Marketing planning

Market segmentation is the process of dividing a large, varied market into smaller sub-groups (segments) of consumers who share similar characteristics, needs or buying behaviour, so that marketing can be tailored to each group.

A target market is the specific segment(s) of consumers a business chooses to aim its marketing at. Product positioning is how that product is perceived by those consumers relative to competing products. The distinction is that targeting selects WHO the firm serves, while positioning shapes HOW the product is perceived by them.

A unique selling point (USP) is a feature or benefit of a product that distinguishes it from competitors and gives customers a specific reason to choose it — for example a patented technology, a distinctive design or an exclusive guarantee.

Using demographic segmentation, the company could divide its market by age and income — for example targeting 25–40 year-olds with disposable income who can afford a paid subscription, and offering a free tier to younger, lower-income users. Using psychographic segmentation, it could divide by lifestyle and values — for example a 'serious athlete/high-performance' group wanting advanced training data, versus a 'general wellness' group wanting simple habit-tracking. Segmenting this way lets the company design distinct app features and marketing messages for each group, making its offer more relevant and its promotion less wasteful than a single generic app aimed at everyone.

A perceptual map for the snack market would use two axes — price (low to high) on one and perceived healthiness (low to high) on the other. Plotting the rivals, HealthBite sits in the high-price/high-healthiness position and SnackCo in the low-price/low-healthiness position, leaving a visible gap in the high-healthiness/mid-price space. The new organic brand could position itself in that gap — offering genuinely healthy snacks at a more accessible price than HealthBite. This differentiates it clearly: it beats SnackCo on healthiness (its USP as an organic product) while undercutting HealthBite on price, appealing to health-conscious but price-sensitive customers that neither rival fully serves. The position is only viable if the brand can credibly deliver organic quality at that price and enough customers want the combination; if not, it risks appearing neither premium nor cheap. Positioning against the named rivals in this way turns the map into a practical strategy rather than a description.

Geographic segmentation would let the chain adapt to the new country's regions — for instance concentrating stores and premium products in dense, higher-income urban areas where footfall and spending are highest, while offering a simpler, value range in smaller towns. This matches the offer to local demand and climate (e.g. more iced drinks in hot regions). Behavioural segmentation would divide customers by how they use the product: a loyalty scheme could target 'heavy daily users' (commuters buying every morning) with rewards to lock in repeat purchase, while promotions on new seasonal drinks could target 'occasional/experimental' users. Combining the two bases lets the chain place the right products in the right locations for the right usage patterns, so its marketing objectives — such as building a customer base and market share in the new country — are pursued efficiently rather than with a single, uniform offer that ignores local differences. The plan's success still depends on reliable market research to confirm these segments actually exist and are large enough.

A niche (concentrated) strategy would focus the firm's limited resources on one specific segment — for example vegan, ethically-minded consumers seeking handmade skincare. The advantages are strong: as a small firm it can build deep loyalty and a clear USP, charge premium prices, and avoid direct competition with mass cosmetics giants it could never out-spend. Concentration also keeps costs down because there is only one product line and one marketing message to fund.

A differentiated strategy — serving several segments with different products and mixes (e.g. separate ranges for teens, luxury buyers and men's grooming) — would widen the market and reduce dependence on a single group. However, for a small artisan firm this is risky: it multiplies product-development and marketing costs, stretches scarce resources thin, and dilutes the specialist, authentic image that gives an artisan brand its appeal. Trying to be many things at once often weakens the brand.

The right choice depends on the firm's resources, capacity and objectives. Because the firm is small and its competitive advantage lies in a distinctive, credible specialism, I recommend it starts with a NICHE strategy — dominating one well-chosen segment where it can build loyalty and premium margins. Differentiation should come later, and only incrementally (adding one adjacent niche at a time) once the firm has the resources and brand strength to support it. A full differentiated strategy now would over-extend the firm and undermine the very authenticity that makes it competitive. The judgement would change only if the firm had substantial funding and production capacity, in which case a limited differentiated approach could accelerate growth.

The situation is serious: the market is growing yet the airline's share is falling, meaning rivals are capturing new customers faster than it is — a marketing-plan failure. On a perceptual map of price against service quality, the premium full-service rival occupies the high-price/high-service position and the low-cost rival the low-price/low-service position, squeezing the airline in the middle where it is 'stuck' — neither the cheapest nor the best.

One option is to reposition down, competing head-on with the low-cost rival on price. This could win price-sensitive flyers, but it risks a price war the airline may not have the cost base to win, driving down already thin margins. A second option is to reposition up toward the premium rival, but building a credible full-service reputation is slow and costly and invites direct comparison with an entrenched brand.

A stronger option is to differentiate into a defensible gap — for example a 'value-plus' position offering low fares with a few clearly-valued extras (guaranteed legroom, reliable punctuality, simple loyalty rewards) that the pure low-cost rival lacks and the premium rival overcharges for. This gives a distinct USP and targets customers who find the low-cost rival too bare-bones but the premium airline too expensive.

On balance I recommend the differentiated 'value-plus' repositioning rather than a head-on price or premium fight, because it exploits an unserved gap between the two named rivals and plays to a budget airline's cost advantage while adding valued differentiation. Success is conditional: the airline must research that enough flyers want this trade-off, deliver the promised extras reliably, and communicate the new position clearly. If it cannot fund the service improvements, a disciplined low-cost repositioning would be the fallback. Either way, staying stuck in the middle is not an option, which is why its share is falling.

A perceptual map is a simple, visual tool that plots how consumers perceive competing brands on two chosen attributes, such as price and quality. Its usefulness is real. It makes the competitive landscape easy to see at a glance, revealing clusters of intense competition and gaps that may represent market opportunities. It forces managers to think from the customer's viewpoint (perception, not just the firm's own claims), helps clarify a brand's positioning and USP, and supports decisions about where to reposition relative to named rivals. For setting and communicating a positioning strategy, it is a genuinely helpful planning aid.

However, the tool has clear limitations. It captures only TWO attributes at once, whereas buying decisions depend on many factors, so an apparent gap on one map may be crowded on another. It is based on perception, which is subjective and must come from reliable market research — a poorly researched map is misleading. Crucially, a gap does not prove an opportunity: the space may be empty because customers do not want that combination (e.g. 'high quality at a low price' may be seen as not credible) or because it is unprofitable to serve. The map is also a static snapshot: competitors reposition, so it dates quickly.

On balance, a perceptual map is a useful STARTING point for positioning decisions rather than a complete answer. It is most valuable when built on sound market research, combined with other tools (such as market analysis and demand data), interpreted with judgement about whether a gap is genuinely viable, and updated regularly. Used in isolation or with unlabelled, arbitrary axes it can mislead. Its usefulness therefore depends heavily on HOW it is constructed and interpreted, not on the tool itself.