Market segmentation and brand positioning

LET us begin by digressing relatively, considering an interesting observation in our local auto market segment. Within 6/8 year-period my team dwelt on auto brand management in this market, our experience was that not even one practitioner or brand owner successfully achieved brand differentiation. At best, what was nearly achieved was (and still is) user category appreciation. It became worse with the entry of those auto brands from Korea and all such related Asian countries. Brands like KIA, Hyundai, Mahindra and those China via Dubai versions of Japanese offerings to include Toyota, Mitsubishi and even Honda rushed into Nigerian market without distinguishing value-offer. So we have all manner of auto brands promising same offer without any one of them swaying anything different.

So, KIA range took a lead in the new executive sedan segment by pushing affordability. The offer connected immediately with the Nigerian market, anchoring on corporate users primarily, to assist its market entry/penetration.

The mushroom marketing method characteristic of our local auto market goes a long way to describe our value pattern as a market and our level of sophistication as a broad consumer-group. Global players are quick to know that the average Nigerian will rationalize his/her choice of auto product on emotional rather than rational consideration, so the brand owner’s focus as far as Nigerian market is concerned, to play up the emotional benefits, to support sales. To a large extent, individual and corporate Nigerians purchased vehicles that are not designed for tropic region like ours, fresh from auto shops, feeling cool. Some of these dealers even went as far selling cars that were brought into this market with fabric seats, fraudulently covered with leather here in Nigeria as leather-seat option straight from factory, at premium price. Yes, all such happened and is still happening today.

Like we indicated earlier, this is a slight digression from the topic of today, though related. To the extent that these global marketers identified Nigerian market as one where any auto product sells, amounts to effective and efficient MARKET SEGMENTATION. Perhaps this analysis will help us in treating the concept of market segmentation much easier or faster in this episode.

The concept of market segmentation was first proposed as an alternative market development technique in a situation of near-imperfect market, where offerings were near identical showing no real differentiation. Subsequently, development, consumer awareness and growth in consumers’ disposable income necessitated taste variants, leading up to marketers having to design product and service offerings around consumer demand. It became imperative for marketers to be customer-centric in focus as a way of growing their market. Let us quickly mention at this point, the relationship between market segmentation and product differentiation since they will both interplay in the consideration of the over-riding application of the concept of MARKET SEGMENTATION.

“Market segmentation is the division of a market into different groups of customers with distinctive similar needs and product/service requirements”. Or  “…the division of a mass market into identifiable and distinct groups or segments, each of which have common characteristics and needs and display similar responses to marketing actions”  (Principles of Marketing Management, an Online resource center). Essentially, market segmentation is about effective and efficient allocation of finite resources for optimal return on marketing investment (ROMI). It is to that extent that market segmentation itself is approachable from either (a) market segmentation or (b) product differentiation.

Market segmentation, as separated above, is when the concept of segmentation is approached from the angle of starting with the customers’ needs, focusing on designing, developing and delivering the customer experience. In this case, the marketer approaches the concept of market segmentation, starting with the customers’ needs. It is difficult to find an ideal case in this market, so we will draw a case insight from a brand of bus service in UK  the Stagecoach UK Bus service. It is one of the largest bus operators in UK, a huge success, operating both express and local bus services across the country.  In spite of its success, the challenge of meeting the needs of identified non-users of its services led to a major research. The major objective was to consider those issues that bother on the target market perception of Stagecoach Bus service and those barriers that should be taken care of, to attract those present non-users. The operative action standard was the deliberate efforts at attracting identified present non-users by designing service offers primarily concerned with the needs of the identified market segment. Here, segmentation is all about the consumer.

On the other hand, market segmentation through product differentiation is more about adapting new product variants, primarily as a market growth initiative based on identified market opportunities. Unlike the case of market segmentation that is customer needs-focused, product differentiation aims at taking advantage of market growth opportunities, as they are identified. It is about the brand not essentially about the consumer. For instance, a given brand could aim at different market segment by adapting different variants (to satisfy the different segments).

So while the one is about the consumer, the other is about the brand, even though both are driven by market segmentation as a marketing concept. Over time, marketers in modern societies have  sought to design product and service offerings around consumer demand (market segmentation) more than around their own production needs (product differentiation), with the aid of proper market research. If this was to apply in this market, auto product marketing in this market would have been more customer-satisfactory. But as we have always stated the extent of consumer sophistication, enlightenment and education contribute a lot towards trade practice. The common knowledge of the rule generally referred to as “American Spec” will always guide the quality of products/service offering intended for American market from any where in the world. The American standard is a quality benchmark for all global players. But with undeveloped and unregulated market such as ours, the compromises are legion.

However, if nothing else, MC&A Digest considers the concept of market segmentation and brand positioning for purposes of academic exercise and professional learning, as against standard implementation in our local market.  To that extent, let us point out that the concept of market segmentation is more in the interest of the marketer than the consumer. Primarily, it assumes the state of scarce resources in guiding the marketer towards investing same in the most effective and cost-efficient way that will help return on investment. Market segmentation is an intricate subject, appreciable through a careful consideration of all the elements involved, including the socio-psychological considerations.

However, it all leads to profitable marketing, riding on the next stage which is brand positioning. Whether the concept is actualized through market segmentation or product differentiation, it helps in brand positioning. Brand positioning is about the target consumer’s reason to buy a particular brand over the competing brands. It is a deliberate effort at establishing the reason-for, for any given product/service offering, by expressly capturing the given brand’s unique offer, value-essence, competitive advantage and promise. It derives from a distinct personality that separates a given brand from the lot.

Now, brand positioning can only own from proper market segmentation.  You will agree that a properly positioned brand will more likely achieve market growth versus that which is not properly guided in the market place. A particular brand of cocoa beverage is presently struggling to make a come-back into our local market it withdrew from many years ago after a long period of market leadership, by going the way of many others who run on assumption. The story is not pleasant right now, and they know it. The principles of marketing will always come to play at critical times. We agree that so many brands have successfully taken this market for granted in the past (and some still do), but change is on the way. Many of the auto brands are redefining the market in line with present development accessioned by the global financial difficulties, yet change is evolving.

 

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Market segmentation and brand positioning