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What is market segmentation and positioning?

Market segmentation is a process to divide the entire market for certain product into key customer subsets, or segment, whose members share similar needs and desires, purchase behavior and habits.

Market positioning means based on market segmentation, the enterprise creates its own product and image for the target market, and set up a unique and valuable impression in its target consumer group. In another word, through market positioning, the enterprise can set up a unique impression of its product in consumer’s mind which will overshadow that of its competitor.


What kind of business problems can be solved by market segmentation and positioning?

Through market segmentation and positioning, an enterprise can make an analysis and comparison of the purchase potential, satisfaction degree, competition situation and the characteristics of the consumers in each segment market, so as to explore the market opportunities which is beneficial to the enterprise, find out its’ own target customers which is its target market, for relatively small target markets, manufacture the products which will meet the needs of the market, make specific market strategies and new product expansion planning in time according to the production techniques and conditions of the enterprise, have the initiative in its hand of the updating of the product, expand new market to better meet the needs of the market. Besides, market segmentation is also helpful to dig out new segment markets and search potential market opportunities.

Case: McDonald’s takes an aim at the needs of its segment market
Look back of the development history of McDonald’s Corporation, we found that McDonald has always pay great attention to market segmentation. It made market segmentation accurately according to the geography, population and the psychological elements and carried out corresponding strategies so as to reach the marketing aim of the corporation. It is this that made McDonald’s had such great success which surprised the world. 

1. McDonald’s made market segmentation by the element of geography
McDonald’s has both domestic and oversea markets. Whether in domestic market or oversea market, there is specific eating habit and cultural background. McDonald makes market segmentation by geography. It mainly analyzes the difference among various regions. At the beginning when McDonald’s entered into China’s market, it popularized American culture and philosophy of life and use American-styled beef hamburger to conquer Chinese people. However, as Chinese people like chicken, chicken products cater to Chinese people’s taste more, thus much easier to be accepted by Chinese people. Give such a situation, McDonald’s changed its previous strategy and launched its chicken product. Then McDonald’s who only sells beef hamburger began to sell chicken hamburger. This change was made due to the geographical difference and it also helped McDonald’s accelerate its development pace in China market.

2. McDonald’s made market segmentation by the element of population
In the area of population, McDonald’s made market segmentation mainly according to age and life stage. McDonald’s takes children as its center-its main consumers, paying great attention to developing their loyalty. The children who eat in the restaurants often get a balloon with McDonald’s mark on it and some small gifts like paper folding. In China, there is also Uncle McDonald’s Club, where children aged 3 to 12 can attend. The club holds activities regularly to win the favor of the children to McDonald’s. This is successful market segmentation which grasps the characteristics and positioning of the segment market.

3. McDonald’s made market segmentation by the element of psychology
Fast food industry basically has two potential segment markets according to people’s way of living: Convenient-oriented and relaxing-oriented. Convenient-oriented people buy McDonald’s products for the convenience of purchase and eating. Relaxing-oriented people buy McDonald’s products in order to relax and kill time. For the convenient-oriented market, McDonald’s put forward ’59 seconds rapid service’, namely the standard time from ordering the food by the customers to leaving the counter with food is 59 seconds. It can’t be over 1 minute. For the relaxing-oriented market, McDonald’s pays great attention to the decoration of the restaurants, make customers feel comfortable and relaxing as much as it can and make its great efforts to let the customers regard McDonald’s as a good place for relaxation with unique culture.