Market Research and Market Strategy: Market, Competition and Business Assessment, Customer Segmentation, Market Positioning

Imagine you are the life of the party, and as a result, you are given the task of planning a big party. What is the first thing you do? You start by listing the kind of music, food, and timings your friends prefer. Once you do this, you are all set to go.

In the marketing context, market research depends upon all the information you have been able to collect to make it to the end product or service. In market research, target marketing is the work that you do to sell the product/service in the best way possible.

Market research helps you figure out what your customers are looking for, and market strategy refers to how you can use that information to sell the product/service.

While we are talking about market research and the strategies involving the same, let us quickly dive into a CEO course which talks about industry standards extensively.

Throughout this blog, we will also touch upon different terms in target marketing, especially the STP (Segmentation, Targeting, and Positioning) factor. Moving ahead, we plan to cover important statistics in target marketing along with the advantages of conducting market research in one’s area of business. Keep reading!

Understanding Target Marketing and Its History

The first known reference to target marketing was recorded around 1960 when Neil H. Borden, a marketer who believed in a few factors, decided to come up with the ‘marketing mix’, a term that consisted of four different factors: product, promotion, price, and place.

Borden travelled outside his academic bounds to put out a statement that was followed only later into the century. In the 1980s, the 4 Ps were expanded to accommodate other factors namely physical evidence and process.

Here is the timeline of target marketing as seen throughout the years -

Early 1900s - Mass marketing era with businesses focusing on mass production and one-size-fits-all targeting
1950s-1960s - Introduction of market segmentation based on age, gender, and income
1970s - 1980s - Introduction of psychographic segmentation divided into lifestyle and values
1990s - Data-driven targeting makes it to the front with technology focusing on targeted advertisements
2000s - The digital revolution enables online advertising through targeted campaigns
2010s - Emergence of big data leads to customer-centric marketing strategies
2020s - Increased focus on CX and personalised experiences

Why Companies Segment Consumers

To understand why companies decide to segment consumers before moving forward with a particular product or service, we must consider these points -

Geography, demographics, psychographics, and behaviours - Companies tend to segment according to the consumer's location, age, gender, lifestyle, opinions, and purchasing habits.
Benefits sought by customer and consumer characteristics - Deducting what a customer seeks can prove beneficial for companies as they gain insight into factors like convenience, price, and status while aligning products accordingly.
Asking “why”, “what”, and “who” - Companies gain a deeper understanding of consumer behaviour by asking the right questions —why consumers buy, what their purchase behaviour is, and who they are as individuals.

In asking the questions, focus on -

Understanding behaviour (Why?) - Analyse past purchases and predict future buying behaviour.
Analysing purchase behaviour (What?) - Focus on frequency, and monetary value of purchases. Get to understand customer loyalty in this stage.
Segmentation via demographics (Who?) - Use available data from multiple sources like income, education, family income and size, and age to categorise customers.

The Three Stages of Target Marketing

The STP model (Segmentation, Targeting, Positioning) is a fundamental framework for target marketing that helps companies to effectively reach their desired target group. The three phases are explained below, followed by brief examples:

Market segmentation

Segmentation is a method of dividing the broad market into smaller, more distinct groups based on common characteristics. These can be psychographic, demographic, behavioural or geographic characteristics.

Example: A skincare company segments its market based on age groups: teenagers facing acne problems, young adults concerned about ageing, and older adults dealing with sensitive skin issues.

Market targeting

Market targeting focuses on selecting specific segments from the identified groups. It deals with analysing the appeal of a segment and choosing the best ones. CEO training programs offer a more comprehensive insight into this topic.

Example: A skincare company decides to target young adults. They come to the conclusion that this group is sizable, accessible, and responsive to their skincare maintenance products.

Market positioning

Market positioning creates an image or perception in the mind of the target audience. As a result, the audience is motivated to pursue the said product or service as opposed to from a different provider. It focuses on UVP (unique value proposition) to differentiate it from other brands.

