Question

What is the difference between market segmentation and differentiation?

Answer 1

Hi Mel2m,

Both are marketing strategy terms. Market segmentation usually means grouping customers based on similar interests or needs, whereas differentiation is a strategy used by companies to distinguish themselves from their competition - often by intentionally designing differences to create a strategic advantage.

Let me think of some examples...segmentation might involve grouping people in a population based on income/economic status, education and other factors in order to target them for car ads. People in a higher income bracket may be more likely to buy BMWs, so that group would be targeted for those ads, whereas lower income drivers might be targeted with economy cars.

Differentiation might involve a restaurant changing their menu or adding specialty items to distinguish themselves from other food service providers in the area who all offer the same selections.

I hope this is helpful

Answer 2

Thanks! That makes sense. It seems like market segmentation is more of an external approach, focusing on customers. On the other hand, differentiation strategies focus more internally, on the product that the company is offering.

Answer 3

Yes, and that's a good observation. You must be a "big picture" thinker. :)