Segmentation, Targeting, Differentiation, Positioning

Micromarketing and the Internet

With the Internet came the consumer demand for individualization:

• Consumers want to watch movies and television shows on Hulu, and they want to be able to skip ads that aren't relevant to them
• Consumers want to go on to Pandora Radio (http://www.pandora.com/) and listen to the music they like. They want to be able to skip the songs they don't want to hear, and they want to be able to listen to music similar to artists they already enjoy.
• Consumers don't want to be bombarded with ads that have nothing to do with their wants and needs.
• Consumers go to the websites they WANT to view...
• ...and they sign up for company e-mails from the companies they actually buy from
  

So, with the internet, company's are taking the concepts of market segmentation and targeting to a higher level. Now, marketers target either small niche audiences - that is, when a company selects one market segment and develops one or more marketing mixes to meet the needs of that segment - or, company's are micromarketing (individualized targeting), which can target a small number of people, as small as one individual person.

In today's world of consumer control and demand for individualization, company's must re-evaluate their marketing segments. To save money and better reach their intended target markets, companies need to specialize their message for their consumers. They must make their consumers feel as if they are important, as if they matter - as if their wants and needs matter.

By observing a consumer's online behavior, companies can see what is important to specific consumers. Companies can then use that information - along with demographics psychographics, and more - to make up more specialized and individualized marketing plans for their consumers.

While segmentation and targeting are important, companies also need to be concerned with their differentiation and positioning, as well. Especially with the Internet, consumers can easily use a search engine to compare products and services, and decide which brand or company is best for them. Because of this ease, companies need to ensure they closely focus on their differentiation. In the next few blog posts, price and its online value will be discussed in further detail. However, as a quick note, price is the easiest of the 4 P's to change, if price differentiation is the way in which a company wishes to go. Other areas that can be used to create differentiation are: product, service, personnel, channel, image, site environment/atmosphere, trust (site security), and the ordering process.

Positioning goes hand-in-hand with differentiation. Positioning is the process of creating a desired image for a company in the minds of a chosen user segment, according to the textbook. It doesn't matter if a company has the best differentiation of all the brand in their category; if the consumer does not have a positive image of a particular company or brand in their mind, then they will not buy that product, no matter what the marketing campaign is like.

In conclusion: Segmentation + targeting + differentiation + positioning = a successful company with happy consumers.