Mapping the Market: Segmentation, Targeting, and Positioning
Selecting Target Markets
Organizations encounter a significant challenge when trying to identify market segments that are both profitable to serve and likely to be receptive to their products. How can they make this choice? How do they determine which segments are more attractive than others?
The ideal market segment possesses several key characteristics that make it viable and valuable for businesses to target. These characteristics ensure that the segment is both attractive and feasible for marketing efforts. The ideal market segment can be characterized using the ADAMS acronym, which stands for accessible, differentiable, actionable, measurable, and substantial[1]. Below is a detailed explanation of each characteristic.
Examples
Ideal Market Segments Using the ADAMS Acronym
| Characteristic | Example |
|---|---|
| A — Accessible: The segment can be effectively reached and served through marketing and distribution channels. | A company selling camping gear targets outdoor enthusiasts who frequently visit national parks. By partnering with online platforms like outdoor adventure forums and social media groups, the company ensures its products are accessible to this segment through digital marketing channels. |
| D — Differentiable: The segment is distinct from others and responds differently to marketing strategies. | A brand offering high-end bicycles differentiates its market by targeting professional cyclists and serious hobbyists. This segment is distinct from casual cyclists who prioritize affordability over performance, allowing the brand to tailor its marketing strategies to emphasize advanced features and durability. |
| A — Actionable: The segment is practical and profitable to target with specific marketing strategies. | A company offering yoga retreats identifies a segment of health-conscious individuals interested in wellness and relaxation. By creating targeted marketing campaigns that highlight the benefits of yoga for stress relief and mindfulness, the company can effectively engage this segment and drive bookings. |
| M — Measurable: The size, purchasing power, and characteristics of the market segment can be quantified and measured. | A manufacturer of musical instruments segments its market based on age and skill level, targeting beginner musicians aged 10-18. By analyzing demographic data and sales trends, the company can measure the size and purchasing power of this segment to allocate resources efficiently |
| S — Substantial: The segment is large enough to be profitable and justify the marketing efforts. | A luxury yacht company targets affluent individuals and families who enjoy recreational boating. This segment is substantial enough to justify the marketing investment, as it includes high-net-worth individuals willing to spend on premium leisure experiences. |
In assessing which segments to target using the ADAMS acronym, an organization is seeking to answer the following questions:
- Whose needs can we best satisfy?
- Who will be the most profitable customers?
- Can we reach and serve each target segment effectively?
- Are the segments large and profitable enough to support our business?
- Do we have the resources available to effectively reach and serve each target segment?
Market Targeting Strategies
Organizations must then decide on the approach or strategy they will pursue to target their ideal segments. Market targeting strategies are approaches used by businesses to identify and focus on specific groups of consumers who are most likely to purchase their products or services. These strategies enable companies to customize their marketing efforts to meet the needs and preferences of the market segments they choose to serve.
The four primary market targeting strategies are:
- Undifferentiated marketing (mass marketing)
- Differentiated marketing (segmented marketing)
- Concentrated marketing (niche marketing)
- Micromarketing
Undifferentiated Marketing (Mass Marketing)
Undifferentiated marketing, also know as mass marketing, involves marketing to the entire market with a single offer or message, ignoring segment differences. The goal is to reach as many people as possible. This approach is less common in tourism and hospitality due to diverse customer profiles.
Examples
Undifferentiated Marketing
Characteristics: It is cost-effective due to economies of scale and is often used for products with universal appeal, such as basic commodities.
Examples: Companies like Crest and Colgate use mass marketing for products like toothpaste, where the product is a staple and appeals to a wide audience.
Differentiated Marketing (Segmented Marketing)
Differentiated marketing, also known as segmented marketing, targets multiple market segments with different offers or messages adapted to each segment’s needs and preferences.
Examples
Differentiated Marketing
Characteristics: It allows companies to cater to diverse customer needs, potentially increasing market share and customer satisfaction.
Examples:
- Nike uses differentiated marketing by offering various product lines tailored to different segments, such as runners, basketball players, and casual wearers.
- Marriott International uses a differentiated marketing strategy with its diverse brand portfolio. This strategy allows Marriott to cater to various traveler preferences and budgets, maximizing their market reach and addressing specific needs of different customer segments. Each brand targets a specific market segment: Ritz-Carlton is for luxury travelers seeking high-end experiences; Courtyard is for business travelers looking for functional, comfortable accommodations; and Moxy is for millennial travelers desiring trendy, budget-friendly options.
- G Adventures offers small-group adventure travel experiences and targets different segments with unique offerings.
Concentrated Marketing (Niche Marketing)
Concentrated marketing, also known as niche marketing, focuses on a single, small market segment or niche, offering specialized products or services that meet the specific needs of that segment.
Examples
Concentrated Marketing
Characteristics: It allows businesses to become experts in their niche, often leading to strong customer loyalty.
Examples:
- Lululemon focuses on niche markets by offering high-quality athletic wear for yoga enthusiasts and fitness-conscious consumers.
- Ruffwear targets outdoor-loving pet owners with adventure gear for dogs. This niche market focuses on products that encourage outdoor activities with pets, appealing to consumers who enjoy spending time in nature with their furry companions.
- Based in Manitoba, Frontiers North Adventures specializes in polar bear and northern lights tours in Churchill. They cater specifically to wildlife enthusiasts and adventure travelers interested in Arctic experiences.
Micromarketing
Micromarketing targets very small segments or individual customers, often referred to as individual or local marketing.
Examples
Micromarketing
Characteristics: It involves highly personalized marketing efforts and can be resource-intensive but allows for precise targeting.
Examples:
- Local Marketing: Local farmers’ markets use micromarketing by tailoring their offerings to the specific tastes and preferences of their community, often offering locally sourced and organic products.
- Individual Marketing: Customized offerings for the individual customer, such as a custom wedding cake, a tailor-made suit, event planning companies creating customized experiences for their clients, Spotify’s personalized playlists, Amazon’s product recommendations, and Netflix’s content personalization.
Media Attributions
- Figure 1: “Figure 11.6. Market targeting strategies” by Ana Carrapichano (2021), in Marketing to South African Consumers, is used under a CC BY 4.0 license.
- Albrecht, M. G., Green, M., & Hoffman, L. (2023). 5.4 essential factors in effective market segmentation. In Principles of marketing. OpenStax. Retrieved November 23, 2024, from https://openstax.org/books/principles-marketing/pages/5-4-essential-factors-in-effective-market-segmentation ↵
A set of criteria used to assess market segments, which stands for Accessible, Differentiable, Actionable, Measurable, and Substantial. This framework helps marketers evaluate the viability of different segments for targeting.
A targeting strategy that ignores segmentation differences and aims at the entire market with one offer or strategy.
A targeting strategy that involves targeting several market segments with a different offer for each.
A targeting strategy that focuses on a small but well-defined segment of the population.
A targeting strategy that tailors products and marketing programs to suit the tastes of specific individuals and locations.
