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Market Segmentation Case Studies – A Detailed Guide
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Rohit Rajpal
Senior Writer
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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.
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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.
![case study segmentation targeting positioning Different Types of Market Segmentation](https://blogimages.softwaresuggest.com/blog/wp-content/uploads/2023/06/14105407/Types-of-Market-Segmentation.jpg)
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.
![case study segmentation targeting positioning behavioral segmentation](https://blogimages.softwaresuggest.com/blog/wp-content/uploads/2023/06/14105349/Behavioral-Segmentation.jpg)
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 –
![case study segmentation targeting positioning Benefits of Market Segmentation](https://blogimages.softwaresuggest.com/blog/wp-content/uploads/2023/06/14105352/Benefits-of-Market-Segmentation.jpg)
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
![case study segmentation targeting positioning Coca-Cola](https://blogimages.softwaresuggest.com/blog/wp-content/uploads/2023/06/14105402/Market-Segmentation-A-Complete-Guide-images01.jpg)
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
![case study segmentation targeting positioning Nike](https://blogimages.softwaresuggest.com/blog/wp-content/uploads/2023/06/14105403/Market-Segmentation-A-Complete-Guide-images02.jpg)
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
![case study segmentation targeting positioning iPhone](https://blogimages.softwaresuggest.com/blog/wp-content/uploads/2023/06/14105404/Market-Segmentation-A-Complete-Guide-images03.jpg)
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
![case study segmentation targeting positioning Amazon's Prime](https://blogimages.softwaresuggest.com/blog/wp-content/uploads/2023/06/14105406/Market-Segmentation-A-Complete-Guide-images04.jpg)
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 –
![case study segmentation targeting positioning Steps to Determine a Market Segment](https://blogimages.softwaresuggest.com/blog/wp-content/uploads/2023/06/14105357/Determine-Your-Market-Segment.jpg)
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:
![case study segmentation targeting positioning Challenges of Market Segmentation](https://blogimages.softwaresuggest.com/blog/wp-content/uploads/2023/06/14105355/Challenges-of-Market-Segmentation.jpg)
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.
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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 .
![case study segmentation targeting positioning case study segmentation targeting positioning](https://www.pulsarplatform.com/wp-content/uploads/2023/09/TRAC-communities-audience-segmentation-1024x710.png)
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.
![case study segmentation targeting positioning case study segmentation targeting positioning](https://www.pulsarplatform.com/wp-content/uploads/2023/09/brand-health-communities-1024x710.png)
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
![case study segmentation targeting positioning case study segmentation targeting positioning](https://www.pulsarplatform.com/wp-content/uploads/2023/10/thinx-case-study-1-1024x599.png)
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.
![case study segmentation targeting positioning case study segmentation targeting positioning](https://www.pulsarplatform.com/wp-content/uploads/2023/10/thinx-case-study-2-1024x512.png)
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.
![case study segmentation targeting positioning case study segmentation targeting positioning](https://www.pulsarplatform.com/wp-content/uploads/2023/10/thinx-engagement-chart.png)
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/
"Market Segmentation, Targeting and Positioning." IvyPanda , 4 Nov. 2020, ivypanda.com/essays/market-segmentation-targeting-and-positioning/.
IvyPanda . (2020) 'Market Segmentation, Targeting and Positioning'. 4 November.
IvyPanda . 2020. "Market Segmentation, Targeting and Positioning." November 4, 2020. https://ivypanda.com/essays/market-segmentation-targeting-and-positioning/.
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Segmentation, Targeting & Positioning (STP) in marketing: Explained with Examples
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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
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Hyper-personalise marketing communications and boost audience engagement with the segmentation, targeting, and positioning (STP) model. Know all about in this STP guide.
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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
![case study segmentation targeting positioning case study segmentation targeting positioning](https://www.salesforce.com/in/blog/wp-content/themes/salesforce-blog/dist/images/offer-block/offer-illustration-layout-two.png)
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:
![case study segmentation targeting positioning audience segmentation criteria, customer segmentation criteria, segmentation based on geography, segmentation based on demography, segmentation based on behaviour, segmentation based on psychography](https://www.salesforce.com/in/blog/wp-content/uploads/sites/9/2023/06/segmentation-criteria-table.png?strip=all&quality=95)
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.
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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.
![case study segmentation targeting positioning brand positioning, brand positioning map, untapped market, potential market](https://www.salesforce.com/in/blog/wp-content/uploads/sites/9/2023/06/segmentation-brand-positioning.png?strip=all&quality=95)
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.
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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
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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
![case study segmentation targeting positioning Market Segmentation of Starbucks Mind Map](https://images.edrawmind.com/article/starbucks-market-segmentation-targeting-and-positioning/example-1120_502.png)
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.
|
|
|
Demographic | Age: 22-60 years old Gender: Male and Female Occupation: Professionals, employees, and students Life-cycle stage: Single people, young married couples, older married couples with children, youngest child under and over six | ● Excellent store ambiance ● Social commitment ● Environment protection |
Geographic | Region: Latin America, US, Canada, Middle East, Europe, China, Africa, Asia, and the Pacific Region Density: Urban | |
Psychographic | Social Class: Middle and upper-class markets Lifestyle: reformer, aspirer, explorer, achiever, mainstreamer | |
Behavioral | Benefits sought: A place conducive for work, formal and informal meetings. Enjoying a premium quality coffee with a relaxing ambiance. Degree of loyalty: 'Hard core' loyalty |
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
![case study segmentation targeting positioning McKinsey's 7s Framework Anlaysis for Starbucks](https://images.edrawmind.com/article2023/optimization/mckinsey-7s-framework-starbucks-.png)
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
![case study segmentation targeting positioning Starbucks PESTEL Analysis](https://images.edrawmind.com/article2023/optimization/starbucks-pestel-analysis.png)
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
Copyright © 1991, MCB UP Limited
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New Approaches to Market Segmentation, Targeting and Positioning: The Case of Maribojoc, Bohol, Philippines
- First Online: 28 November 2021
Cite this chapter
- 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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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
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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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