After researching the company's environment, the entrepreneur will have to name the target market for the company. The entrepreneur will also have to think carefully about how he wants to market his product or service. This process of segmenting and positioning is the next step in drawing up the business plan.
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F.1 Segmenting the market
Customers can be divided into so-called market segments based on relevant criteria . Segmentation is the clustering of customers into comparable, homogeneous groups. The segmentation process consists of three parts:
Conducting customer research to gain insight into the motives, attitudes and behavior of customers. Attention is paid to; (a) buying motives ; (b) customer attitudes towards the product and the sale of the product; and the (c) behavior related to how - and where - the customers use the product.
Analyzing and interpreting the research data, where the naming of homogeneous customer groups is central. These homogeneous groups are also called segments . Segments can be named based on four distinctions: (a) geographic segmentation where the market is divided into regions; (b) demographic and socio-economic segmentation where the market is divided based on factors such as age, origin and education; (c) psychographic segmentation dividing the market based on lifestyle factors; and (d) behavioral segmentation that divides the market into behavioral characteristics.
Describing the segments. Description of the segments helps the entrepreneur to name the target market for his company.
F.2 The target market definition
When determining the target market , the entrepreneur determines which segments are most attractive to the company and on which segment the company will focus. For choice, the attractiveness of the segments is determined. This is done on the basis of:
the necessity and possibility of product differentiation . It is important for a product that it has a distinctive character for the intended customer. Is it possible and necessary for the product to differentiate itself for the targeted segment?
competitive intensity and strategy. This involves looking at the competitive strength that exists for the product or within the segment.
the relationship between the product and the needs of the customers in a segment . Attention is paid to the connection of the product to the wishes of the segment. the size and growth of the segment .
How many segments can be targeted as target markets depends on the resources the company has available. This also depends on how easily the product can be adapted to the desires and wishes of the buyers. Then the entrepreneur chooses an approach strategy to reach his target market. He can choose between three strategies:
undifferentiated approach where all segments are approached in the same way.differentiated approach in which the different segments are each approached in their own way. concentrated approach in which the company concentrates on one segment or a combination of a number of small segments.
F.3 The positioning of the offer
After the target market has been determined, it is necessary to position the product or service in the market. Overall, this positioning can be done in five different ways.
Emphasizing specific product features.
Emphasizing the problem -solving or need-satisfying ability that the product can provide to the customer. Emphasizing the user situation in which the product is to be used. Comparing the product with product features of another brand. Placing the product in a product class.
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