2 key marketing concepts

The two key marketing concepts: Segmentation and Product Differentiation At the root of strategic marketing are two concepts, segmentation and differentiation, also referred to as targeting and positioning.

These two dynamic concepts underlie both marketing theory and practice. Segmentation Market segmentation is rooted in the following assumptions:

• You cannot be everything to everybody. • focused effort leads to superior results.

• A smaller firm should concentrate on market(s) where the opponents are weak. • in a market with heterogeneous demand, one can earn higher than average profits by concentrating on a distinct group (target) with a similar demand.

• Segmentation avoids head to head competition.

• Segmentation leads to market opportunities.

Customer demand ranges from homogeneous demand to heterogeneous demand with a lot of positions in between. Steven Schnaars’ places segmentation on a continuum of diffused preference to clustered preference to homogeneous preference.