Market Segmentation, Target Market Selection,

and Positioning

The Harvard Business School article speaks about the next stage in
the marketing process-following that of marketing analysis. This
stage comprises three steps which are essential for an effective
marketing strategy. They not only allow the firm to focus on the
right customers, but also help to organize the marketing mix;
product positioning playing a most vital role. The three steps are
listed as follows and examined in more detail:

1) Market segmentation
2) Target market selection
3) Positioning

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 Market segmentation

This step involves dividing the market into groups of prospective

customers that have unique traits; these groups are called market
segments. Market segmenting is done to differentiate groups of
customers from each other. This enables products to match the
groups’ exact needs and demands. Segmentation takes place in two
ways, though the first- customer needs-is preferred.

i) Based on customer needs

ii) Based on what is observed in customers

The article uses the example of nonprescription drugs for pain and
fever, and how customers-or market segments-look for two
different factors in these medications. The market is usually
segmented based on observable traits such as demographics,
geographic locations, lifestyles, etc and must be also be linked to
customer benefits. This enables a marketing message to effectively
reach its segments. Therefore, marketers must understand what
benefits customers want; profile and segment the market, and
identify variables that differentiate these segments. It is a complex
and complicated process.

2
 Target Market Selection

Target market selection is the next step which follows market

segmentation. It examines each group and then decides which
group it wishes to explore, with the aim of maximizing profits. The
firm bases its findings on costumer’s demands, as well as the
internal and competitive environments. Since it is vital to grasp
differentiation between the markets, the firm must collect data
from competitors and compare it with itself. Data collection takes
place in five areas which are then further divided. These areas
examine the ability to conceive and design, produce, market,
finance, and manage. The data is then organized into matrices,
which each matrix representing one segment. This method is useful
for target market selection, as it highlights strengths & weaknesses.
However, it does not predict outcomes.

3
 Positioning

‘Positioning’ is the firm highlighting a USP (Unique Selling

Proposition) for its product. A USP enables a product to gain an
edge over its competitors. An effective positioning statement is
said to examine three areas; namely, who the customers are,
what needs the product fulfills, and why those needs are best
satisfied by that product. These questions must be asked and
answered for each market segment. The firm must also consider
how it wishes to be perceived by those groups. The positioning
statement is important because it paves the way for the
marketing plan, and helps to define the marketing mix. Internal
communication is also essential for successful execution.

The positioning statement must not only highlight customer

benefits, but also how the product is different from its
competitors. This differentiation is of two types. Products may
be may be vertically differentiated or horizontally differentiated.
While the former deals with products in which one is considered
superior in quality, the latter deals with products that are
virtually similar and cater to different tastes. Hence, in vertical
differentiation, customers pay for quality; in horizontal
differentiation, customers pay for their preference in taste.
Marketers can usually differentiate their products in both ways
by combining a number of tools and skills.

Positioning is very closely intertwined with branding. Firms

want to stress on their product being different from its
competitors. The highest achievement, however, is when the
brand comes to be seen as a category. This is something all may
aspire to, but few brands are able to achieve.

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HARVARD BUSINESS SCHOOL

ARTICLE SUMMARY

-PRINCIPLES OF MARKETING-

GMKT 201

BY:

• FARIHA TARIQ
• HINA AMER
• KANZA RASHID