MARKET SEGMENTATION, TARGETING & POSITIONING FOR

COMPETITIVE ADVANTAGE

Brief Background

 Amazon or also known as Amazon.com pertains to an online

manufacturer and retailer of electronic book readers or also called as e-
book readers as well as known to provide Web services that paved the
way for the development and introduction of e-commerce.
 It was founded by Jeff Bezos in July 5, 1994 in Bellevue, Washington,
United States and is now currently has its headquarters in Seattle,
Washington.
 The vast company had made its humble beginnings in the garage of the
Bezo’s rented home in Bellevue with their initial investment of around
$250,000 as a start-up capital for the business.
 Since Amazon mainly deals and engages in providing a wide range of
products and services online or in e-commerce, it can be categorized as
an online retail company and is included in the industry of cloud computing
e-commerce artificial intelligence as well as in consumer electronics, and
digital distribution.
 The current market sized of Amazon had now been estimated to no less
than $1.4 trillion which is said to have doubled at least four times
compared to its 2016 size.
 Moreover, the continuous increased in the size of the company had been
attributed to the on-going operations of Amazon especially at the peak of
the COVID-19 pandemic wherein their market cap had shown to
continuously increased with the shipping of packages and the propagation
of online shopping and online and cashless payments.

In ensuring that the company will continue to grow and prosper in the
future it is necessary for the company to take some steps which can
ensure their competitive strength.
Market Segmentation
Definition
 Pertains to the process of aggregating prospective or potential buyers into
groups or segments which are held together by their common needs and
responds similarly to a certain marketing action
 An extension of market research that seeks to better identify targeted
groups of consumers in order to tailor or align products and branding to
make it more attractive to that particular consumer group/segment
 Process which involved dividing a target market into smaller, much more
defined categories
 It segments customers into segments or groups that share similar
characteristics such as in terms of interests, location, demographics, or
location.

CASE STUDY – AMAZON – MARKET SEGMENTATION

 Since Amazon.com particularly focuses on providing products and
services through e-commerce and continuously provides electronic book
or e-book readers such as Kindle and that the business is also focused
on selling books, movies, music, housewares, toys, electronics, and
other necessity of the masses, Amazon also has a wide and various
market segmentation
 For Geographic, this includes by region and density of people in an
area
 As for Demographic, this includes age, gender, life-cycle stage and
occupation
 For Behavioral, this includes the degree of loyalty, benefits sought,
personality and user status
 And for Psychographic this includes the social class and lifestyle

Importance/Objectives/Benefits
 Enable companies and businesses to target different categories of
customers
 Has a goal to minimize risk by means of determining which particular
products have the best chances for gaining a share of a target market
  It can also be used to better determine the best way to deliver certain
products to the market
 Allows and helps a company to increase its overall efficiency by means of
focusing more on the limited resources on efforts that can be able to
produce the best return on investment (ROI)
 To enable a company or business to differentiate effectively its products or
message in accordance to the common dimension of their market
segment
 Allows to get to know better the customers
 Helps in designing and executing better and effective marketing strategies
from top to bottom
 It helps in designing and creating stronger marketing messages to reach
the customers
 It also helps in attracting and converting quality leads and draw in ideal
prospects and convert potential customers to buyers
 It can also help in building deeper customer affinity or brand recognition
 It also helps in better identifying niche market opportunities and even find
and effectively target underserved niche markets which can foster the
development of new products and services
 It also keeps the business to become and stay focused and identify new
marketing opportunities and avoid distractions along the way

Criteria of Market Segmentation

1. Homogeneity – this refers to the common needs within a particular
segment
2. Distinction – this refers to being unique from other groups or segments
3. Reaction – this refers to having similar response to the market involved

Ways of Segmentation
Businesses and companies can be able to segment or categorize markets
in a variety of ways:
 1. Geographically – can be by region, location or area, country, climate,
urban or rural, ZIP code
2. Demographically – includes age, gender, family size, educational
attainment, life cycle, income, occupation, etc.
 One of the most popular and commonly used types
3. Pyschographically – includes social class, personality, lifestyle, interests,
motivations, priorities, values, attitudes, psychological influences
4. Behaviorally – includes use, benefit or response, purchasing and
spending habits, user status, and brand interactions

Market Targeting
Definition
 Also known as target market
 Pertains to a group of potential customers to whom a certain company or
business wants/intends to sell its products and services
 Also includes specific customers to whom a company or business directs
or aims its marketing efforts
 This also refers to one part of the total market for a certain goods or
service
 The consumers included in the target market share similar characteristics
such as (1) buying geography; (2) buying power; (3) demographics, and
(4) income
 Are generally categorized by means of location, age, lifestyle and income
 This process is conducted even before a certain product is released or
introduced
 During the testing phase, the company may use limited product rollouts,
allowing the company to determine which aspects of the product are
stronger among the consumers
 A business may have more than one target market
 The target market can also grow as the company’s product sales grows
 The process of selecting the target market from the entire market
  The market target includes two processes – (1) evaluation of segments
and (2) selection of the appropriate market segments
 An act which involved the evaluating and selecting of market segments

CASE STUDY – AMAZON – MARKET TARGETING

 As Amazon continue to aim to be world’s leading customer-centric
company and also aims to provide satisfying customer experience
through the use of the Internet and various forms of modern technology
and also to continually provide services that will be used in order to help
their customers to find, discover, and buy anything that they need, the
company has a variety of target market
 These include the following – urban and rural, 14 years old and older,
male and female, bachelor, single people, newly married couples,
retired, students, employees, professionals, hard and soft core loyals,
switchers, widest range of products, convenience of online shopping, all
social classes, resigned, explorer, reformed, mainstreamer, etc.

