Targeting and Positioning Strategies

In today’s highly competitive retail environment, simply offering products is not enough to succeed. Retailers must clearly identify which customers to serve and how to present their offerings in the minds of those customers. This is achieved through targeting and positioning strategies, which follow the process of market segmentation. Targeting and positioning help retailers use their resources efficiently, differentiate themselves from competitors, and create a strong and favorable image in the consumer’s mind.

Meaning of Targeting

Targeting refers to the process of evaluating different market segments and selecting one or more segments to serve. After segmenting the market, retailers assess the attractiveness of each segment based on factors such as size, growth potential, profitability, competition, and compatibility with the retailer’s objectives and resources.

In retailing, targeting determines who the retail store is meant for—for example, budget shoppers, premium customers, families, youth, or niche consumers.

Importance of Targeting in Retail

Targeting is important because:

• It helps retailers focus on the most profitable customer groups

• It avoids wastage of marketing resources

• It enables better product assortment and pricing decisions

• It improves customer satisfaction and loyalty

• It supports effective positioning in the market

Without proper targeting, retailers may fail to meet customer expectations and lose competitive advantage.

Targeting Strategies in Retail

Retailers generally adopt one of the following targeting strategies:

1. Undifferentiated Targeting Strategy (Mass Marketing)

Under this strategy, the retailer targets the entire market with a single retail offering. No major differentiation is made between different customer segments. The retailer offers standard products, pricing, and promotions to all consumers.

Retail Example:

Government ration shops or small general stores selling basic necessities to all customers.

Advantages:

• Low marketing and operational costs

• Simple strategy

• Wide market coverage

Limitations:

• Ignores differences in consumer needs

• Less effective in competitive markets

• Not suitable for modern organized retail

2. Differentiated Targeting Strategy

In this strategy, the retailer targets multiple market segments and designs separate retail mixes for each segment. Different products, prices, promotions, or store formats are used for different customer groups.

Retail Example:

A large retail chain offering:

• Budget products for price-sensitive customers

• Premium brands for high-income customers

Advantages:

• Better customer satisfaction

• Higher sales potential

• Reduced risk through multiple segments

Limitations:

• Higher costs

• Complex operations

• Requires strong management capabilities

3. Concentrated Targeting Strategy (Niche Marketing)

Under concentrated targeting, the retailer focuses on one specific market segment and specializes in serving it effectively. This strategy is common among specialty and boutique retailers.

Retail Example:

Organic food stores targeting health-conscious consumers or baby care stores focusing on infants and parents.

Advantages:

• Strong brand loyalty

• Less competition

• Clear market focus

Limitations:

• High dependence on one segment

• Risk if segment demand declines

4. Micromarketing (Individualized Targeting)

Micromarketing involves targeting very small segments or individual customers through personalized offerings. This strategy is enabled by technology, data analytics, and CRM systems.

Retail Example:

Online retailers recommending products based on customer browsing history and purchase behavior.

Advantages:

• High customer satisfaction

• Strong personalization

• Improved customer relationships

Limitations:

• High technological cost

• Data privacy concerns

Concept of Positioning in Retail

Positioning refers to the process of creating a distinct image of the retail store or brand in the minds of target consumers, relative to competitors. It answers the question:
“How do we want customers to perceive our store?”

In retailing, positioning is achieved through store image, pricing, product assortment, service quality, ambience, and communication.

Importance of Positioning in Retail

Positioning is important because:

• It differentiates the retailer from competitors

• It influences consumer choice and store preference

• It builds brand identity and recall

• It supports long-term customer loyalty

• It helps retailers survive in competitive markets

Positioning Strategies in Retail

Retailers use various positioning strategies to occupy a unique place in consumers’ minds:

1. Price-Based Positioning

Under price-based positioning, retailers position themselves as low-price, value-for-money, or premium price stores.

Examples:

• Discount retailers: D-Mart, Reliance Smart

• Premium retailers: Lifestyle, Shoppers Stop

Benefits:

• Attracts price-conscious or premium customers

• Easy to communicate

Challenges:

• Price wars

• Lower margins for discount retailers

2. Quality-Based Positioning

Here, the retailer emphasizes superior quality, durability, and reliability of products.

Examples:

Luxury boutiques and branded fashion outlets.

Benefits:

• Builds trust

• Supports premium pricing

Challenges:

• High sourcing and operational costs

3. Product Assortment Positioning

Retailers position themselves based on wide variety or specialized assortment.

Examples:

• Hypermarkets offering a wide range of products

• Specialty stores offering limited but deep assortment

Benefits:

• Appeals to specific shopping needs

Challenges:

• Inventory management complexity

4. Service-Based Positioning

Retailers focus on excellent customer service as a key differentiator.

Examples:

High-end retail stores offering personal shopping assistance and after-sales service.

Benefits:

• Enhances customer experience

• Encourages repeat visits

Challenges:

• Requires trained staff

• Higher service costs

5. Convenience-Based Positioning

Convenience-based positioning highlights ease of shopping, including location, store layout, operating hours, and online availability.

Examples:

Convenience stores and online retail platforms.

Benefits:

• Saves customer time

• Encourages impulse purchases

Challenges:

• Higher operating costs

6. Experience-Based Positioning

Retailers position themselves by offering a unique shopping experience through ambience, entertainment, and engagement.

Examples:

Mall-based lifestyle stores, theme-based retail outlets.

Benefits:

• Emotional connection with customers

• Strong brand recall

Challenges:

• High investment in store design

7. Lifestyle and Image Positioning

Retailers associate themselves with a particular lifestyle, personality, or social status.

Examples:

Premium fashion and luxury retail brands.

Benefits:

• Strong emotional appeal

• Brand loyalty

Challenges:

• Limited target market