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Market Segmentation Case Studies – A Detailed Guide

Rohit Rajpal

Senior Writer

In today’s competitive business landscape, effective marketing is essential for businesses to thrive and stay ahead. One powerful strategy that can elevate your marketing efforts and drive remarkable results is market segmentation. According to a study, segmentation makes firms 60% more likely to understand their customers’ concerns and challenges.

Understanding your target audience and tailoring your marketing approach to specific customer segments can significantly enhance your business’s success.

In this blog, we will explore the concept of business market segmentation, its importance, and the benefits it offers. We will delve into different types of market segmentation, including geographic, demographic, psychographic, and behavioral segmentation, highlighting how each can help you better understand and connect with your customers.

You need to start segmenting your demographic if you want to achieve better results and scale your business. You can start by identifying your target market, understanding your customer’s choices and preferences, and then building a solid marketing segmentation strategy.

What Is Market Segmentation?

Market segmentation is the process of dividing a larger target market into distinct groups or segments based on similar characteristics, needs, or behaviors. It allows businesses to better understand their customers and tailor their marketing strategies and offerings to meet the specific requirements of each segment.

By segmenting the market, businesses can identify different groups of customers with shared traits such as demographics (age, gender, income), geographic location, psychographics (attitudes, interests, lifestyle), or behavioral patterns (purchase history, usage habits).

This segmentation helps companies to effectively target their marketing efforts, create personalized messaging, develop relevant products or services, and allocate resources more efficiently. Market segmentation is mainly done by using an automated market segmentation software. 

So, now that you know the market segmentation definition, let’s now learn the importance of market segmentation.

Why Is Market Segmentation Important?

Market segmentation is of paramount importance in the field of marketing due to several key reasons. Firstly, it enables businesses to comprehensively understand their customers by dividing the target market into distinct segments.

Businesses can acquire valuable insights into their preferences, motivations, and purchasing patterns by identifying shared characteristics, needs, or behaviors among customers within each segment. This deep understanding forms the foundation for developing targeted marketing strategies that resonate with each segment, resulting in more effective and relevant communication.

Secondly, market segmentation facilitates precise targeting and positioning. Rather than adopting a generic approach, businesses can focus their marketing efforts on specific segments most likely to be interested in their products or services.

By tailoring messages and campaigns to the unique characteristics and desires of each segment, businesses can position themselves in a way that differentiates them from competitors and appeals to the specific needs of their target audience. This targeted approach improves the efficiency of marketing campaigns, as businesses can allocate their resources more effectively, resulting in higher conversion rates and increased customer acquisition .

Moreover, market segmentation enhances the overall effectiveness of marketing endeavors. By delivering personalized and relevant messages to each segment, businesses can establish stronger connections with their customers. 

Customized communication that addresses specific pain points, desires, or aspirations enhances engagement and response rates and ultimately drives higher sales. Customers are more likely to engage with messages that resonate with their needs, and market segmentation allows businesses to tailor their content precisely to meet those expectations.

Different Types of Market Segmentation to Understand

Market segmentation strategy that involves dividing a larger target market into distinct segments based on shared characteristics, needs, or behaviors. Businesses can employ several market segmentation types to effectively understand and reach their target audience.

The key market segmentation types include geographic, demographic, psychographic, and behavioral segmentation.

1. Geographic Segmentation

This method of segmenting the market creates divisions based on geographic elements such as location, climate, region, or population density. It acknowledges that consumer demands, interests, and behaviors might change depending on where they are in the world.

Companies can modify their marketing plans and product lines to target particular areas, cities, or neighborhoods. For instance, a clothing merchant might modify its product line to fit the local climate or cultural preferences.

2. Demographic Segmentation

Segmenting the market based on demographic characteristics like age, gender, income, occupation, level of education, or family size is known as demographic segmentation. Businesses can target particular client groups with specific demands and features thanks to segmentation. For instance, a toy company might market to young children with its goods, but a luxury automobile company might target wealthy people with higher earnings.

3. Psychographic Segmentation

Market segmentation based on psychological and lifestyle characteristics, including as attitudes, values, interests, personality traits, and behaviors, is known as psychographic segmentation. Businesses can better understand their target market’s motives, objectives, and preferences by using this kind of segmentation.

By determining psychographic profiles, companies can adjust their marketing messages and products to fit particular consumer lifestyles and preferences. For instance, a fitness brand may appeal to people who are health-conscious and who value living an active and healthy lifestyle and are health-conscious.

4. Behavioral Segmentation

Behavioral segmentation divides the market based on consumer behaviors, usage patterns, and decision-making processes. It considers factors such as purchasing habits, brand loyalty, usage frequency, benefits sought, and response to marketing stimuli.

Businesses can develop strategies to target and engage specific segments by understanding how consumers behave and make purchasing decisions. For instance, an airline might offer special loyalty programs and incentives to frequent travelers or develop targeted promotional campaigns for customers who have previously purchased their services. These processes can also be easily automated using a marketing automation software .

What Are the Key Benefits of Market Segmentation?

To connect with your target audience, it’s essential to segment them based on their preferences. Market segmentation offers several key benefits for businesses –

1. Targeted Marketing

Businesses can target particular client categories using niche marketing approaches thanks to market segmentation. Businesses can develop individualized messages and services that appeal to their target audience by understanding the particular traits, requirements, and preferences of each segment. The possibility of attracting the interest and attention of potential customers increases with this focused strategy, resulting in increased conversion rates and improved marketing efficiency.

2. Improved Customer Understanding

Market segmentation helps companies gain a better knowledge of their target audiences. Businesses can learn more about the demographics, behaviors, tastes, and motivations of their customers by examining various segments. By creating goods and services that specifically address customer demands, businesses can increase client happiness and loyalty. Businesses may build deeper relationships with customers and provide experiences that live up to their expectations by having a detailed understanding of their needs.

3. Enhanced Product Development

Market segmentation facilitates product development by identifying the unique needs and preferences of different customer segments. By understanding the specific requirements of each segment, businesses can create products or services that cater to those needs. This customization improves the product-market fit, increases customer satisfaction, and creates a competitive advantage in the marketplace.

4. Efficient Resource Allocation

Market segmentation enables businesses to allocate their resources more efficiently. Instead of deploying a one-size-fits-all marketing approach, businesses can focus their efforts and resources on segments offering the highest success potential. This targeted resource allocation reduces waste and maximizes marketing initiatives’ return on investment (ROI).

5. Competitive Advantage

Market segmentation helps businesses gain a competitive advantage by identifying and targeting niche markets or underserved customer segments. Businesses can differentiate themselves from competitors by focusing on specific segments and addressing their unique needs. This differentiation enhances brand positioning and increases the chances of capturing a loyal customer base.

6. Market Expansion Opportunities

Through market segmentation, businesses may discover new market opportunities or niche segments with specific unmet needs. By identifying these gaps, businesses can develop products, services, or marketing campaigns to address those needs. This can lead to market expansion, increased market share, and business growth.

7. Effective Communication

Market segmentation allows businesses to develop targeted communication strategies. By understanding the characteristics and preferences of each segment, businesses can tailor their messages, channels, and marketing tactics to effectively reach and engage their target audience. This improves the relevance and impact of marketing communications, leading to higher response rates and customer engagement .

Case Studies: Successful Examples of Market Segmentation 

To better understand how market segmentation can positively impact your business, we’ve compiled a list of 4 case studies that showcase market segmentation. You can check out how segmentation worked for these leading companies.

Case Study 1: Coca-Cola’s “Share a Coke” Campaign

Coca-Cola’s “Share a Coke” campaign is a successful example of market segmentation. In an effort to connect with consumers on a more personal level, Coca-Cola replaced its iconic logo with popular names on its bottles and cans. By doing so, they targeted the millennial generation, which values individuality and personalization.

The campaign involved extensive market research to identify the most common names within specific regions. This approach allowed Coca-Cola to create a strong emotional connection with consumers by making the product more personalized and shareable. The campaign was a tremendous success, leading to increased sales, social media buzz, and customer engagement.

Case Study 2: Nike’s Women’s Market Segmentation

Nike’s focus on the women’s market is another noteworthy example of successful market segmentation. Nike identified that women have distinct athletic needs and preferences, leading them to develop a dedicated product line catering to female athletes.

Nike introduced innovative designs, technologies, and marketing campaigns that resonated with women, emphasizing empowerment, inclusivity, and performance. By recognizing this segment’s unique characteristics and desires, Nike has become a dominant player in the women’s athletic market, securing a loyal customer base and driving substantial revenue growth.

Case Study 3: Apple’s iPhone Segmentation

Apple has effectively implemented market segmentation in its iPhone product line. Recognizing that different customer segments have varying preferences and budgets, Apple offers a range of iPhone models with different features and price points.

The iPhone SE caters to price-conscious customers who desire a more affordable option, while the iPhone Pro targets customers seeking high-end specifications and advanced camera capabilities.

By addressing the needs of various segments, Apple has successfully captured a significant share of the smartphone market, appealing to different customer preferences and maximizing their revenue potential.

Case Study 4: Amazon’s Prime Membership Segmentation

Amazon’s Prime membership is a prime example of market segmentation and customer loyalty. Amazon segmented its customer base by offering a subscription-based service that provides exclusive benefits such as free shipping, access to streaming services, and special discounts.

By targeting customers who frequently make online purchases, Amazon has created a loyal customer segment that values the convenience and additional perks offered by the Prime membership. This segmentation strategy has increased customer retention, higher average spending, and a strong competitive advantage in the e-commerce industry.

How to Determine Your Market Segment?

Determining your market segment involves a systematic approach that combines market research , analysis, and evaluation of customer data. Here are some steps to help you determine your market segment –

1. Determine your Target Audience

Establish your product or service’s broad target market before anything else. Take into account variables like demography, location, and psychographic traits. The basis for further segmentation will be this large target market.

2. Conduct Market Research

Using a variety of research techniques, gather information and insights about your target market. Surveys, interviews, focus groups, and analyses of previous customer data are some examples of this. Understanding the demands, interests, attitudes, and purchasing habits of your potential customers is the aim.

3. Demographic Segmentation

Create distinct groups within your target market based on characteristics like age, gender, income, occupation, level of education, and family size. Examine the information to find any notable variations or patterns within these segments.

4. Segment Based on Psychographics

Take into account traits like values, attitudes, hobbies, and way of life. Look for patterns and combine clients with comparable psychographic profiles. Understanding the motives and desires of various consumer categories is made easier by segmentation.

5. Segment Based on Behavior

Analyze customer behaviors and patterns such as frequency of purchases, brand loyalty, product usage, and reaction to marketing stimuli to create segments based on behavior. Determine groups based on these behavioral traits to comprehend how people use your product or service.

6. Evaluate Segment Attractiveness

Analyze the attractiveness of each segment by taking into account its size, growth rate, level of competition, profitability, and suitability for your company’s objectives and resources. Concentrate on market segments that support your company’s goals and have the best chance of succeeding.

7. Test and Refine

Once you have identified potential segments, test your marketing strategies, messages, and offerings with each segment. Monitor the response and gather feedback to refine your approach further. This iterative process allows you to optimize your marketing efforts and tailor them to each segment’s specific needs and preferences.

Remember that market segmentation is not a one-time activity. Markets evolve, and customer needs change over time. Regularly reassess your market segments, monitor market trends, and adapt your strategies to ensure ongoing relevance and success.

Challenges and Limitations of Market Segmentation

While market segmentation is a valuable strategy, it is not without its challenges and limitations. Here are some key challenges and limitations:

1. Data Availability and Accuracy

Market segmentation relies heavily on accurate and reliable data. High-quality data can be challenging, especially for smaller businesses with limited resources. Additionally, data sources may have limitations, and there can be inaccuracies or biases in the data collected. It is essential to ensure data validity and constantly update and validate the data to maintain its accuracy.

2. Overgeneralization

Market segments are based on identifying common characteristics among a group of consumers. However, it is important to remember that individuals within a segment can still have unique preferences and behaviors. Overgeneralizing and assuming that all customers within a segment are the same can lead to ineffective marketing strategies and missed opportunities.