Importance/Objectives/Benefits
 Considered to be an essential step for any company or business in their
pursuit of developing a marketing plan
 Not taking in consideration the importance or market targeting can result
to costing a lot of money and time for the company
 Allows a company to determine specific market factors to reach and
connect with customers through the application of various sales and
marketing efforts
 It means the difference between selling a certain product or service
 It is the central focus within a marketing plan that helps in determining
other vital factors for the product
 It helps in determining the specific significant factors about the product
itself and its various aspects
Types
There are two types of target market that all businesses and enterprises
should be familiar of:
 1. Primary Target Market – the main focus
2. Secondary Target Market – is not as large as the primary target market
but shows some growth potential in time

Factors that Determine Attractiveness of Target Market

These include the following factors:
1. Attractiveness of the Segment – includes various conditions or
characteristics that reflect the attractiveness of a segment such as in
terms of size, measurability, profitability, potential for growth, scale of
economy, accessibility, differentiability, etc.
2. Objectives and Resources of the Company/Business – includes the
resource capacity in terms of material technological and human resources

Market Targeting Strategies

1. Single Segment Concentration – the company selects only a single
segment as target market and offers a single product
It has several advantages:
 Can gain strong knowledge of the segment’s needs
 Can specialize its production, distribution and promotion
 Can earn higher return of investment
While there are also some disadvantages:
 Another competitor may disrupt the segment
 Has to pay high costs for change in habit, attitude, and fashion

2. Selective Specialization – the company/business selects a number of

different segments and a business can still earn money from other
segments regardless if other segments seemed to be unattractive
3. Product Specialization – a company makes a specific product and which
can be sold to several segments or in simpler terms, only one product but
has many segments.
 It can help build a strong reputation in the specific product area
 4. Market Specialization – consisted of serving many needs of a particular
segment and wherein the products are many while the segment is only
one.
5. Full Market Coverage - a company/business attempts to serve all the
customer groups/target markets with all the products that they needs

Positioning for Competitive Advantage

Definition
 Refers to the ability to influence consumer perception regarding a certain
brand or product relative to its competitors
 Refers to a consumer’s perception of a particular brand or product in
relation to competing brands and products in the market
 It also refers to the process involved in establishing the image or identity
of a brand or company

CASE STUDY – AMAZON – POSITIONING FOR COMPETITIVE

ADVANTAGE
Amazon mainly uses the following three types of market positioning:
 Multi-Segment Positioning – wherein Amazon offers a wide range of
products and services and utilizing more than one segment at the same
time. With 120 million products sold online, there is a high chance that
this will appeal to the needs and wants of a wide range of customer
segments

 Adaptive Positioning – closely monitoring changes in external

marketplace and addresses increasing customer expectations by
periodically repositioning products and services in accordance to
changes in the segments

 Anticipatory Positioning – positioning a market segment that has a

low turnover with the anticipation that the turnover will increase in the
future

Importance/Objectives/Benefits
  To establish the image or identity or a certain brand or product so that
consumers can be able to perceive it in a certain positive way
 This can be considered to be a strategic process that involves marketing a
product or brand to establish an image or identity
 This should be maintained as long as possible and requires the
application and assistance of continuous marketing initiatives

Types of Positioning Strategies

There are different types of positioning strategies that businesses and
companies should consider:
1. Product Price – associating the brand or product with the competitive
pricing
2. Product Attributes and Benefits - associating the brand or product with
certain characteristics or beneficial value
3. Product Quality - associating the brand or product with perception or
standard or high quality
4. Product Competitors – making the brand/product to appear better than
competitors
5. Product Use and Application - associating the brand or product with a
specific use or purpose

Ways to Create an Effective Market Positioning Strategy

Through developing/creating a market positioning strategy, this can be
helpful for a business/company to identify their business and how they want the
brand/product to be perceived by their target consumers. These include the
following steps/strategies:
1. Determining uniqueness by comparing to other competitors –
comparing and contrasting differences between the company against
competitors to see opportunities
 2. Identifying current market position – involves identifying the existing
market position and how the new positioning can be beneficial against
other competitors
3. Conducting a competitor positioning analysis – this can be helpful in
identifying the various condition of the current marketplace and the
amount of influence that each competitor has against the other
References:

Jaideep, S. (2019). Marketing targeting: introduction, definition, procedure and

methods. Your Article Library. Retrieved from
https://www.yourarticlelibrary.com/economics/market/market-targeting-
introduction-definition-procedure-and-methods/48609

Kenton, Will. (2020). Target market. Investopedia. Retrieved from

https://www.investopedia.com/terms/t/target-market.asp

Tarver, Evan. (2020). Market segmentation. Investopedia. Retrieved from

https://www.investopedia.com/terms/m/marketsegmentation.asp

https://blog.alexa.com/types-of-market-segmentation/

https://corporatefinanceinstitute.com/resources/knowledge/strategy/market-
positioning/

https://strategiccfo.com/market-positioning/

https://research-methodology.net/amazon-segmentation-targeting-positioning-
widest-range-target-customer-segment-2/