Example: The skincare company positions its anti-ageing products as scientifically advanced, natural, and affordable. Through this, it emphasises its effectiveness in reducing fine lines and wrinkles compared to competitors' products.

How Is Value Propositioning Related to Target Marketing?

Value propositioning is an integral part of target marketing and works in these ways -

It aligns with audience needs in addressing the preferences, and their pain points.
As part of the focused audience rule, it defines the market and allows businesses to diversify.
It creates a need for differentiation as it sets the brand apart from competitors.

Customer Segmentation

Customer segmentation enables a deeper understanding of target marketing as it makes it easier for target marketers to devise products according to one’s preferences and choices. Let’s look at the criteria for segmentation.

Segmentation criteria

Demographic segmentation - A widely used criterion in itself, demographic segmentation divides consumers into different groups based on characteristics such as -

Age - Teenagers, young adults, middle-aged, and seniors
Sex - Gender identities and personal preferences
Level of education - Educational background and levels of knowledge
Individual income - Income levels or socioeconomic status
Family capacity and income - Marital status, family size, life stage such as parents or empty nesters
Occupation - Professions or job types

Psychographic segmentation - Psychographic segmentation deals with categorising consumer behaviours based on their psychological traits. These criteria are -

Personality - Personality type and its traits
Lifestyle - Activities, interests, and hobbies
Values and beliefs - Convictions, views, and nature of values
Attitude - Loyalty towards a particular brand, social issues, product categories

Behavioural segmentation - Behavioural segmentation involves dividing consumers into different brackets based on their behaviours —actions, and patterns of interaction with products and services. Key criteria for behavioural segmentation include -

Purchase behaviour - Buying habits such as frequent buyers, non-buyers, or occasional buyers
Brand loyalty - Extended loyalty, occasional switchers, or entirely new to the brand
Timing - Occasional or seasonal buyer and holiday shoppers
Usage rate - Frequency of using a product, distinguishing between light, moderate, and heavy users
Engagement level - Engagement with marketing campaigns, social media, and loyalty programs

Geographic segmentation - Geographical segmentation is carried out using physical locations and the factors associated with them. Some criteria that one can include are -

Region - Continents, countries, states, or more specifics like cities
Climate - All climatic zones
Population density - Urban, suburban and rural areas
Population type - Preferences and lifestyles of urban, suburban, and rural populations
Cultural preferences - Cultural nuances, restrictions, and affiliations

Needs-based segmentation - Needs-based segmentation involves categorising consumers according to their need-based purchasing patterns. These can be driven by specific needs, desires, and motivations like -

Pain points - Challenges associated with personal choices
Benefits - Convenience, affordability, and status
Readiness to adopt - Adaptability to new technologies or innovations

How Market Segmentation, Targeting, and Positioning Are Co-Related

Market segmentation, along with targeting and positioning poses a unique mix to targeted marketing. Here is how they are all connected -

Aspect	Market segmentation	Market targeting	Market positioning
Purpose	Divides the market into different groups based on shared data.	Selects segments to employ focused marketing.	Creates a specific image/perception of the product or service in the consumer’s mind.
Focus	Derives different customer groups and their unique needs and interests.	Identifies viable segments to target them further.	Devises tailored suggestions and messages to help consumers resonate better.
Customisation	Crafting unique value propositions according to segment results.	Develops strategies for choosing segments.	Creates a UVP aligned with the targeted segments.
Marketing strategies	Guides strategies until they are fully performed.	Adds to resource allocation and management with customised approaches.	Directs communication strategy and messaging to appeal to chosen segments.
Decision making	Makes informed decisions around a product or service coupled with a design and marketing team.	Guides decisions on prioritising certain segments over others.	Influences brand positioning decisions.
Customer engagement	Enhances engagement by addressing pain points and preferences.	Works towards improving chosen segments.	Heightens customer engagement by aligning with their desires and perceptions.
Competition	Provides a space for competition by addressing niche uniquely, at par, and better than competitors.	Focuses approach so potential competitors can be dealt with.	Creates a unique market position that sets the brand on a higher pedestal than its competitors.

