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In marketing, segmenting and positioning are used to help companies identify and target groups of consumers who may buy a product. Segmenting is the process of defining types of consumers based on their wants, needs, and shopping habits. Positioning is the process of designing and marketing a product that meets the needs of the chosen group. While the physical characteristics of the product play a role, an important goal of positioning is influencing how the product is perceived by consumers. Targeting, choosing which groups to market to, occurs between segmenting and positioning.
Segmenting is a complex process that attempts to divide consumers into categories. The first goal of segmenting is to decide which variables are important. A seemingly endless number of variables can be used to define a segment, including demographics, benefits sought by the consumer, and how often the consumer is likely to buy the product. Marketing professionals must also take into account brand loyalty, the tendency of consumers to stick with a brand they know even if another brand is offering a better or less expensive product.
There are two basic methods of segmenting. The breakdown method is used most often. It assumes that customers are essentially the same, so marketing professionals must look for differences in order to define marketing segments. The build-up method assumes that customers are all different, so the marketing professional must look for similarities as a basis for defining the marketing segments.
Marketing the object to the chosen segments is known as positioning. The company must design a product that fulfills consumer wants and needs while staying within a reasonable budget so that the price of the product is not more than consumers are willing to pay. Then marketing professionals must promote the product in a way that appeals to the target groups. Finally, the product must be distributed to consumers. These steps — product design, price, promotion, and distribution — are known as the marketing mix.
Targeting occurs between segmenting and positioning. Marketing professionals use the information gathered during segmenting to decide which groups to market to. This choice is based on the size of the group, how much money people in the group are willing to spend, and other variables.
Segmenting and positioning are not a one-time occurrence. Significant changes in the market or demographics over time may require marketing professionals to reassess segments. If the brand faces competition or public relations issues, marketing professionals may attempt to reposition the brand. Repositioning is much more difficult than the original segmenting and positioning because the marketing must overcome the strong associations that already exist in the mind of consumers. This process is not always successful.