3. Dynamic Market Conditions

Markets are constantly evolving, and consumer needs and preferences change over time. A market segment that was once successful may become less relevant or saturated as new trends emerge. Adapting to changing market conditions and continuously reassessing and updating market segments is crucial for maintaining relevance and effectiveness.

4. Increased Competition

As businesses become more adept at market segmentation, competition within specific segments intensifies. It can become challenging to differentiate products or services in a crowded market segment. Businesses need to develop unique value propositions and continually innovate to stand out from competitors and capture the attention of their target audience.

5. Cost and Resource Constraints

Implementing market segmentation strategies can require significant investments in terms of time, money, and resources. Small businesses with limited budgets may find it challenging to conduct comprehensive market research or develop customized marketing strategies for each segment. It is important to strike a balance between the resources available and the potential benefits of segmentation.

6. Segment Overlap and Cannibalization

In some cases, market segments may overlap, with customers falling into multiple segments. This overlap can create complexities in targeting and messaging, and businesses need to carefully manage their marketing efforts to avoid cannibalizing their own customer base or confusing their target audience.

7. Ethical Considerations

Market segmentation can involve the use of personal data and consumer profiling. Businesses must ensure that they comply with privacy regulations and ethical guidelines. Respecting consumer privacy and using data responsibly is essential to maintain trust and credibility.

The efficacy and performance of your company can be considerably increased by including market segmentation in your marketing plan. You may adapt your marketing efforts to resonate with each segment by splitting your target market into categories based on similar qualities, requirements, and behaviors. This will improve customer engagement, boost conversion rates , and improve customer happiness.

Thanks to market segmentation, you can target particular client groups with specialized messaging, goods, and experiences. This focused marketing segmentation strategy enables you to establish better connections with your audience, set your brand apart from rivals, and interact with them on a deeper level. You may then send engaging marketing messages that speak directly to the specific interests and demands of each segment.

Frequently Asked Questions

Yes, market segmentation can be applied to service-based industries just as effectively as it is used for product-based businesses. Segmentation helps service providers understand their target customers' needs, preferences, and behaviors, enabling them to tailor their offerings and marketing strategies accordingly.

Market segmentation objectives can vary depending on the specific business and industry. However, common objectives include targeted marketing to specific customer segments, gaining a deeper understanding of customers, increasing sales and revenue through personalized offerings, and gaining a competitive advantage by differentiating from competitors.

When implementing market segmentation, it is important to avoid common mistakes such as overlooking market research, relying solely on demographics without considering other factors, neglecting to evaluate segment size and potential, and failing to regularly reassess and update market segments as customer needs and preferences evolve. It is also crucial to respect ethical considerations and comply with privacy regulations when collecting and utilizing customer data for segmentation purposes.

Rohit Rajpal is an accomplished writer and data enthusiast passionate about unraveling the intricacies of information and data. With a deep understanding of the subject matter, Rohit strives to simplify complex concepts and make them accessible to readers. Rohit’s expertise in the field and his knack for clear and concise communication make his blog an invaluable resource for those seeking clarity in the data-driven world.

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The complete guide to segmentation, targeting and positioning (STP marketing)

• Business Services

13th June 2023

In business, attempting to cater to everyone often backfires, resulting in a brand that resonates with no one. While, on the surface, casting a wide net could look like a winning strategy to capture more customers - it'll likely do the opposite. By not outlining a clear target market, you run the risk of diluting your brand and stretching resources thin. 

Because of this, understanding your audience is vital. That's where segmentation, targeting, and positioning (STP) come into play. This model helps marketers pinpoint precisely who their audience is and how best to reach them in a way that will resonate. 

This guide will cover the STP marketing model in detail and explore how these elements work in tandem to enhance marketing results.

Table of Contents

What is segmentation, targeting and positioning (stp marketing).

• STP process in marketing

Benefits of STP marketing

Stp marketing example.

• Getting started with the STP marketing model

Segmentation, targeting and positioning , often referred to as STP marketing is a strategy that makes your marketing communications more defined, relevant, focused and personalized to more effectively appeal to your target market. 

In simple terms, STP marketing is a strategic approach that enhances the impact of your marketing efforts by honing in on specific consumer groups.

For more clarity on this, let’s break down each term:

• Segmentation : Dividing a market into distinct grouping based on shared affinities, characteristics and/ or needs. 
• Targeting : Once segmented, decide which of these groups align most closely with your product or service, focusing your efforts where they'll have the most effect.
• Positioning : This is the art of crafting and presenting your brand's message in a way that stands out from the crowd, ensuring your chosen segments perceive your product or service in the intended light.

STP process in marketing 

Why is the STP model a go-to in marketing? It's because it offers a structured approach to sift through a plethora of audience data, pinpointing exactly how your offerings connect with specific audience subsets. From there, you can craft a positioning strategy tailored to appeal to each chosen segment.

You might visualize the process as segmentation + targeting = positioning . By first segmenting your audience and then choosing the optimal segments to target, you set the stage for effective positioning.

Now, let's dive deeper into each component of the segmentation, targeting, and positioning model . 

Segmentation 

The first step to all successful marketing is knowing your target audience. While you might have a rough understanding of your audience and the general groups attracted to your business based on your products or services, going granular is essential. 

Nine times out of 10, marketing your products or services to a broad audience using a generic message will fail to capture the attention of potential customers. But what is the alternative? Audience segmentation. 

Segmenting your audience based on specific defining attributes or demographic data will reveal shared affinities, behaviors and characteristics, leading you to more focused and relevant target marketing. Once you have segmented your audience into smaller groups, it will become easier to identify who will benefit the most from your product or service and those most likely to convert. 

Typical audience segmentation criteria typically consist of the following categories: 

• Demographic segmentation : Details like age, gender, education, occupation, income and marital status. Find out how to go beyond traditional demographic data for more nuanced insights with our article on audience demographics analysis . 
• Geographic segmentation: Understanding based on location, encompassing regions, urban or rural settings, and climatic differences.
• Behavioral segmentation : Revealing shopping habits, brand loyalty, and channel preferences. Learn more with our guide on mastering behavioral segmentation in marketing .
• Psychographic segmentation : Factors like priorities, personality traits, interests and core beliefs.

For a more in-depth exploration of the segmentation types, check out our article “ What is market segmentation? A detailed look at segmenting your customer base ”. 

Segmentation example  

Let’s consider sportswear as an example. Suppose your product is a line of activewear and your general audience is people interested in fitness and maintaining an active lifestyle. But given the vastness of people, this is relevant for, you need to split your audience into smaller groups to understand how to position your product in a way that will resonate with different factions of your general audience. You can begin by segmenting your audience into two categories: 

• Segment A: People who maintain an active lifestyle and buy sportswear as a fashion statement, representing a young and trendy demographic.
• Segment B: Serious athletes and gym-goers who prioritize functionality and durability in their sportswear.

Positioning your product to these two segments is going to be different. For Segment A, highlighting the balance between trendiness and practicality might be the key. For Segment B, emphasizing functionality and material durability would be more relevant.

With tools like Pulsar TRAC , you can instantly segment your audience, gaining real-time, nuanced insights that help you make informed decisions based on their behavior, preferences, and interests. 

Once you have your segments, evaluate the potential to see which segments are worth pursuing. Take into account the following factors:

• Profitability : Can they afford your products? Have they shown a willingness to spend money?
• Growth rate : Is the segment size charting an upward trajectory? Can you ride the wave?
• Opportunity : How well are these consumers currently being served? Is there an untapped market or opportunity for innovation?
• Access : How easily can you reach these people? Will acquisition costs be too high?

Choose which segments you want to focus on – i.e. your target market – based on the evaluation conducted in the previous step. It’s vital at this stage to also consider the company’s resources, capabilities and overall aims.

Targeting example

Let’s return to our sportswear example to paint a clearer picture. To decide whether to target Segment A or Segment B, consider the following: 

• Market size : Is one segment significantly larger than the other?
• Profit potential : Which segment is willing to pay more or buys sportswear more frequently?
• Brand alignment : Does one segment align more with your brand's values and messaging?

If you find that Segment A offers a larger market size and makes frequent purchases, while Segment B is smaller but willing to pay more for quality - this will undoubtedly impact who you choose to target depending on your brand’s goals. 

Once you choose who to target, now is the time to delve further into the details. You’ll already have a basic segment profile, but take this further by honing in on your target market, fleshing out their likes, dislikes and pain points with data and industry research. Ensure you understand their needs and what engages them so you can nail the next stage.

Positioning 

Now is the time to uncover what makes you different from your competitors. It’s highly likely that other businesses will offer products or services similar to your own. So, if you don’t know already, it’s vital that you figure out what sets yours apart. This could be a lower price point, superior customer service or even brand affinity, amongst other things.

Combine your previous research and acquired knowledge of your target market into a marketing strategy. Now that you have a nuanced understanding of your segment’s needs and wants, you can construct highly targeted marketing messaging, build a tailored marketing mix, and expand your reach with lookalike audiences.

The reasons to buy your product come down to its features, advantages and benefits. Setting these out is known as a FAB analysis , and it’s extremely useful when deciding your brand positioning. Let’s get into it. 

Positioning example 

If we return to our sportswear example, your unique selling point (USP) could mean having sustainable materials, offering vast sizes, or leveraging athlete endorsements. 

The FAB analysis for a pair of gym leggings could look like this:

• Feature : Moisture-wicking fabric.
• Advantage : Keeps the wearer dry during intense workouts.
• Benefit : Enhances comfort and prevents skin issues, allowing athletes to train longer and harder.

Your chosen segment can also determine the features, advantages, and benefits you choose to highlight. For instance, Segment A (the trend-conscious segment) might prioritize aesthetics and brand collaborations, while Segment B (dedicated athletes) would appreciate technical features like breathability or ergonomic design.

In short, how you position your product directly depends on the specific audience segment you choose to target. 

Aided with a more refined target audience, clear communication strategies, and an understanding of how your audience segments would best receive your product or service through marketing - you’re guaranteeing better overall business outcomes. But let's get into the specific benefits. 

• Enhanced customer focus : By segmenting the market, you  gain a deeper understanding of customer preferences, needs, and buying habits. This understanding leads to more personalized and effective marketing strategies.
• Resource optimization : Targeting allows companies to focus their resources on specific segments that offer the highest potential for growth, profitability, or strategic importance. This leads to more efficient use of marketing budgets and resources.
• Competitive advantage : By positioning products or services uniquely in the minds of consumers, companies can differentiate themselves from competitors. This differentiation can lead to a sustainable competitive advantage in the marketplace.
• Increased marketing ROI : Tailored marketing campaigns, based on segmentation and precise targeting, often result in better response rates and higher returns on marketing investment.
• Clearer communication : With positioning, a company's message is tailored to resonate with a specific audience, leading to clearer and more effective brand communication.
• Identification of market opportunities : Segmentation can reveal untapped  market segments, presenting new opportunities for growth. 

By leveraging advanced audience intelligence tools such as Pulsar TRAC and Pulsar CORE , the execution of a segmentation-targeting-positioning (STP) strategy is streamlined. Observe how Thinx, a feminine hygiene brand, adeptly utilized Pulsar in 2020 to implement its STP marketing approach effectively.

STP marketing case study: How Thinx mastered positioning in a volatile landscape

Segmentation : The broader category that Thinx operates in is menstruation products, which includes items like tampons, sanitary napkins, menstrual cups, and more recently, period-proof underwear. Within this, Thinx specifically addresses the niche of consumers looking for sustainable, comfortable, and innovative solutions.

Targeting : With the onset of the pandemic in 2020, Thinx recognized the changing dynamics in the online shopping behavior. They noted that customers had become more anxious about e-commerce deliveries, with concerns ranging from delivery delays and out-of-stock items to package theft. By actively monitoring these concerns using Pulsar TRAC , Thinx targeted their communication to address and alleviate these specific anxieties of their consumer base.