Statistics

Let’s look at some target marketing statistics to evaluate the market. To diversify your scope in marketing, go for a certificate course in senior management that accounts for multiple marketing tools and techniques.

A total of 56% of marketers use personalised content to bring in consumers.
A staggering 40.5% of people believe in targeted marketing compared to traditional marketing.
Targeted ads are known to increase brand search by a whopping 800%.
Google’s ad revenue amounts to a total of $147 billion.
40% of internet users reveal that they are loyal to their favourite brands.
27% of online users use targeted ads for marketing their products.
Targeting using behavioural data amounted to 5.4 times higher clicks than any other targeted segmentation.

Types of Market Research

Market research methods are divided into two —primary and secondary. Before focusing on different segmentation factors, these research types represent the process of researching.

Primary market research

Primary market research happens when companies employ third-party organisations to research available data. It is a combination of both qualitative and quantitative data. In terms of qualitative research, focus groups, and individual interviews are given utmost importance.

Focus groups - It usually consists of a small group of people (6-10) and involves asking several questions. The goal is to collect complex information that can be carried out remotely. It is a compensatory method as it requires participants to be treated monetarily.
Individual interviews - One-to-one interviews work in a more personal and interactive way. In this type of interview, the interviewee is given open-ended questions to address. The result of these interviews depends on individual experiences.
Ethnographic studies - The ethnographic research experience focuses on surveying the participant’s location. The interviewer has to note all geographical constraints available at the location. The usual duration for this research ranges from a few days to years.
Telephonic surveys - This type of research involves using phone calls to gather information from a selected group. This research aims to collect direct feedback and measure customer satisfaction. Some CEO training programs describe traditional methods of reaching out to potential participants along with modern targeting programs.

Secondary market research

Secondary market research focuses on using information from sources outside of the company’s reach. These may include government agencies, forms of commerce, and external informants such as educational institutions.

Public outlets - Public sources like libraries are excellent sources of information. Government libraries offer reliable resources without any fee and are viable places for researchers.
Business sources - Commercial sources are incredibly expensive in comparison to its competitors. These may be magazines, journals, local media, and television. Traditionally, these mediums are ideal for the collection of globalised data.
Academic establishments - Educational institutions are a good source of collection of data as the constant production of research papers and technical projects help in realising targets. They offer more content compared to the business and management sector.

Steps to Conduct Market Research

To understand how to conduct market research thoroughly, go through these steps. To opt for a further understanding of market research, you can also sign up for CEO training programs.

Decide a definite approach

Having a well-defined approach is vital to understanding where and how one wants to approach. These may include planning primary or secondary research and managing funds for the purpose. As for presenting participants with a clear image of the market research, devise a marketing test with all necessary questions, and leave no space for vagueness.

Identify the issue

Marketing research can be carried out using representative samples using sampling tools. A larger size of participants will require a less elaborate sampling technique. Accordingly, one can base their tools to get the best outcome. All surveys must go through thorough scientific sampling in the form of statistics and probability regardless of their size.

Determine the sample

A data collection instrument must be developed by the researchers to carry out appropriate surveys. One unaddressed answer can leave gaps in the research causing errors.

Conduct data gathering

An in-depth analysis of data is recommended to obtain a result. Based on this, the data will be considered worthy. Quantitative data can be measured using objectives like age, sex, and profession coupled with the total number of participants.

Evaluate the findings

While creating the test report, ensure to follow the inverted pyramid style to obtain results. One can start by answering at the beginning, followed by basics, content, and conclusions.

