Recently I have been getting a marketing course, here are the most important concepts.
- Single most important concept in marketing: the process and implementation of segmenting, targeting and positioning. This should be done on your entire market, not just the customers you have.
Segmentation means grouping customers on similar parameters. Groups should be big enough to matter, small enough to be distinct, collectively exhausting and mutually exclusive. Possible segmentation could be:
- Demographic: certainly the most easy and objective way (think of baby boomers, Gen X, Y, Z etc)
- Behavioral: what benefits does a customer seek, what is the usage rate and its context, on which occasions? This is often revealed through focus groups/in-depth interviews.
- Psychographic: which social class, lifestyle, personality, affiliation, character type (intro/extravert)
Targeting is nothing more and nothing less than matching the company’s capabilities to the chosen segment.
How do you position your products/services in the market? What do we have the competitors don’t, what makes us different? There is a trap where companies want to tailor their products too much towards segments and actually reduce the operational effectiveness of the manufacturing. This negative trade-off of customer value and cost position will need to be balanced. The choice what to compete on will be lead by a good decomposition of the customer needs, and by finding out what differences are relevant.
Customer needs fall in two categories, the satifiers and the qualifiers. Qualifiers are an ‘olympic minimum’ that need to be attained in order to compete. If it is not attained, customers will be dissatisfied. But if a company overachieves on this, customers will not necessarily reward this. (A hotel room needs beds, but who will pay extra for a room with 5 beds in?)
Satisfiers will positively influence customer’s experience, a supplier then needs to choose to be at par with competition or make a point of difference with them -> where do you want to be famous for? Usually we see that 1, sometimes 2, unique features should be enough to outpace competition. If the Segmentation, Targeting and Positioning have been done well, 1 satisfier allows you to win the race.
Value proposition results in positioning. A Unique Value proposition, made through the right Product with the right Promotion in a Place and at a Price, will
- put you apart from competitors
- create customer value
- be relevant to the target segment
- drive your customer communication
So long story short, marketing looks at the different customer groups, decide who is the company’s customer and determines what to offer to that customer.