Positioning : Recognizing the unique challenges of the time - such as heightened customer anxiety and rapid changes in the news cycle - Thinx positioned themselves as a brand that is not only responsive but also proactive. They kept a close eye on broader conversations and reacted promptly to emerging issues. For instance, when assessing their engagement relative to competitors on topics like CEO communications, they used Pulsar data to understand the nuances of engagement metrics. This enabled Thinx to position their messaging more effectively, making sure it resonated with their audience's current sentiment.

Getting started with the STP marketing model 

Pulsar is at the forefront of STP development. We provide audience segmentation tools that integrate data from multiple sources to create a detailed picture of the target market. Armed with distinct customer segments, precise buyer personas and in-depth audience insights , businesses  are empowered to craft compelling marketing messages effortlessly.

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Market Segmentation, Targeting and Positioning Case Study

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

STP framework consists of three components: segmentation, targeting, and positioning. Each of these elements plays a significant role in building organizations’ strategic value. Market segmentation is defined as a process of apportionment of a mass market into specific and recognizable segments, each of them having common features and demonstrating identical reactions to marketing actions (Baines & Fill 2014). With the help of this process, companies can choose particular target segments and establish marketing plans focused on satisfying the specific requirements of potential consumers. Determining the segments is regarded as an opportunity (Baines & Fill 2014).

Two major groups of variables are employed in segmentation: descriptive considerations (demographic, geographic, and psycho-graphic) and behavioral characteristics (customers’ responses to brands and benefits) (Kotler & Keller 2012). Descriptive features enable researchers to analyze customers’ responses to products. Behavioral considerations help to identify whether various features are related to each particular consumer-reaction segment (Kotler & Keller 2012).

Market segmentation is based on a principle that every consumer has different needs and purchasing behavior. With the help of this component of STP framework, companies can identify what segments should be targeted. Market targeting is defined as a set of consumers with similar characteristic features that an organization wants to serve (Zimmerman & Blythe 2013). Segments can be targeted in two ways: by evaluating the appeal of each sector and by scrutinizing the ability of a company to serve particular segments (Dibb & Simkin 2013).

Targeting may be undifferentiated, differentiated, and concentrated. When a company uses undifferentiated targeting, it concentrates on similarities present in all segments but at the same time makes an effort to satisfy the whole market with a single marketing mix. This type of targeting most frequently occurs in the initial phases of a product lifecycle when consumers are bound to accept the product because they have no alternative (Zimmerman & Blythe 2013).

Undifferentiated marketing ends when competition appears. Differentiated marketing is employed when a company creates particular marketing mixes to serve every segment. The cost of this type of targeting is higher than that of undifferentiated marketing. The third kind of targeting – concentrated – is suitable for companies with limited resources (Zimmerman & Blythe 2013). When using this type of targeting, an organization can afford to focus on as little as one or several segments with the aim of building dominance in that sector.

The third component of STP framework is positioning. Positioning takes place when the processes of segmentation and targeting have been completed. Market positioning is defined as establishing a set of features and advantages that will help to single out the brand in consumers’ perception (Andaleeb 2017). The main members of any company’s audience are consumers and employees (Bruggerman et al. 2012). Therefore, positioning helps to suggest the products in a way that is most attractive for the audience.

Segmentation is the element of STP framework that bears the highest strategic value for organizations since it serves as a basis for targeting and positioning. An example of a company that successfully utilizes demographic segmentation is Victoria’s Secret (Kotler & Keller 2012). The brand focuses on female consumers, and its primary aim was to satisfy the US women with the lingerie shopping experience similar to the European one. The evidence of the organization’s use of key concepts presented in this week’s learning resources is in constant growth of its annual sales and popularity all over the world.

Reference List

Andaleeb, SS 2017, ‘Market segmentation, targeting, and positioning’, in SS Andaleeb & K Hasan (eds), Strategic marketing management in Asia: case studies and lessons across industries , Emerald, Bingley, UK, pp. 179-208.

Baines, P & Fill, C 2014, Marketing , 3rd edn, Oxford University Press, Oxford, UK.

Bruggerman, J, Grunow, D, Leenders, MAAM, Vermeulen, I & Kuilman, JG 2012, ‘Market positioning: the shifting effects of niche overlap’ , Industrial and Corporate Change , vol. 21, no. 6, pp. 1451-1477.

Dibb, S & Simkin, L 2013, Market segmentation success: making it happen! Routledge, New York, NY.

Kotler, P & Keller, K 2012, Marketing management , 14th edn, Pearson, New York, NY.

Zimmerman, A & Blythe, J 2013, Business to business marketing management: a global perspective , 2nd edn, Routledge, New York, NY.

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IvyPanda. (2020, November 4). Market Segmentation, Targeting and Positioning. https://ivypanda.com/essays/market-segmentation-targeting-and-positioning/

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Segmentation, Targeting & Positioning (STP) in marketing: Explained with Examples

Segmentation, Targeting, and Positioning (STP) is a fundamental approach marketers use to analyze and plan the strategic positioning of their products or services. Let’s break down each of these concepts:

• Segmentation  is the process of dividing a broad market into distinct consumer groups with everyday needs, preferences, or characteristics. Segments can be defined in many ways, such as demographic (age, gender, income), geographic (location, climate), psychographic (lifestyle, values), and behavioral (usage rate, loyalty) factors.
• Targeting : Aftermarket segments are identified, marketers must decide which segments to focus on. This decision depends on factors such as the segment’s profitability, the company’s ability to serve the segment effectively, and how competitive the segment is.
• Positioning : Once the target segments are selected, the company must decide how to position its products or services in the market. Positioning involves developing a marketing mix that will appeal to the target market. It’s about creating a unique, clear, and desirable place for the product in the minds of target customers relative to competing products.

Let’s understand Segmentation, Targeting, and Positioning (STP) in Marketing in detail

Segmentation .

• Demographic Segmentation : This is perhaps the most common form of market segmentation, where the market is divided into groups based on variables such as age, gender, income, occupation, education, religion, race, and nationality. For example, a clothing brand might target different age groups with different styles and designs.
• Geographic Segmentation : This method divides customers into segments based on their physical location. It could be as broad as a country or region or as specific as a city or neighborhood. A company might market winter clothing in colder climates and summer clothing in warmer ones, for example.
• Psychographic Segmentation : This segmentation is based on lifestyle, personality traits, attitudes, values, and interests. For example, a travel company might market adventure packages to thrill-seekers and relaxation packages to those seeking tranquility.
• Behavioral Segmentation : This divides customers based on their knowledge of, use of, or response to a product. It could be based on customer loyalty, purchase frequency, readiness to buy, benefits sought, usage rate, etc. For instance, a software company may offer casual versus power users different packages.
• Technographic Segmentation : This relatively new form of segmentation, enabled by the rise of technology, categorizes customers based on their relationship with technology – their use, knowledge, and ownership of different technologies. For example, a tech company might target early adopters with its cutting-edge products.

The ultimate aim of segmentation is to identify high-yield segments – those segments that are likely to be the most profitable or have growth potential – so that these can be selected for special attention. Although several factors may be employed in the segmentation process, it’s important to ensure that the segments created are measurable, accessible, substantial, differentiable, and actionable. This is known as the criteria for effective segmentation.

Example of Segmentation

Let’s imagine that we have a company that produces fitness equipment – treadmills, stationary bikes, weights, and so on.

• Demographic Segmentation : The company might start by looking at demographic information. They could segment the market by age and income, for instance. Perhaps their products are particularly popular with people aged 25-45 with a higher-than-average income level. This makes sense because fitness equipment can be quite expensive and is often purchased by people concerned about their health, which tends to correlate with age and income.
• Geographic Segmentation : Next, the company could look at geographic data. They might discover that they sell more products in urban areas than in rural ones. This could be because people in urban areas have more disposable income and less access to outdoor activities.
• Psychographic Segmentation : The company could then segment by lifestyle and attitudes. They might find that their products are popular with people who value a healthy lifestyle and enjoy the convenience of working out at home. They may also find that their customers are motivated by goals like weight loss, muscle gain, or maintaining an active lifestyle.
• Behavioral Segmentation : The company could segment the market based on behavioral factors. They might find that their most loyal customers are those who initially bought a large piece of equipment, like a treadmill, and then returned to buy smaller items, like weights or yoga mats. They could also look at usage rates and find that customers using their equipment daily are likelier to recommend their products to others.

By conducting this segmentation, the fitness equipment company now has a much clearer picture of their ideal customer: a high-income, 25-45 year old, urban-living individual who values a healthy lifestyle, uses the equipment daily, and is motivated by fitness goals. They can now tailor their marketing messages to appeal to this segment, making their marketing efforts more effective and efficient.

Targeting 

Targeting is the second step in the STP (Segmentation, Targeting, and Positioning) process. After the market has been segmented into distinct groups, the next step is to select which segments to target with your product or service. The process involves evaluating the attractiveness of each segment and deciding which ones to focus your marketing efforts on.

There are several targeting strategies that a business can adopt:

• Undifferentiated (Mass) Marketing : In this strategy, the company ignores segment differences and targets the whole market with one offer. This approach focuses on what is common in the needs of consumers rather than on what is different.
• Differentiated (Segmented) Marketing : The company targets several market segments and designs separate offers for each. For example, a car company might produce different models for different income levels.
• Concentrated (Niche) Marketing : Here, the company targets a large share of one or a few smaller segments or niches. Businesses with limited resources often choose this strategy as it allows them to focus their efforts and specialize.
• Micro-marketing (Local or Individual Marketing) : In this strategy, the company tailors products and marketing programs to suit the tastes of specific individuals and locations. This includes local marketing (tailoring to specific cities or neighborhoods) and individual marketing (tailoring to individual people).

The choice of which strategy to adopt depends on company resources, product variability, product life cycle stage, market variability, and competitors’ marketing strategies.

The targeting step aims to identify the segments most likely to respond to the company’s offerings and where the company’s resources can be most effectively used. It’s about finding the best match between your products or services and the customers most likely to need or want them.

Explain of Targeting

Let’s continue with the example of the fitness equipment company we used while explaining segmentation.

After the company has segmented the market, it has several distinct groups to consider. Let’s assume they identified these four main segments:

• Young adults (18-24) who are students or just starting their careers. They have lower incomes and limited space for large fitness equipment.
• Adults (25-45) with higher incomes who value a healthy lifestyle and enjoy the convenience of working out at home.
• Older adults (46-64) are interested in fitness to maintain health and mobility but may have specific needs or limitations.
• Gyms and fitness centers that require commercial-grade equipment.

Now the company needs to decide which of these segments to target. They consider the attractiveness of each segment based on several factors, including size, profitability, accessibility, and the company’s ability to serve the segment effectively.

• The young adult group is large, but they have limited income and space, which might not make them the best target for high-end fitness equipment.
• The adults with higher incomes who value a healthy lifestyle make an attractive segment because they have the financial resources and motivation to buy fitness equipment.
• Older adults also could be a viable segment. However, catering to them might require developing or modifying products to meet their specific needs, which could be costly.
• Gyms and fitness centers represent a lucrative segment, but they often have specific needs and high standards for durability. Competing in this space might require a considerable investment.

After evaluating these options, the company might target the second segment (adults 25-45 with higher incomes who value a healthy lifestyle) because it has the financial resources, motivation, and space for its products. They might also target the fourth segment (gyms and fitness centers), but they recognize that they must invest in developing more durable, commercial-grade equipment.

By choosing specific segments to target, the company can focus its marketing efforts on the consumers who are most likely to purchase their products, leading to higher sales and better returns on their marketing investment.

Positioning

Positioning is the final step in the STP (Segmentation, Targeting, and Positioning) process. It involves creating a unique, consistent, and recognized customer perception of a brand or a product in the target market. It’s about crafting the brand’s image so the target customers can distinguish it from the competitors’ offerings.

The main goal of positioning is to create a unique impression in the customer’s mind so that the customer associates something desirable and different with your brand that they do not associate with other brands.