Reach conclusions

Market research is paramount in reaching a conclusion and making an informed decision. However, it can be tricky and must be conducted thoroughly without giving leeway to errors. After finding the results, the company/brand can finally implement their choices into devising the right product/service for the targeted demographic.

Market Segmentation, Targeting, and Positioning Examples

Here are a few elaborate examples talking about segmentation, targeting, and positioning in detail -

Market Segmentation

Demographic segmentation - A company decides to divide its customers based on age groups for their skincare line. They offer different products for teens, young adults, and senior citizens. They do so by addressing different skincare concerns for specific skin needs.
Psychographic segmentation - An athletic apparel line that targets active enthusiasts for their brand. Their active lifestyle needs a certain maintenance which is looked after by the product catalogue.

Market Targeting

Selective targeting - A high-end fashion brand caters to affluent customers only. In this pursuit, they want to showcase luxury branding and pricing strategies for the chosen demographic only.
Niche targeting - A coffee shop meant for coffee enthusiasts is planning to open a counter that only sells high-quality coffee. Its target audience is based on a demographic that seeks authentic coffee flavours.

Market Positioning

Product attributes - A smartphone company leverages its products as one of the most advanced in the market. It highlights its innovative features and competes with other brands directly due to its superior marketing.
Price and quality - An automobile manufacturer decides to build high-end cars and proceeds to sell them only to the affluent, and prestigious elite. This justifies a premium price tag that consumers are willing to purchase in comparison to standard vehicles in the market.

Case Studies

As a targeted marketer, reading case studies is equivalent to being a part of a project from a distance. Let’s discuss notable cases.

Chevrolet DTU by Carol H. Williams (2019)

Chevrolet “DTU” is an acronym for Diversity, Talent, and Culture, the three tenets of a campaign created by Carol H. Williams Advertising. Despite declining readership, Williams noticed that print circulation was still on the move. This was coupled with the AA market’s preference for luxury vehicles like the Cadillac Escalade.

The study aimed to develop a 360-degree media campaign surrounding NNPA(National Newspaper Publishers Association) and Chevrolet’s best features. This bridged the digital gap between AA(African American) audiences by merging both traditional and digital platforms and engaging younger demographics throughout its course.

Key takeaways

Several metrics got a boost including brand recognition, familiarity, and changed perceptions for both Blazer and Chevrolet.
Individuals, especially men with income groups exceeding $100,000 showed a promising demographic for future purchases.
Participants showed their support for Chevrolet’s campaign and HBCU(Historically Black Colleges and Universities) students. A noticeable community involvement within the African-American demographic was also boosted.

Gila Rivers by O.H Partners (2023)

O.H. Partners, an advertising agency partnered with their long-term client Gila River Resorts & Casinos to create a reasonable space catering to the youth. They recognised the demographics of young adults and created a “You Do You” motto-based platform, which addressed people’s unique identities.

In creating the campaign, they included vibrant colours, and aesthetics and even invited some of the young adults to participate. Scholar was hired for production and animation and was accompanied by 750MPH for sound engineering. It also featured New York-based rapper Outasight, whose musical talent was lauded by the team and welcomed into the campaign.

Key takeaways

An integration of animation and real-life elements boosted Gila River’s welcoming atmosphere.
Collaborations with renowned partners like Scholar, Outasight, and 750MPH outperformed the game.
Gila River Resorts’ efforts at diversifying and expanding made the younger demographics engage further.
The “You Do You” brand slogan saw a unique brand identity getting explored as Gila River embraced a new slogan.

Conclusion

Market research is a vital tool when it comes to understanding what customers need and tailoring services accordingly. It can also offer a competitive advantage over other brands available in the market. Through segmentation, targeting, and positioning, products and services can align with the goals of the companies while also enhancing relevance and overall appeal.

To stay competitive in the ongoing market, ensure to maintain a stellar industrial journey. After all, marketing research isn’t just about understanding customers but also predicting their needs and working towards building a relevant service.

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