3 Take Aways: Market Segmentation

Entrepreneurs need to create a positioning strategy for their new products in a way that emphasizes their differences and valuable distinctions from other previously established industry competition products. Proper positioning allows for consumers to place a new product or the idea of the new product (envisioning it, its image, etc.) into context of how relevant that product is to their lives and how necessary, how appropriate, and so forth regarding the many reasons that go into consumer decision-making. Positioning a product specifically in order that it would optimize a consumers perception of the product--its benefits and image--is key to presenting a worthwhile investment in the eyes of buyers, especially in an industry where there are already many options available, well-known brands, or consumer favorites (unless one's particular product is a niche product in which it stands alone for a very minute but existing target audience). Positioning it in a way that customers can accept its message (for example, a fashion magazine would be positioned for local boutiques) will make understanding why a product should be bought more easily accessible.

There is a difference between the target market and market segmentation: segmentation analysis expresses how the market is defined whereas the target market expresses how one can best adapt and compete in that particular segment. The market is segmented using variables that Alexander Hiam and Charles Schewe suggest should be relevant to the products' and the companies' intentions and what is closest to the realistic consumer's buying behaviors in a particular industry. Competitors' target markets and market segmentation should also be studied as an example and also as a basis or foundation upon which one's own products can be further differentiated. Thus, the market is segmented into various markets that the company can then choose to target based on relevant differences or similarities used to separate them into groups that are homogeneous within and heterogeneous between.

Consumers of a target market, according to Baudrillard, "consumers are not buying use value or exchange value" but rather are purchasing the image that the product exudes or the meanings or connotations that are attached to it. This image is established by various means: the elaborate packaging of the product, the celebrities advertising it, the commercials that appeal to sexual connotations or humorous, the price tag (with the idea that consumers automatically assume a higher price means the product is of higher quality, whether that is true or not), and the images and reputations of those who purchase the product. The example that the Encycolpedia of Consumer Culture used was of perfume with it's elaborately decorated and fanciful packaging alongside its high price tag, its celebrity advocator--who is always widely known as a sex icon--and the idea that once worn, a consumer will become sensually desireable. Consumers are paying for these ideas rather than the chemical mixture of smells. This is an important key not to keep in mind as entrepreneurs design their marketing plan to sell new products to target audiences and segregated markets.