There are several ways a brand or product can be positioned:

• By Product Attributes : A product can be positioned based on its attributes or qualities. For example, a car might be the most fuel-efficient car in the market.
• By Benefits : The product can also be positioned based on the benefits it offers to customers. For instance, a shampoo might be positioned as the one that makes your hair the shiniest.
• By Use or Application : A product can be positioned based on its use. For instance, a coffee brand might be the perfect start to your day.
• By User : Positioning is done by associating a product with a user or class of users. For instance, a clothing brand might position itself as the brand for the adventurous and outdoorsy.
• By Competitor : Positioning can also be done relative to the competition. A brand might position itself as superior to competitors on certain key aspects. For example, a smartphone might be positioned as having a better camera than its competitors.
• By Price or Quality : Lastly, products can be positioned based on price or quality. A brand might position itself as an affordable or luxury, high-quality option.

To establish effective positioning, a company often uses a positioning statement or a unique selling proposition (USP) to communicate the unique benefits or characteristics of the product, service, or brand to the targeted segment. It’s vital that this positioning is consistent across all marketing efforts and touchpoints to create a coherent and recognizable brand image.

Explain of Positioning

Let’s continue with our hypothetical fitness equipment company as an example for positioning.

Let’s say the company has decided to target two segments: adults aged 25-45 with higher incomes who value a healthy lifestyle and gyms/fitness centers that need durable, commercial-grade equipment.

Now, the company needs to position its products to appeal to these segments and differentiate them from competitors.

• For the individual consumer market (adults aged 25-45) : The company might position its fitness equipment as a “home luxury fitness” brand. Their marketing messages could focus on their products’ high quality, durability, and advanced features. They could emphasize how their equipment supports a healthy lifestyle without having to leave home and how investing in their products is an investment in long-term health and well-being. They might also highlight their sleek design that fits well in a modern, upscale home.
• For the commercial market (gyms and fitness centers) : The company could position its products as “commercial-grade fitness equipment that withstands the test of time.” Their messaging could emphasize their products’ durability, reliability, and cost-effectiveness over time. They could also highlight features that might be important to this segment, such as easy maintenance, warranty, and excellent customer service.

In both cases, the company must ensure that its positioning is reflected in every aspect of its marketing mix (product, price, place, and promotion) and is consistent across all marketing channels. This helps to build a strong, recognizable brand image that resonates with their target customers and sets them apart from their competitors.

Remember, the goal of positioning is not just to differentiate the product but to make it stand out as superior in certain meaningful ways in the minds of the target consumers.

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STP Marketing Strategy: Comprehensive Guide

Hyper-personalise marketing communications and boost audience engagement with the segmentation, targeting, and positioning (STP) model. Know all about in this STP guide.

Salesforce India

Share article, introduction to stp (segmentation, targeting, positioning).

There’s a common saying in the business world, “If you try to be everything to everyone, you’ll end up becoming nothing to anyone.” Far too often, businesses fall into the trap of positioning their product(s) as something that ‘everyone’ benefits from. Their rationale is this: if they cast their net wide enough, they’re bound to catch enough customers soon. This approach is flawed in two ways-

• The company’s resources – budget and employees – get spread too thinly in chasing far-flung customer segments.
• It leads to brand dilution, where the company’s ‘real’ target customers stop seeing value in the brand.

Think about it: you build a product or many products to solve a specific problem. Not all 7.9 billion people in the world would have that problem. Even if your product is something as essential as a toothbrush, it has to stand out from the existing toothbrushes in the market in some way to bring in sales.

Say, from the media and your conversations with friends you notice that an increasingly large number of people are moving towards sustainable living. You strike up this idea of creating toothbrushes out of bamboo shoots.

At the very outset, you plan to target all the toothbrush users by positioning your product as an environmental-friendly alternative to plastic brushes. This strategy is going to create a negligible impact, almost like a drop in the ocean.

This is because 85% of your audience doesn’t care for sustainable living. While you could still go after them by creating awareness, you need to first educate them on the adverse effects of using plastic on the environment. Tell them how your product addresses the issue, and finally, how it benefits the customer individually.

This is a long-drawn process that can strain your time and budget while giving minimal returns. You’d fare better targeting the other 15% – people who are already looking for sustainable alternatives. They’re already aware of ‘why’ they need your product, so you can go ahead and directly pitch it to them.

By skipping the motions, you save on resources and use them where they are needed the most. Also, since your target’s needs are aligned with your product offering, the customer acquisition cost is low.

The above scenario is an apt use case for the segmentation, targeting, and positioning model of marketing. Now that we have some context, let’s dive deeper into what the segmentation, targeting, and positioning (STP) model is.

What Is STP marketing?

Segmentation, targeting, and positioning (STP) is a marketing model that redefines whom you market your products to, and how. It makes your marketing communications more focused, relevant, and personalised for your customers.

In short, STP is a marketing approach where you segment your audience, target the best-fit audience segments for your product, and position your product to capture your target segment effectively.

The STEP Formula

The easiest way to remember the STP model is through the STEP formula, which is

Segmentation + Targeting = Positioning

A closer look at this formula tells us that the product positioning for each target segment is different. This forms the essence of the STP (Segmentation, Targeting, and Positioning) marketing model.

Let’s take a closer look at each of these parts of segmentation, targeting and positioning.

Segmentation: Identifying Your Market

When you start creating a GTM strategy for your product, you have an idea of who your audience is. You can target the entire group that fits the broad definition of your audience, but chances are a generic message may fail to resonate with a huge chunk of that group.

Segmenting the audience into smaller groups based on specific attributes gives you better clarity on who benefits the most out of your product and how. With this clarity, you can make your messages more focused and relevant to target groups.

While you can segment your audience using any criteria that best suits your business, the below criteria are commonly used:

How do you get started with segmentation?

To perform audience segmentation, you first need to know about your audience. Solutions such as Salesforce CDP (Customer Data Platform) allow you to unify data from across touchpoints – like sales, service, marketing – and use Artificial Intelligence (AI) to mine richer audience insights from it. You can enrich this with first-party data from other platforms like social media, websites, customer forums, etc. This helps marketers build a single, comprehensive view of all audiences using a central, user-friendly interface. With an accurate population count and AI-enabled features, you can create highly targeted and customised audience segments.

Segmentation gets you better results even when you’re nurturing your existing subscribers. Using tools like Salesforce’s Email Studio , you can segment your current subscribers’ list based on their profiles and send targeted email campaigns, improving your open and click rates. Segmenting your existing customer base also helps you make an informed guess about your larger audience. By extrapolating current customer data, you can identify potential audience segments and build your marketing strategy around them.

Segmentation with an example

Suppose your product is plant-based milk. Your general audience is people who want to move away from dairy-based products. You can segment this audience into two categories:

Segment A: people who are looking at dairy-free alternatives for lifestyle purposes, typically high-income groups.

Segment B: lactose-intolerant people looking for other options.

The message you use for these two segments is obviously going to be different from each other. Using tools like Data Studio, you can further segment the above two segments into groups that already use a competitor product and those that don’t. You can then hone your messaging according to it.

Targeting: Reaching the Right Audience

The next step in the STP model is targeting. This is the stage where you decide which segments you created during the segmentation phase are worth pursuing. You should ideally consider the below criteria to choose your targetable segments:

Size: Your audience segments must have enough potential customers to be worth marketing to. If your segments are too small, you may not get enough conversions to justify your marketing efforts.

Difference: There should be a measurable difference between any two segments. The lack of it leads to unnecessary duplication of efforts.

Reachability: The segments should be accessible to your sales and marketing teams and not be marred by technical or legal complications.

Profitability: The segment should have a low-to-medium customer acquisition cost (CAC) while bringing in high returns, i.e., the audience must be willing to spend money on your product.

Benefits: Different benefits attract different segments. In our plant-based milk example, Segment A would go for cruelty-free while Segment B for dairy-free.

Knowing which audience segments to target comes from having all-around visibility of those segments in one place. This makes comparing segments and weighing the pros and cons of targeting some segments over others easier.

In our example of plant-based milk, you’ve determined through research that veganism is all the rage, and roughly 60% of the people are searching for dairy-free alternatives. You also discover that approximately 80% of the people in your chosen demographic are lactose intolerant. Though the audience size is more significant in the second segment, you’re likely to get more returns when you go after the first segment as it consists of high-income groups who are ready to pay a premium for quality lifestyle-changing products.

Salesforce CDP helps unify such audience and customer data from multiple sources to get more comprehensive insights. With more data and insights, segmenting and targeting your audiences becomes much more precise and granular. Then, you can translate all of this data into action by using a tool like Journey Builder to create highly personalised and relevant journeys throughout customer lifecycles.

Positioning : Differentiating Your Brand

The final stage of the STP model, positioning, is where you use the insights gained from segmentation and targeting to decide how you’re going to communicate your product to chosen audience segments.

While segmentation and targeting are about customers, positioning is about your product from the customer’s perspective. You can consider positioning as the bridge that connects your product with the audience. This is the stage where you perform competitor analysis, figure out your value proposition, and communicate that to your customers.

Based on what your brand stands for, you can position your product in several ways. If you’re in the luxury market, you can appeal to the ‘desire for prestige’ among customers by positioning yourself as a status symbol. Or, if you fall in the budget category, you could differentiate yourself by offering more benefits to your target at a lower cost than your competitors.

The best way to approach positioning is by drawing a Product Positioning Map that has two key market attributes as its axes and plotting your competitors and you in it. This will give you a clear picture of how you stack up against your competition and where you should place your product to maximise profits.

How to make STP marketing actually work

Now that you’ve narrowed down your market, sharpened your segments, and have an attack plan, all that’s left to do is craft and deliver your message. This is where a core concept – personalisation – comes in. Looking back, the entire segmentation, targeting, and postioning model is geared towards making marketing personalised for customers, so your message and the channels through which you communicate it should reflect that.

Luckily, some solutions help you meet customers where they are and drive personalised, 1-to-1 engagement with them.

Salesforce Marketing Cloud offers a product suite that enables marketers to hyper-personalise every interaction across channels. Here’s how:

• Salesforce CDP allows you to unify all your customer data and build finer audience segmentation for better targeting
• With Email Studio , you can segment your subscribers using drag-and-drop, and deliver 1-1 marketing messages
• Social Studio lets you listen to customer conversations about your brand on social channels and engage and support customers on their preferred channels
• Using Advertising Studio , you can launch paid digital advertising to create 1-1 customer experiences
• Interaction Studio allows you to manage all your marketing interactions in real time so you can offer a personalised experience across touchpoints
• Journey Builder enables you to create personalised experiences at every touchpoint and stage of the customer lifecycle
• You can drive higher RoI by using Datorama ‘s analytics and reporting features
• With Pardot , you can build greater sales and marketing alignment to perform personalised, automated marketing at scale
• Manage all your mobile messaging efforts using Mobile Studio
• Delight and engage your best customers with Loyalty Management
• Combine the power of Salesforce and Google by integrating Google Analytics 360 into Marketing Cloud

Benefits of STP marketing

Improved engagement : Because you’re targeting precise audience segments with personalised messages, your audience finds you relevant and is more likely to engage and convert.

Reduced marketing costs : Since you’re going after only those segments with a high potential return on investment, you’re no longer wasting your budget on channels and segments that don’t work.

More robust product : Because you know precisely whom you’re pitching your product to, you can make improvements based on feedback from that audience segment, fostering focused product innovation.

STP case studies

Apple has nailed the STP model. It positions itself as a lifestyle, targeting those audience segments with a keen design aesthetic, who want to stand out from the crowd, and are well-off. Apple follows a “closed” software ecosystem with an emphasis on security. In doing so, it creates an aura of exclusivity that makes people feel privileged to own Apple products. Apple’s STP model works so well that the brand name has become synonymous with expensive, high-performance, luxury gadgets.

McDonald’s

McDonald’s name evokes images of a family with kids enjoying a ‘happy meal’ of burgers, fries, and Coke. McDonald’s target audience is low to middle-income segments, and it positions itself as an accessible, budget-friendly brand, consciously staying away from the luxury fine-dining market. You can find a McDonald’s on almost every street, which is a sign of its accessibility.

