Then we have the four piece or
the marketing mix variables that we're able to help us try to capture that value,
and ultimately what we're looking to do is customer acquisition.
We want to get customers into relationships with the brand or
with the service provider.
We want to develop those relationships and retain those customers.
And that's ultimately what's going to drive profit.
So as you can see, from this schematic the STP framework of segmentation,
targeting, and positioning happens relatively early on In the process.
So what we're going to focus on in this session,
is how do we go about doing that market segmentation?
All right, and so just to give you a sense for
why we might be interested in segmenting the market,
there are a lot of decisions that market segmentation can help drive.
So if we look at the development design of products and how we position them.
Well, how I position the product, the features that I include in products or
services, kind of the set of offerings that I put on the market, those are all
going to be dictated by which market segment I'm trying to appeal to.
If I understand that a market segment that is important to us is price sensitive,
I'm not going to put in the most costly features.
Because the price point that the product or
service becomes available at may not resonate with those customers.
On the other hand, if the segment that I'm going after is particularly affluent,
they're not price sensitive, and what they value is the highest possible quality,
well, that's going to dictate a different product design and
a different positioning.
And so, the product and service design and
positioning is going to be affected by segmentation, the way that we communicate
with our customers, both prospects and existing customers.
So, what is the messaging that's going to most resonate with them?
If we have a good understanding of what their preferences are or
what's important to them, what opinions they hold,
what they believe on different dimensions, then we're going to be able to tailor our
communication materials and use messaging that's going to resonate with them.
Another important aspect where segmentation can be informative,
is when it comes to resource allocation.
I have a fixed amount of resources.
I've got a fixed budget when it comes to the marketing activity,
that I can engage in.
Well, which of the segments is going to be most responsive to the marketing
activity that we're going to do?
Which segment is big enough?
Which segment is particularly responsive?
And which one's going to ultimately be most profitable for me to go after?
If I've segmented the market, I can try to answer those questions and
see where are my resources best deployed.
Pricing is also going to be something that is informed by your segmentation strategy.
Again, if we go back to the example of some customers being price sensitive, some
customers being relatively insensitive when it comes to changes in price.