Consumer Focused Strategy: Segmentation and Positioning

Regarding segmentation and positioning, let’s begin with how they are defined. Market segmentation is the process of dividing the large and diverse mass market into subsets of consumers who share common needs, characteristics, or behaviors, and then targeting one or more of those segments with a distinct marketing mix. (Kardes et al., 2022). Positioning involves the actions marketers take with regard to product, price, distribution, and promotion in an effort to fulfill the wants and needs of the target market.

In 2013, Kevin Plank, the founder of Under Armour, decided to focus on the female market segment, which at the time represented only 21% of the sales revenue. Strategies included:

• Rejecting traditional sports campaigns focused primarily on television spots
• Celebrity brand ambassadors popular on social media
• Employing a multichannel platform approach with social media at its core (Darden Business Publishing, 2016).
• Launching a campaign in the television, print and digital space

The targeting of the women’s market in 2013 proved that women represent a powerful buying segment that had previously been overlooked and ignored. In fact, from the success of the multi-channeled campaign, Under Armour determined that the women’s category can definitely set the standard for the rest of the brand. The marketing team successfully executed segmentation and positioning resulted in $35 million in earned media, 42% increased traffic to UA.com, and most importantly a 28% increase in women’s sales (Darden Business Publishing, 2016). These numbers show that they were effective in determining consumer preference heterogeneity, which identifies the different tastes and preferences among consumers (Kardes et al., 2022).

Before 2013, the company had been falling into the trap of the majority fallacy; which was to focus their marketing on the largest segment, that being men, assuming that would be the most profitable approach. Indeed, smaller segments can actually be more profitable when there is less competition (Kardes et al., 2022). In their efforts to target a smaller, more defined audience, they increased sales through the sales-cost trade-off strategy. This trade-off recognizes that, as market segmentation increases, sales increase because a firm’s offerings align more closely to consumers’ preferences (Kardes et al., 2022).

A key point to keep in mind when developing a marketing plan is that consumers no longer want to receive and evaluate marketing information that is irrelevant or unwanted (Kardes et al., 2022). Always ensure that your communications are relevant and engaging. To refine your segmentation and positioning strategies, here are some other points to consider:

1. Develop customer profiles that represent your segmented target audience
2. Create and execute SMART goals
3. Build a multi-platform marketing campaign that includes traditional and digital media as well as social engagement
4. Choose KPIs that best measure the success of your goals
5. Track analytics throughout the campaign to best understand your reach and audience
6. Reevaluate your customer profiles

The newest, increasingly powerful market segment is the Zoomer Generation. Once teenagers come into their own, their unique wants and needs are what differentiate them from older generations. They quickly become the most influential market segment. Marketers must be insightful, identifying youthful trends that can disappear in a flash or resonate, defining an era.

An effective positioning strategy would offer tailored communications to the target audience, through channels frequented by them, offering appealing products that satisfy their wants and needs at price points within their budget restraints. Before launching a campaign it’s important to understand your target market as best you can. Consider the psychographics. The Zoomer Generation has differing lifestyles, attitudes, activities, interests, beliefs and social values from generations that have come before them. Consumer research and the building of in-depth customer profiles enrich our understanding of our target market. Once we understand what motivates our desired audience, we can effectively offer our value proposition in our communications.

As you develop your next campaign consider implementing the following breakdowns:

• Demographic segmentation (age, gender, income, education, social class, etc.)
• Geo-demographic segmentation (zip-code marketing)
• Behavioral-based segmentation (preference for product attribute or benefit, usage, loyalty, etc.)

For more on marketing segmentation check out the following article written by Survey Monkey: 5 types of market segmentation and how to use them

References:

Kardes, F., Cronley, M., & Cline, T. (2020). Consumer Behavior (2nd Edition). Cengage Learning US. https://mbsdirect.vitalsource.com/books/9781305161689

Darden Business Publishing (July, 2016). Under Armour’s Willful Digital Moves. University of Virginia. https://services.hbsp.harvard.edu/lti/links/content-launch

Survey Monkey (2022). 5 types of market segmentation and how to use them. https://www.surveymonkey.com/market-research/resources/market-segmentation/?program=7013A000000mweBQAQ&utm_bu=CR&utm_campaign=71700000096739641&utm_adgroup=&utm_content=&utm_medium=cpc&utm_source=adwords&utm_term=&utm_kxconfid=s4bvpi0ju&language=&test=&gclid=EAIaIQobChMI6ene–iN-gIVhd7ICh1aDQiKEAMYASAAEgIGTvD_BwE&gclsrc=aw.ds