Apart from segmenting its audience by their income, McDonald’s also does geographic segmentation quite well. It customises its menu for each country based on cultural preferences, making it more appealing to its target audience segments.

Godrej Group

Godrej Group is a very popular and trusted Indian company that is serving customers across product categories – from household goods to real estate. Every Indian household is aware of Godrej’s products like furniture and locks. But to engage and make aware customers of other product categories as well, Godrej has adopted social listening as a tactic to identify what their target audiences are talking and reading about. They are using audiences’ content consumption patterns to shape their content marketing strategies in a manner that deliver maximum engagement and awareness.

Coca-Cola is one brand that has the entire world as its market. But it also has cut-throat competition in the form of another brand, Pepsi. To gain a competitive edge over Pepsi, it introduced new variants such as Diet Coke and Coke Zero to target niche, health-conscious audience segments. It also brought in more flavoured variants to target the younger, experiential population.

Beyond segmentation and targeting, Coca-Cola positions itself as a drink that brings families and friends together. This is evident from its advertisements, which typically feature get-togethers, festivals, and celebrations in which Coke plays an integral role.

How to create an STP model for your business: Implementation strategy

We’ve covered the basics of the STP marketing model with benefits and examples. Now, it’s time to get down to the brass tacks; that is, see how you can implement a segmentation, targeting, and positioning model for your business step-by-step.

Step 1: Define your market

The world may be your market, but breaking it down into manageable segments is how you conquer it. To know the market segment in which you can hit the bullseye, you start by defining your Total Available Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM). Let’s look at what each of these is:

Total Available Market (TAM) : TAM is the total market demand for a product or service. In other words, it’s the biggest available market for the brand. TAM is the maximum revenue that a business can generate if it achieves 100% of its market share.

Serviceable Available Market (SAM) : SAM is a subset of TAM, that is, a portion of the total available market that fits your product or service. You can define SAM by geographical or product specialisation constraints.

Serviceable Obtainable Market (SOM) : SOM is a subset of SAM, that is, the segment of the serviceable available market that you can realistically reach after considering factors like product differentiation, budget, and competition.

In the case of Coca Cola, its TAM is the entire beverage market, while its SAM would be soft drinks. Its SOM is the market that Pepsi does not capture. For Diet Coke, the SOM would be health-conscious, sugar-free drinkers.

Step 2: Create audience segments

Now that you know your market definition, you can segment the audience within that definition.

You can segment the audience based on geography, demography, behaviour, or psychography, but ideally, a mix of all four can help you achieve clearly differentiated segments. The more segmentation layers or variables you add, the more delineated your segments would be.

For example, suppose you’re selling a luxury makeup product. In that case, you can target high-income working women (demographics) in India (geography), who follow makeup handles on social media (behaviour) and are willing to spend money on premium makeup products (psychography).

This kind of repeated layering and segmentation creates focused audience groups that you can target with hyper-personalised messages. Research by McKinsey found that companies that excel at personalisation generate 40% more revenue from those activities than average players.

Step 3: Identify the more attractive segments

Have all the segments data in one place and evaluate the attractiveness of each segment. You can use metrics like return on investment, segment size, and growth potential in your evaluation. Again, solutions like Salesforce Data Studio and CDP help gather data and get comprehensive visibility into different audience segments, improving segmentation.

Step 4: Evaluate your competition

With your audience segmentation sorted, it’s now time to look at your product and determine how it stacks up against your competition. Prepare a table that lists down all of your product capabilities and your competition’s, do a SWOT analysis, identify gaps, and figure out the most viable entry point into your desired customer segment.

Step 5: Fix your positioning

The groundwork on segmentation and targeting is now out of your way, so you can focus on positioning your product to grab the lion’s share of the market. You can follow any one or a mix of the following positioning strategies:

• Competitor-based positioning : where you show in what aspects better than your competitor.
• Consumer-based positioning : how well your product aligns with consumer needs.
• Price-based positioning : how you’re competitively priced and give customers more value for their money
• Benefit-based positioning : how your customers benefit from buying your product, either individually or over your competition.
• Attribute-based positioning : what your unique selling point or value proposition is, above and beyond benefits and price.
• Prestige-based positioning : how customers get a status boost from buying your product.

Step 6: Determine your marketing mix

The final step of the segmentation, targeting, and positioning model is to choose your ‘marketing mix’ that helps reinforce your positioning. The marketing mix consists of four Ps – Product, Price, Placement, and Promotions.

Product represents factors like quality, benefits, features, design, services, support, availability, and edge over the competition.

Price reflects what customers are willing to pay for the product. It covers list price, discounts, payment methods, etc. Pricing your product much lower than your competitor might fetch you immediate benefits but will be detrimental to revenue in the long run.

Placement covers “where” your product is available. It includes ecommerce, physical stores, inventory, logistics, trade channels, etc.

Promotion takes into account “how” your product reaches your customer. It covers marketing campaigns, advertising, public relations, sales promotions, word of mouth, influencer marketing, and so on.

STP model is a scientific, tried-and-tested marketing approach that helps businesses identify segments where they can indeed provide value, personalise their marketing communications, and reap sizeable profits.

If you want to get started on your segmentation, targeting, and positioning journey, you could give solutions like the Salesforce Marketing Cloud a try. The products inside Marketing Cloud provide you deep insights about your audience, help you identify the most viable segments, and hyper-personalise communications across channels, leading to 1-1 customer connect.

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Market Segmentation, Targeting, Positioning for Starbucks

Discover more helpful information.

Suppose you love coffee, then you bet one of your go-to coffee houses is Starbucks. Behind the various flavors and products, this coffee chain offers an extensive and comprehensive marketing approach. This includes Starbucks' market segmentation, target, and positioning . And if you are looking for some inspiration on how to navigate through these marketing approaches, you might as well continue reading and take a look at how Starbucks does it.

The three elements in marketing can also be shortened as STP (segmenting, targeting, and positioning) , a broad structure that streamlines and simplifies the market segmentation process.

Mind Map: Market Segmentation of Starbucks

The market segmentation of Starbucks is typically divided into four variables - demographic, geographic, behavioral, and psychographic. These variables will be the basis for specifying a company's target market. Every company has various variables for its marketing strategy; however, since Starbucks is a global company, it is proper to tackle several categories with its marketing plan.

The elements under Starbucks' targeting section typically answer and specify the four variables mentioned in the market segmentation section. Starbucks' diverse customers can still be broken down into more specific aspects.

Starbucks focuses on males and females, professional employees, and students for demographics. Professionals and employees can include the older age bracket; hence they target those aged 22-60. Single people, older married couples with children, and youngest children under and over six years old are also included in its targeting approach.

Geography is also one of Starbucks' target considerations since it serves several chains worldwide. Wherever there is a Starbucks chain, it should be included in the geographic aspect of the targeting. This includes Latin America, the US, Canada, the Middle East, Europe, China, Africa, Asia, and the Pacific regions.

Psychographic elements of Starbucks' targeting approach include customers from a specific societal class and different lifestyles of customers.

As has been previously mentioned, the positioning of Starbucks is customer-based, allowing the company to provide the best customer service. Besides its customers, Starbucks also promotes its social commitment by hiring refugees and families of veterans and military and giving career and education opportunities to its employees. It may not be that evident to everyone, but the company also participates in environmental protection initiatives.

Market Segmentation of Starbucks

According to Kotler and Armstrong (2006), Market segmentation means the process of classifying a market into different groups of buyers based on their needs, characteristics, or behaviors that might need marketing initiatives or separate products. Also, companies offering various brands utilize psychotropic variables like lifestyle to categorize a market into several segments.

The early years of Starbucks focused on the well-off market, which was mainly composed of educated customers and those with white-collar jobs. However, they discovered opportunities for growth in the industry, setting strategies to accommodate a broader scope of a market segment.

Starbucks classifies its market based on demographic, geographic, behavioral, and psychographic. They then use a product differentiation approach to satisfy varying customer groups. As with the geographic segmentation, the company has retail outlets in several locations, where each outlet reflects the preferences and tastes of the local market. The outlets might have similar designs but vary in product categories, such as baked food and coffee.

Demographics will include the company's target market's age, occupation, and income level. Meanwhile, the psychotropic variables include customer tastes and styles to provide authentic products for diverse customer needs. The behavioral elements in Starbucks' market segmentation can tackle consumer loyalty and consumption behavior.

Targeting of Starbucks

Targeting is about evaluating all the interests of market segments and choosing one or more segments to enter and focus on (Kotler 2016). A company usually focuses on elements with a higher probability of profit generation and can sustain it over time. To simply put it, targeting refers to the segments or groups a company decides to sell its products to.

Starbucks' target markets focus on middle to high-income office employees looking for premium quality products. Since Starbucks has chains internationally, the company makes local delights showing cultural characteristics among customers. Besides locals trying out local treats offered by Starbucks, tourists traveling to countries and visiting a Starbucks chain can try the country's local food through the products that they have.

As people continue to seek cleaner and sustainable food, Starbucks also aims to provide tables of drink and food nutrition such as fat, calories, fiber, sodium, and protein on its website. Customers who are conscious about calorie intake can refer to this information.

Positioning of Starbucks

Positioning is considered the last stage among the three pillars of marketing strategy. Positioning a product in the market entails a strategic approach that involves marketing a brand to create and nurture an image in the customers' minds within the target market.

In Starbucks' case, the company has created a unique market positioning so that they effectively distinguish their products from the competing brands and provide them with an excellent strategic edge in their target markets. The company's positioning strategy is customer-based, giving more than what the customer needs. Besides producing great coffee, it promotes a good reputation to its target market through excellent store ambiance, environmental protection, and social commitment. As a result, customers will feel that they also contribute to nature and society by using the products Starbucks offers.

Every coffee chain has free Wi-Fi services and a comfortable place where customers can rest or study. Some have 'drive-thru' for those opting not to enter the store. The company also goes out of its way to promote social responsibility as it focuses on the community. Starbucks provides opportunities to hire various people, including military commitment by hiring military and veteran spouses, hiring refugees, and giving career and education for the youth.

In terms of environment protection, Starbucks positions its brand by adapting the LEED (Leadership in Energy and Environmental Design) approach to structure buildings. Starbucks utilizes recycled coffee grounds on their tables and materials low in harmful chemicals for adhesives, paints, coating, and sealants.

Here's what Starbucks' market segmentation, targeting, and positioning look like in a chart.

Bnous: Two Other Starbucks Analyses

Gain insights from Starbucks' effective marketing strategy with the example diagram templates below. Discover how the global coffee chain excels in customer service. Explore the two diagrams and delve into the company's strategic framework.

McKinsey's 7s Framework Anlaysis for Starbucks

The framework below is a template that dissects Starbucks' organizational components. It comprises seven elements: structure, systems, styles, staff, skills, and strategy, with shared values at the core. Each 'S' is color-coded, simplifying comprehension. The framework is accompanied by detailed descriptions of their respective organizational roles.

The diagram is instrumental when assessing Starbucks' internal dynamics. It is useful for pinpointing areas of strength and improvement within the company. By utilizing the diagram, Starbucks can enhance its internal synergy. It ensures the effective execution of its strategy and maintains a strong corporate culture.

Starbucks PESTEL Analysis

The PESTEL analysis below examines the critical external factors shaping Starbucks' business environment. It assesses Political elements related to tax policies and employment laws, Economic factors linked to rising raw material costs, Sociological aspects in people's lifestyles, Technological trends like increased smartphone use, Ecological considerations tied to recyclable packaging initiatives, and Legal components encompass employment regulations and licensing requirements.

The analysis aids in strategic planning and risk assessment. When expanding into new markets, Starbucks can employ this analysis to adapt to those regions' specific conditions and regulations. It ensures its coffeehouses align with local political, economic, social, technological, ecological, and legal nuances.

