Market Segmentation + Target Market + Differentiation = Positioning The Author ：Wei Rongning

Cirebon, (SGOnline),-
When studying marketing strategy, it’s essential to discuss positioning, which is a fundamental concept in marketing. Understanding positioning not only helps us comprehend marketing strategies better but also aids in creating professional business plans. When discussing positioning, three key concepts are often intertwined: market segmentation, target market, and differentiation. Let’s delve into these concepts:
Market Segmentation Concept: Because it’s impossible to serve the entire world, the first step in marketing is market positioning. Market segmentation is the process of categorizing customers into groups based on various criteria, including needs, personality traits, and behavior. Market segmentation forms the foundation for setting market objectives, so it involves grouping consumers with similar characteristics together.
The concept of market segmentation was introduced by American marketing scholar Wendell Smith in the mid-1950s. It involves dividing diverse markets into numerous sub-markets with relatively similar characteristics to identify groups of customers with similar needs. To simplify the understanding of market segmentation, remember these three fundamental points:
Market segmentation is about categorizing customers, not markets or products.
Market segmentation is based on the differences in customer needs.
Market segmentation is a process of aggregation, not fragmentation. It’s not about breaking down markets; it’s about bringing together like-minded groups.
Target Market Concept: The target market is the market that a business decides to enter, i.e., the group of customers for whom a business plans to provide products and services.
To simplify the understanding of the target market, keep in mind these three criteria:
The market should have sufficient size and growth potential.
Competitors have not yet completely dominated the market.
Your company possesses the capability to enter the market.
You can think of it as slicing a cake: the cake needs to be big enough, competitors haven’t finished taking their slices, and your company has the ability to grab a slice.
Differentiation: Differentiation refers to making a product or set of benefits highly valuable to a specific target market within a segment, and convincing them that these benefits cannot be found elsewhere. Differentiation helps products avoid becoming “commodities,” where the only differentiator is price. It guides the development of value propositions and promotional messages.
Now, let’s look at a case study: In the 1980s, The Coca-Cola Company faced a bleak situation, with a 35% market share in the soft drink industry, nearly the highest possible market share due to saturation. Meanwhile, PepsiCo, a younger and more dynamic competitor, was aggressively attacking. Coca-Cola appeared to be in a defensive posture, engaging in fierce competition for just one or two percentage points. PepsiCo was outperforming Coca-Cola in the market, and analysts and business writers were writing eulogies for Coca-Cola. Despite having competent employees and high morale, the company was pessimistic. They couldn’t see a way out, believing their only path at the peak was down.
How does a large corporation break free from established industry perceptions? Upon taking over as the new CEO of Coca-Cola, Roberto Goizueta posed a series of questions during a top-level executive meeting. “How much liquid is consumed daily, on average, by the 4.4 billion people in the world?” The answer was “64 ounces.” (Approximately 31 grams per ounce.) “Now, how much Coca-Cola does each person consume daily?” “Less than 2 ounces.” “So, what’s our market share in people’s stomachs?” Goizueta asked in conclusion. These questions led to a paradigm shift. People were no longer concerned about Coca-Cola’s market share in the cola market, nor the global soft drink market share. Instead, the core question became the market share in the world’s total liquid consumption market. Through this profound reflection, everyone realized that Coca-Cola’s market share was negligible. Goizueta guided Coca-Cola’s executives to see that their real competitors weren’t just PepsiCo; they were coffee, milk, tea, and even water. Management scholar and author Ram Charan analyzed, “Goizueta repositioned Coca-Cola in the market, and the immense potential of this market exceeded anyone’s imagination.” Subsequently, Coca-Cola awakened to limitless opportunities and entered a new era of rapid growth.
Positioning is about segmenting the entire market, selecting a target market, and establishing and developing product differentiation advantages to secure an appropriate place for the product in customers’ minds.

Wei Rongning (023202305019) from Class – B 2023-1 Masters of
Technology Management, Faculty of Business in the subject Strategic Marketing
for Prof. Dr. Jony Oktavian Haryanto at President University