a company to change the importance or usefulness of a product in a consumers mind in comparison to a competitor product. A company will use head to head positioning (pg. 202) in order to compete with suppliers of similar products. An example of this type of positioning is Pepsi vs. Coke. These two companies sell soda that the attempt to convince theirs and the opposing companies customers of buying.
An example of a company, product, and positioning strategy is Splash Lagoon Water Park in Erie, PA. This company operates as an indoor water park resort type facility and serves mostly families with young children. They offer entertainment such as water slides, a wave pool, arcade, and laser tag. Their value to the consumer is advertised through television, internet, direct mailings, and word of mouth. They have nearby a competitor in Castaway Bay Water Park, which is owned by Geauga Lake, located in Ohio.
Both of these companies offer similar product offerings and amenities. Splash Lagoon uses a head to head marketing approach in offering competitive rates, coupons, group discounts, and hotel accommodations much like that of its Castaway Bay competitors. Referring to the concept called managing the product life cycle, the statement, “Sometimes demand patterns must be modified for consumers to perceive a firms product differentiation as worthwhile. ” This is seen in a variety of products offered from many different companies.
Many companies will attempt to re-gain a consumers interest in a product or line by changing the formula or offering a different look for the packaging. Often times the familiarity of a certain product to a customer can cause them to overlook it when new and more appealing products enter the market. Many companies also add other products from their line in combination with a product to increase brand recognition. An example of a modification in managing the product life cycle is the Mr. Clean Magic eraser.
The product has a very large consumer popularity. There are now many other companies manufacturing the same type of product and offering it for a lower cost. The Magic Eraser was improved by the company by giving several different options available. The original brand product is still available in addition to larger versions of the same product, multi pack options, and recently marketed a bathroom specific eraser product containing Febreeze cleaning solution to increase consumer interest.
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