Key Takeaways

Some may find Starbucks' marketing segmentation, targeting, and positioning unusual; however, the company has been reaping the fruits of that strategy for decades now. The discussion above is an overview of how extensive and comprehensive the coffee chain has conducted its marketing strategies over the years. Starbucks is a global company catering to diverse customers worldwide. It divides the market into geographic and demographic elements. The company can target customers in seasons, cultures, and preferences effectively through segmentation. Starbucks has successfully differentiated its brand from other coffee chains with excellent store ambiance, tasty coffee, giving importance to societal and environmental initiatives, and gaining profits in the process.

As you plan out your marketing analysis, you can use EdrawMind, a mind mapping software that offers a user-friendly interface and tools ideal for both beginners and experienced users. EdrawMind's pre-built templates on Market Segmentation and STP Analysis make it easier for marketing specialists to draw out their charts. You only need to select a template and fill in the necessary information on the diagram. You have two options in using the software - either through a browser or installing it to your computer. Either way, you can still experience the same features from this mind mapping tool.

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New consumption patterns highlight the importance of personalisation in products and services; thus, market segmentation is the only way to properly reach customers. Small market segments and a targeted planning strategy may be undertaken for a precise market position to be effectively achieved. This case study aims to reveal the importance of market segmentation, targeting and positioning in the airline industry showcasing Singapore Airlines Group. By analysing such an important airline group, this case study focuses on customer services in detail, to develop a deeper understanding of strategic segmentation and the design of customer personas.

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International Journal of Retail & Distribution Management

ISSN : 0959-0552

Article publication date: 1 March 1991

Customers have unique requirements, aspirations and satisfaction levels. Some customers, though, are “similar”: they have common requirements for goods, services and ideas. If these customers′ needs can be clearly identified and those with similar needs grouped in quantities of sufficient sizes, market segments have been determined. Each customer group – or market segment – has specific expectations and retail marketers must develop retail brands and concepts which cater for the needs of the segment targeted. Having decided on which segment (or segments) to target, retailers position their brands with an image with which the targeted customers identify. Market segmentation, targeting and positioning is a fundamental process in modern retail marketing strategy. The key decisions and the steps necessary for successful implementation are examined.

• Consumer marketing
• Market segmentation
• Positioning

Dibb, S. and Simkin, L. (1991), "TARGETING, SEGMENTS AND POSITIONING", International Journal of Retail & Distribution Management , Vol. 19 No. 3. https://doi.org/10.1108/09590559110143800

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New Approaches to Market Segmentation, Targeting and Positioning: The Case of Maribojoc, Bohol, Philippines

• First Online: 28 November 2021

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• Maria Criselda G. Badilla 9  

Part of the book series: Palgrave Studies of Marketing in Emerging Economies ((PSMEE))

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Market segmentation, targeting, and positioning are effective marketing tools for reaching out to potential customers of destinations to achieve a good return on investment. Segmenting the market geographically and demographically has its limitations. New trends and developments in tourism destination planning call for marketers to have a better understanding of postmodern tourists and their consumption patterns. The emergence of the experience economy, tourist co-creation of experiences and digital technology present the tourism marketer in emerging destinations with opportunities and challenges. The literature validates new strategies of segmenting tourist markets using benefit segmentation, practice-based segmentation, stakeholder approach and the explorer quotient. Specialised segments reveal that personalised marketing to smaller segments is achievable through digital marketing. Location-based marketing and social media marketing have transitioned marketing from one-to-many to one-to-one. Also, this chapter provides a case study of market segmentation, targeting and positioning of Maribojoc, Bohol, in the Philippines.

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Acknowledgements

The author acknowledges Mayor Romulo Manuta and Tourism Officer Mary Annie Jabines of the town of Maribojoc for granting permission to use the information about the town for this chapter.

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Badilla, M.C.G. (2022). New Approaches to Market Segmentation, Targeting and Positioning: The Case of Maribojoc, Bohol, Philippines. In: Mensah, I., Balasubramanian, K., Jamaluddin, M.R., Alcoriza, G., Gaffar, V., Rasoolimanesh, S.M. (eds) Marketing Tourist Destinations in Emerging Economies. Palgrave Studies of Marketing in Emerging Economies. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-83711-2_9

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A Case Study on Market Segmentation, Positioning and Classification of Multi-Brand Hotel Chains

2018, Emerging Dynamics of Indian Tourism and Hospitality

Multiple branding is a common marketing technique used by the most hotel chains having several sub-brands. Marketing of such all sub-brands can be challenging to management and confusing for guests. The confusion can arise because different hotels brands are priced at different levels while all such hotels are under single major brand. Marketers use the various terms like luxury, premium, five-star, up-market to explain the different hotel brands. Hoteliers use various techniques like market segmentation, positioning and classification to sell various hotel brands at different price points. Using case study as a research method, this chapter discusses three techniques (segmentation, positioning and hotel classification) to discuss how hotels are sold at different price points without creating any confusion among guests. The cases of Taj Hotels, Carlson Hotels and AAA hotel classification systems are discussed to explore concept of market segmentation, product positioning and hotel classification, respectively.

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In this exhaustive study, the authors endeavour to review the existing scheme for award star rating for hotels in India. In doing so, efforts were also made to compare some leading schemes from across the world, chosen on the basis of leading inbound tourist markets for India, to bench-mark the criteria catalogue and assessment/evaluation process. Along with many fresh recommendations, the authors also pitch for a rating-scale based scheme to capture the sensibilities of 'service quality'

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(optional) Select some text on the page (or do this before you open the "Notes" drawer). 3. Highlighter Color: 4. Search for: Search in: Course-wide Content Quizzes More Resources Instructor Resources Course-wide Content Instructor Resources Power Dialer is Boost call efficiency and supercharge your sales with Power Dialer’s lightning-fast, automated calling system! Zapier Integration is KrispCall now supports Zapier Beta! Connect & elevate your workflow seamlessly Market Segmentation: Examples, Types, Benefits, And Strategies 21 minute read Are you having trouble😰 effectively reaching your target🎯 audience? Segmenting the market is essential for fixing this issue.  Using a targeted approach, market segmentation enables you to create customized messaging and raise client satisfaction. Likewise, this blog will explore🧐different kinds of market segmentation, its benefits, practical examples, implementation tips, strategies, and limitations to help you get started.  If you change how you sell and market, you and your company will see success💯. 🔑KEY HIGHLIGHTS Market segmentation is breaking a market into separate customer groups with shared wants or attributes to customize marketing initiatives efficiently. Market segmentation includes behavioral, psychographic, demographic, and geographic segmentation. Segmentation of the market improves customer happiness and loyalty by enabling companies to customize their offerings and marketing strategies for particular client segments. Consumer goods, telecommunications, and the automotive industry are some use cases and examples of market classification. Establishing goals, performing market analysis, and creating client profiles are some strategies for market division. Some limitations of market segmentation are cost and complexity,over-segmentation, data accuracy, and dynamic market conditions. Table of Contents What Is Market Segmentation? Market segmentation is the process of breaking down a large or commercial market into smaller consumer groups based on shared traits. These divisions may be made according to behaviors, interests, or other characteristics. Market segmentation makes it easier for companies to target their marketing campaigns. Concentrating on specific markets allows businesses to develop goods and services more effectively to satisfy their clients’ requirements. This results in higher levels of client pleasure and loyalty. Customized marketing communications also have a higher chance of connecting with the intended audience. Moreover, market segmentation takes various forms, such as behavioral, psychographic, geographic, and demographic . Similarly, businesses can manage resources more effectively when they divide their markets. This raises conversion rates, enhances marketing tactics, and gives businesses a more competitive edge and market presence. Generally, while understanding market segmentation, companies employ three criteria to determine separate market segments: homogeneity (shared demands within a segment), differentiation (distinction from other groups), and reactivity (similar response to the market).  For example, a beverage company may divide its target market into young adults and health-conscious consumers, who might react differently to customized advertising. This knowledge enables the business to modify its marketing tactics successfully for each group. Types Of Marketing Segmentation There are four main types of market segmentation. They are : 1. Demographic Segmentation Demographic market segmentation is based on age, gender, family size, income, and education . Companies may customize their marketing methods to ensure that their words and products resonate effectively with target demographics. For example, a business that sells baby goods targets new parents who fall into a particular age bracket, such as 25 to 35. By getting to know these parents, the business can create and market goods like diapers, baby food, and parenting accessories that specifically address their requirements and tastes. Concentrating on demographic characteristics can help businesses develop more impactful and relevant marketing efforts. Strong alignment of products and services with consumer needs results in greater customer happiness, loyalty, and improved sales outcomes. 2. Geographic Segmentation Geographic segmentation is achieved by dividing a market according to geographical factors like nations, regions, cities, or neighborhoods . This method assists companies in customizing their marketing plans to target areas while considering local demands and preferences. For example, a clothing company may sell lighter summer apparel in warmer climates and warmer winter apparel in colder climates. By learning about the culture and climate of each area, the brand may develop and market goods that fit the context and way of life of each area. Likewise, Businesses can develop more relevant and successful marketing efforts by concentrating on geographic considerations. Products and services customized to the preferences and needs of each area also raise customer satisfaction, which in turn leads to better sales results. 3. Psychographic Segmentation Markets are segmented psychographically according to lifestyle, values, interests, or personality attributes . This method enables companies to create more individualized marketing strategies by helping them comprehend their target market’s underlying desires and motivations. For example, a fitness company may aim to attract people who prioritize well-being, lead active lifestyles, and are health-conscious. By comprehending these psychographic characteristics, the company may craft marketing messages that appeal to this group of consumers and promote fitness treatments, health supplements, and training equipment. Similarly, concentrating on psychographic characteristics can help businesses establish a stronger emotional connection with their audience. Also, Businesses can increase sales by appealing to the values and interests of each psychographic group. This strategy also strengthens brand loyalty and cultivates closer ties with customers. 4. Behavioral Segmentation Behavioral segmentation divides a market according to consumer behaviors, including usage patterns, decision-making processes, brand loyalty, and purchasing patterns. This technique allows companies to understand better how consumers use their goods and services, leading to more specialized marketing plans. For example, an airline may divide its client according to their travel frequency and preferences. Frequent fliers may receive personalized promos and reward programs, and infrequent travelers may receive deals according to their preferences and historical booking activity. In addition, businesses can customize their advertising campaigns to target customers’ unique requirements and preferences by concentrating on behavioral aspects. This approach helps to increase engagement, satisfaction, and loyalty by making customers feel understood and appreciated for their actions and communication with the company. What Are The Benefits Of Marketing Segmentation?  Marketing segmentation has many advantages. It enables companies to more successfully target particular demographics, resulting in customized messaging that appeals to consumers. This strengthens brand loyalty, raises revenue, and improves customer satisfaction. Some of the benefits of marketing segmentation are : 1. Customized Advertising Campaigns Companies can create more appealing and relevant messages to particular audiences through marketing segmentation. This relevance results in higher engagement rates, which raises the possibility of connecting with the target audience. In addition, businesses can improve the overall efficacy of their advertising efforts by catering to each segment’s distinct requirements and needs. Customized initiatives lead to higher levels of consumer satisfaction and increased brand loyalty. 2. Increased Rates Of Engagement Marketing segmentation enhances engagement rates by addressing the specific needs of customer segments and following the best customer engagement metrics . This focused approach means customers are more interested in the brand when they feel understood and appreciated by the brand. Therefore, customers are more likely to respond to offers and marketing messages specifically targeted to them. This increased engagement may result in stronger client relationships and increased conversion rates. 3. Increased Consumer Satisfaction Marketing segmentation increases consumer satisfaction by providing more individualized experiences. Customers are more satisfied with a company when they believe their particular requirements are being met. This customized strategy strengthens the bond between the customer and the brand. Therefore, customers can remain loyal to the company and recommend it to others, which promotes long-term success. 4. Efficient Utilization Of Resources Marketing segmentation focuses on high-potential areas, which helps deploy resources more effectively. Due to this focused strategy, marketing budgets are allocated to places that will have the greatest impact. Similarly, businesses can optimize their overall return on investment by concentrating on these potential categories. More effective and prosperous marketing initiatives result from this economic resource allocation. 5. Enhanced Return On Investment Targeting most potential client segments through marketing segmentation offers higher returns on investment. Companies can focus on the most likely converting segments with this targeted approach. Marketing initiatives become more successful, increasing sales and profitability. Thus, by focusing on these profitable sectors, businesses can increase their return on investment and achieve more financial success. 6. Accurate Product Creation Marketing segmentation guides product creation. This helps businesses understand the unique requirements and preferences of various markets. Companies can use this data to design goods that match customers’ expectations. Likewise, addressing these specific needs can help businesses create more profitable products. A customized approach also increases the likelihood of new products being well-received by their target markets, increasing adoption and satisfaction. 7. Maintain A Competitive Position Using marketing segmentation, competitive positioning involves identifying and gaining access to specific markets that competitors might miss. Businesses can set themselves apart by concentrating on these underutilized markets and drawing clients with particular, unfulfilled requirements. Similarly, this tactical strategy aids businesses in establishing a distinctive market position. Focusing on these specialized sectors can lessen direct competition and position companies as industry leaders, promoting long-term growth and client loyalty. 8. Enhanced Retention Of Customers Personalized communication and customized offers help build closer customer relationships and enhance customer retention . This is accomplished through marketing segmentation. By getting to know each client’s preferences and wants, businesses may foster stronger relationships that promote customer loyalty and repeat business. Additionally, this customized approach shows that you know your customers’ interests, boosting customer happiness and lowering turnover. By implementing effective customer retention strategies , businesses may improve the customer experience and strengthen their brand reputation. 9. Proactive Modification Of Market Trends Businesses can foresee changing market dynamics and respond to them successfully through proactive market trend modification made possible by marketing segmentation. Companies can spot new trends early by examining segmented data and consumer behavior. Thanks to this strategic foresight, businesses can quickly adjust their strategy. This helps them stay ahead of the competition and satisfy shifting client needs. Companies may remain relevant in competitive industries and grab fresh chances quickly. It also guarantees steady expansion and market dominance. 10. Effective Pricing Techniques Market segmentation-driven pricing strategies effectively identify and address the varying value perceptions of various client segments. By comprehending the distinct biases and payment abilities of different customer categories, businesses can determine pricing that optimizes profitability while maintaining client appeal. Using a customized strategy, pricing moves are made to align with the perceived value of each segment. It increases overall sales and competitiveness in the market. By matching pricing to customer aspirations, businesses maximize income streams and keep an edge in their marketplaces. 11. Enhanced Sales And Profitability Marketing segmentation increases sales and profitability by matching the right items with clients. Businesses can improve their attractiveness and relevancy in the market by matching their product offers to the unique requirements and preferences of distinct client groups. In addition, this focused strategy raises conversion rates, increases sales, and optimizes the use of marketing funds and resource allocation. Concentrating efforts on high-potential areas can increase profitability and maximize return on investment. 12. Market Differentiation By meeting the demands of particular segments more successfully than competitors, firms can set themselves apart in highly competitive markets. Marketing segmentation makes this possible. Businesses can establish a unique identity and attract devoted clients by customizing their offerings. Additionally, this targeted approach improves market positioning and brand loyalty and raises consumer satisfaction. Because of this strategic advantage, companies can maintain an advantage in dynamic marketplaces, sustain growth, and charge premium pricing. How Do You Identify Your Target Market Segment? We can identify the target market segment by following phases: Phase 1: Establishing Goals And Expectations What is the aim or objective of market segmentation? What is the organization hoping to learn from its marketing segmentation efforts? Does the business have any assumptions about potential market spaces? Phase 2: Determine Client Segments Which market niches do rival companies serve? What data from the US Census Bureau relevant to our market is available to the public? What information is needed, and how can it be gathered? How should our consumer base be divided up? Phase 3: Assessing Possible Segments What is the chance that our data’s market segments are not accurate? Why should we prioritize serving a particular kind of consumer over another? What are the long-term consequences of selecting a particular specific market over another? Which market segments closely resemble the company’s ideal “perfect customer” profile? Phase 4: Create a Segmentation Plan How can the business validate its hypotheses on a test market sample? What makes a marketing segmentation plan effective? How can the business assess if the plan is effective? Phase 5: Start and Track After a market segmentation strategy is revealed, who are the important stakeholders who can offer feedback? What are the obstacles to execution, and how may they be removed? How should the marketing campaign’s internal launch be announced? Use Cases And Examples Of Marketing Segmentation Some use cases and examples of marketing segmentation are as follows: 1. Consumer Goods Consumer goods companies, such as skincare brands, use demographic segmentation to target distinct age and gender groups. For example, they may develop items exclusively for adolescent acne sufferers and senior citizens seeking anti-aging remedies. By addressing the unique skincare requirements of each group, they can increase sales and cultivate a devoted consumer base. Additionally, companies can create skincare products tailored to their needs by studying older people and teenagers. This method improves customer happiness and brand trust by ensuring every demographic finds items tailored to their age-related issues and skin conditions. 2. Telecommunications Behavioral segmentation is a tool telecom companies use to personalize their service offerings to their client’s specific needs. For instance, a mobile network provider may provide different incentives and data plans for frequent and infrequent customers. By offering services that closely correspond with their tastes and usage patterns, this technique seeks to draw in and keep consumers. Similarly, Telecom firms may optimize their marketing and service strategies by studying client behavior. They can create customized offers and targeted campaigns tailored to the needs of various user categories. This guarantees that each group gets the most out of their telecom services and is satisfied. 3. Automotive Industry Geographic segmentation is a strategic tool automakers use to cater to automotive driving needs and preferences. For example, they may concentrate on fuel-efficient vehicles made for crowded cities and tough SUVs made for difficult-to-travel rural locations. With this strategy, automakers may better match their product offerings to local market needs, increasing their market share and sales figures. In addition, Automakers can strategically position their automobiles in different regions by comprehending geographical variances in driving conditions and consumer preferences. By providing automobiles appropriate for particular locations, this customized strategy increases customer service experience and strengthens brand loyalty and competitive advantage in each region. 4. Technology Sector Technological enterprises use psychographic segmentation to adapt to various customer values and lifestyles. For instance, a smartphone maker might target tech-savvy consumers who value innovation with sleek, high-performance models. In addition, they provide mainstream customers who prioritize functionality with reasonably priced and easily navigable solutions. Likewise, Tech companies effectively distinguish their products with this segmentation method. By appealing to the distinct biases of individual segments, enterprises may improve client involvement and promote sales expansion. 5. Financial Services Income-based segmentation is a tool used by banks and other financial organizations to personalize their offerings. While they may provide basic savings and checking accounts to students or young professionals, they may also give high-net-worth clients tailored wealth management solutions and premium banking services.  Similarly, Banks can customize financial products based on income levels to fulfill the unique demands of various sectors. This tactic increases customer happiness and loyalty by ensuring customers obtain pertinent and worthwhile services. Ensuring Effective Segments: Key Criteria Some of the effective segments key criteria are: 1. Measurable Measurable segments are crucial to marketing because they measure client numbers and spending power. It gives valuable information about size and purchasing power. To allocate resources more effectively based on segment dimensions and earnings potential, retail businesses, for example, frequently identify segments based on demographics like age groups and income categories.  Similarly, businesses can carefully match their product offerings and marketing activities by assessing their segments with their customers’ requirements and preferences. In areas where competition is fierce, this analytical technique enables customized marketing efforts that appeal to particular client categories, encouraging interaction and boosting revenue. 2. Accessible Accessible segments are essential for organizations to effectively reach and captivate customers through customized marketing and distribution channels. For example, digital platforms are crucial for connecting with tech-savvy customer segments and utilizing online advertising and e-commerce to interact with digitally knowledgeable consumers. Likewise, this accessibility requirement guarantees companies can use suitable tactics to engage with various client segments. This maximizes outreach endeavors to cater to particular tastes and actions.  3. Substantial In marketing, significant segments are crucial because they provide a rationale for the expenditures required to target them effectively. For example, because of the considerable spending potential per consumer, specialized luxury segments can be profitable despite their smaller size.  Additionally, this measure ensures that companies prioritize customer segments that are large enough or have enough purchasing power to generate significant returns on marketing expenditures. Through smart resource allocation and optimization of their market influence, firms can concentrate on segments that can propel revenue growth and profitability.  4. Actionable  Actionable segments are essential in marketing because they let companies categorize their client according to their distinct requirements, interests, and habits. For instance, behavioral differences within segments could mandate particular product attributes or marketing strategies catered to each group’s unique needs. Similarly, Businesses can customize their product offers and marketing tactics to target particular segment characteristics by comprehending and capitalizing on these variances. By regularly fulfilling the diverse tastes and expectations of various consumer groups, this method not only enhances customer experience marketing and perceived value but also strengthens brand loyalty. What Are The Strategies Of Market Segmentation? Market segmentation separates a large consumer or commercial market into more manageable, focused segments according to demands, behaviors, or common traits. By customizing their marketing plans and product offerings, companies can better match the unique needs of each market group. Market segmentation techniques include psychographic segmentation, which centers around lifestyles and values; behavioral segmentation, which examines consumer behaviors like purchase patterns and brand loyalty; and demographic segmentation, which focuses on groups based on attributes like age and income. These tactics assist companies in customizing their marketing initiatives to meet the demands and tastes of particular clients. So, Here are some of the strategies for market segmentation: 1. Establish Goals Companies should begin by outlining their segmentation goals precisely. Establish the goals of the company’s segmentation strategy, which may include expanding into untapped markets, customizing marketing campaigns, or raising customer satisfaction levels. Establishing specific goals gives direction and guarantees that the segmentation approach aligns with corporate objectives. Thus, it is also useful for evaluating the effectiveness of segmentation initiatives. 2. Perform Market Analysis Collect information about the target market by conducting interviews and surveys and analyzing current data sources. This includes data about potential customers’ demographics, psychographics, locations, and behaviors. Additionally, Market research provides the knowledge to comprehend customers’ requirements, preferences, and behaviors. It serves as the cornerstone for accurately and meaningfully constructing segments. 3. Determine The Segmentation Factors Select the factors that will be applied to market segmentation. These could be behavioral (buying habits), psychographic (lifestyle, values), geographic (place), or demographic (age, gender). Additionally, Choosing the appropriate variables is essential to producing applicable and useful segments. The variables selected ought to align with the company’s goals and the features of the intended market. 4. Create Client Profiles Make thorough profiles that include descriptions of each segment’s traits, requirements, and habits. These individuals, also known as profiles, help visualize and comprehend the typical client in each market sector. In addition, Using customer profiles simplifies customizing product offerings and marketing strategies for each segment’s needs. They also clearly show the company’s target audience. 5. Assess Attractiveness Segment Evaluate each segment’s size, growth potential, accessibility, and profitability. This stage entails data analysis to decide which market sectors are worthwhile. Similarly, evaluating segment attractiveness ensures that resources are allocated to the most promising segments. Prioritizing tasks and concentrating on areas with the greatest potential return on investment is beneficial. 6. Customize Your Marketing Approaches Create campaigns and marketing plans specific to each market specialization. This entails tailoring product offers, costs, advertising, and means of distribution to each segment’s particular requirements. Likewise, Customizing marketing tactics improves efficiency and relevance. It also raises the possibility of interaction and conversion. It guarantees to improve the customer experience for every section. 7. Monitor And Modify Monitor the segmentation strategy’s effectiveness and make any necessary revisions. Use metrics and feedback to determine whether the goals are achieved and the segments are properly targeted. Additionally, if it is routinely evaluated and improved, the segmentation approach will continue to work in evolving market conditions. It enables companies to adapt to changing consumer demands and fresh insights. What Are The Limitations Of Marketing Segmentation? Some of the limitations of marketing segmentation are: 1. Cost and Complexity Marketing segmentation may be costly and complex, requiring in-depth data analysis and study. For businesses to effectively collect and evaluate data, which might require a lot of resources, they must invest in the necessary tools and talent. Because of this complexity, which frequently increases expenses, smaller businesses find it challenging to adopt segmentation tactics that work. Additionally, for companies with tight budgets, the costs could be greater than the gains. This reduces their ability to compete effectively and affects their overall marketing efficiency. Smaller businesses might find it challenging to devote money to segmentation initiatives, which would lower the efficacy of their marketing. 2. Over-Segmentation When companies divide their marketing efforts into too many tiny segments, this is over-segmentation. As a result of resources being dispersed too thinly over multiple segments, this fragmentation may cause inefficiencies . As a result, marketing initiatives lose effectiveness, and the company’s overall impact diminishes. Furthermore, over-segmentation can result in conflicting messaging and misunderstandings. As a result, the brand becomes less identifiable and has a harder time connecting with consumers. Companies must balance segmentation and diminishing returns to maintain coherence and efficacy in their marketing efforts. 3. Data Accuracy Accurate data is essential for effective segmentation, yet finding trustworthy information can be difficult. Outdated or inaccurate data can result in incorrect initiatives that don’t connect with target audiences. Businesses’ reliance on accurate data exposes them to mistakes, reducing their marketing initiatives’ efficacy. Similarly, Continuous monitoring and updating, which can be sophisticated and resource-intensive, are necessary to ensure data integrity. Businesses need to spend money preserving reliable data to prevent unsuccessful marketing campaigns. Although it can be resource-intensive, this constant work is necessary for effective segmentation. 4. Dynamic Market Conditions The dynamic nature of the market and consumer behavior challenges the sustainability of important segments. To keep up with these developments, businesses must regularly adjust their segmentation strategy, which can be difficult and drawn out. Similarly, static segmentation models may become less useful over time as they become outdated. Businesses need to continue being flexible and aware of changing consumer preferences. Retaining competitiveness and efficient segmentation requires this flexibility. 5. Potential For Stereotyping  Business assumptions regarding customer groupings might result in stereotyping as a result of segmentation. This method may lead to marketing plans that ignore personal quirks and preferences. As a result, prospective clients could feel cut off. Stereotypes can reinforce prejudices, harming a brand’s reputation and clients. To prevent this, businesses must ensure their segmentation is founded on a fair and complex understanding of their customer’s requirements and behaviors. This strategy increases brand loyalty and promotes diversity. Wrapping up Market segmentation is crucial for organizations to efficiently target and serve various client groups. Companies can better satisfy and maintain customers by segmenting their market according to specific criteria like psychographics, behavior, geography, or demographics.💫 Moreover, industries such as consumer electronics and automobiles, where companies like Apple and Toyota tailor their products to specific market segments, are successful examples. However, market segmentation also has its limitations. It might demand a significant investment in research, data analysis, or plan formulation, making it resource-intensive. Potential clients may be excluded, and opportunities lost due to improper or excessively restrictive segmentation. Despite these difficulties, market segmentation is still an essential tactic for companies to comprehend and use.🚀 What is meant by market segmentation? Market segmentation is the process of breaking up a large consumer or commercial market into more manageable groupings of clients based on shared wants, interests, or traits. This enables companies to efficiently customize their marketing plans and product offerings to each segment’s unique needs. How do you segment a market? You can segment a market by breaking down a large consumer or company market into more manageable, focused segments according to shared needs, interests, habits, or demographics. What are the common segmentation variables? The common segmentation variables factors are behavioral (use occasions, brand loyalty), psychographics (lifestyles, values, attitudes), geographic (region, urban vs. rural), and demographic (age, gender, income). What are some examples of successful market divisions? Some examples of successful market segmentation include Nike, which focuses on athletes using performance gear; Apple, which appeals to computer fanatics with innovative goods; and Coca-Cola, which accommodates a wide range of taste preferences worldwide.  How do businesses use market segmentation? Businesses use market segmentation by identifying and targeting particular client groups with products, services, and marketing tactics designed to meet their requirements and preferences. Follow our newsletter ! Dinesh Silwal Dinesh Silwal is the Co-Founder and Co-CEO of KrispCall. For the past few years, he has been advancing and innovating in the cloud telephony industry, using AI to enhance and improve telephony solutions, and driving KrispCall to the forefront of the field. Related Blogs How To Choose The Best Automation Software: A Step-by-Step Guide Conventional data collection and processing methods are inefficient and thus provide some trouble to you. 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This is where Gmail's… 7 minute read 428 IMAGES Segmentation, targeting, positioning Segmentation, Targeting and Positioning Process (STP Model) STP Marketing Analysis: Segmentation, Targeting, Positioning STP Marketing Analysis: Segmentation, Targeting, Positioning The Marketer's Guide To Segmentation, Targeting, & Positioning (STP The Segmentation, Targeting, Positioning model VIDEO Ch 4 Segment, Target & Position Market Segmentation, Targeting and Positioning Lecture 9 Segmenting, Targeting & Positioning Interactive image segmentation Segmentasion, Targeting, Positioning (STP) Market segmentation,targeting diff & position.Product,service & brands |Marketing COMMENTS Market Segmentation Case Studies Market segmentation is the process of dividing a larger target market into distinct groups or segments based on similar characteristics, needs, or behaviors. It allows businesses to better understand their customers and tailor their marketing strategies and offerings to meet the specific requirements of each segment. The Segmentation, Targeting and Positioning (STP) Marketing Model The Segmentation, Targeting and Positioning (STP) Model helps you position a product or service to target different groups of customers more efficiently. STP stands for: ... targeting & positioning examples and as brand case study. By segmenting your target market, targeting the right customers and properly positioning your products. Guide to Segmentation, Targeting & Positioning (STP) + Examples STP marketing case study: How Thinx mastered positioning in a volatile landscape . Segmentation: The broader category that Thinx operates in is menstruation products, which includes items like tampons, sanitary napkins, menstrual cups, and more recently, period-proof underwear. Within this, Thinx specifically addresses the niche of consumers ... Segmentation, Targeting, and Product Positioning 2 items. Together, the two readings Segmentation and Targeting and Brand Positioning provide students with a foundation in the key elements of a marketing strategy. The first reading covers different ways to segment a market and how to target the specific customer groups that best match the firm's offering. The second reading shows how firms ... Market Segmentation, Targeting and Positioning Case Study Segmentation is the element of STP framework that bears the highest strategic value for organizations since it serves as a basis for targeting and positioning. An example of a company that successfully utilizes demographic segmentation is Victoria's Secret (Kotler & Keller 2012). The brand focuses on female consumers, and its primary aim was ... Segmentation, Targeting & Positioning (STP) in marketing: Explained Let's understand Segmentation, Targeting, and Positioning (STP) in Marketing in detail Segmentation . Demographic Segmentation: This is perhaps the most common form of market segmentation, where the market is divided into groups based on variables such as age, gender, income, occupation, education, religion, race, and nationality. For example ... STP Marketing: Complete Guide to Segmentation, Targeting, Positioning Segmentation, targeting, and positioning (STP) is a marketing model that redefines whom you market your products to, and how. It makes your marketing communications more focused, relevant, and personalised for your customers. In short, STP is a marketing approach where you segment your audience, target the best-fit audience segments for your ... PDF 7: Market Segmentation, Targeting, and Positioning The chapter's in-depth case study exam - ines these principles in the context of . Moxy Hotels, designed to capture the millennial traveller market, and owned by . Marriott . group. 7.1 . nI troduction. Segmentation, targeting and positioning (STP) make up a series of steps that are inter-related. The rst step, segmentation, involves dividing ... Market Segmentation, Targeting, and Positioning The chapter's in-depth case study examines these principles in the context of Moxy Hotels, ... 1 Introduction. Segmentation, targeting and positioning (STP) make up a series of steps that are interrelated. The first step, segmentation, involves dividing the market into groups (segments or clusters) of consumers who share similar needs ... Market Segmentation, Targeting, Differentiation and Positioning The value proposition must involve elements like segmentation, targeting, differentiation and positioning as shown in Fig. 10.1. ... 10.7 Case Study: Image Differentiation of Hennessy Cognac. ... Market Segmentation, Targeting, Differentiation and Positioning. In: Performance Excellence in Marketing, Sales and Pricing. Management for ... Market Segmentation, Targeting, and Positioning Books and journals Case studies Expert Briefings Open Access. Publish with us Advanced search. To read this content please select one of the options below: ... "Market Segmentation, Targeting, and Positioning", Andaleeb, S.S. and Hasan, K. (Ed.) Strategic Marketing Management in Asia, Emerald Group Publishing Limited, Leeds, pp. 179-207. https ... Starbucks Market Segmentation, Targeting, and Positioning The market segmentation of Starbucks is typically divided into four variables - demographic, geographic, behavioral, and psychographic. These variables will be the basis for specifying a company's target market. Every company has various variables for its marketing strategy; however, since Starbucks is a global company, it is proper to tackle several categories with its marketing plan. Market Segmentation, Targeting and Positioning: Case Studies and The paper examines if takeovers target the "correct" firms. Using the English brewing industry (1945-1960) as a case study, size and conventional performance criteria of taken-over ... Effective airline market segmentation Small market segments and a targeted planning strategy may be undertaken for a precise market position to be effectively achieved. This case study aims to reveal the importance of market segmentation, targeting and positioning in the airline industry showcasing Singapore Airlines Group. By analysing such an important airline group, this case ... (PDF) A Case Study on Market Segmentation, Positioning and Using case study as a research technique, this paper adopts three methods (segmentation, positioning and hotel classification) to deliberate how hotels are sold at different price points without ... TARGETING, SEGMENTS AND POSITIONING Market segmentation, targeting and positioning is a fundamental process in modern retail marketing strategy. The key decisions and the steps necessary for successful implementation are examined. Books and journals Case studies Expert Briefings Open Access Case Study On Segmentation Targeting Positioning This case study shows that segmentation marketing is an effective way for . . . (Market Positioning Strategies. n. d. ). Once the segmentation process is complete. the company should have a better idea of how to market their product or service to the specific segment they are targeting. 7 Six Types of Segmentation Marketing Market segmentation ... New Approaches to Market Segmentation, Targeting and Positioning: The Market segmentation, targeting, and positioning are effective marketing tools for reaching out to potential customers of destinations to achieve a good return on investment. Segmenting the market geographically and demographically has its limitations. ... Also, this chapter provides a case study of market segmentation, targeting and positioning ... (PDF) A Case Study on Market Segmentation, Positioning and A Case Study on Market Segmentation, Positioning and Classification of Multi-Brand Hotel Chains 9.10 95 Conclusion The chapter compared three techniques with which hotels are classified into different segments to help travellers have an idea of level of facilities, services and price points. Module 6: Market Segmentation, Targeting, and Positioning Case Study Which example is consistent with target marketing? Specializing in Asia. Charlie tasks the chief marketing officer (CMO) with developing and communicating a marketing brand and vision that will win over new customers for the new electric battery. The CMO decides to design various promotions for each major market area based on the variance in ... Group Assignment 1: Case Study on Market Segmentation, Targeting and 2 Geographic Segmentation. Geographic segmentation categorises a target audience by geography to allow consumers to be finest served by marketers in a specific region. This method of market segmentation is concentrated on the geographic regions within such as countries, states, towns, etc. Market segmentation, targeting and positioning Market segmentation, targeting and positioning. Click on the menu to the left of this page to view the resources available to you. Chapter-by-chapter resources may be viewed by clicking on the drop-down list. Click on the link at the base of this page to return to the Information Centre. Bigbasket Case study solutions American well Case study analysis; Preview text. SEGMENTATION, TARGETING AND POSITIONING OF BIGBASKET INTRODUCTION: Bigbasket is India's largest online retail store that include fruits, vegetables, groceries, personal care items etc. It was founded in October 2011 by Hari Menon., Abinay Choudari,V S Sudhakar,Vipul Parekh and V S Ramesh. Market Segmentation: Meaning, Types, Benefits & Strategies Using marketing segmentation, competitive positioning involves identifying and gaining access to specific markets that competitors might miss. ... requiring in-depth data analysis and study. For businesses to effectively collect and evaluate data, which might require a lot of resources, they must invest in the necessary tools and talent ... assignment essay homework phd report resume review speech thesis