Understanding the diverse nature of customers is crucial for creating effective marketing strategies. Businesses cannot serve everyone in the same way, so they divide the market into smaller groups based on shared characteristics. This unit focuses on three interconnected concepts: market segmentation, targeting, and positioning—together known as the STP model in marketing. These are essential tools that help marketers focus their efforts and deliver the right message to the right audience.
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Meaning and Need for Segmentation
Market segmentation refers to the process of dividing a broad market into smaller, more defined groups of consumers who have similar needs, preferences, or characteristics. Each segment responds differently to marketing efforts, so companies can better tailor their products and communication to meet specific expectations.
The need for segmentation arises from the fact that the market is not homogeneous. Customers differ in income, age, location, interests, and buying behavior. A single marketing strategy cannot appeal to all. Segmentation allows businesses to:
Identify profitable customer groups
Design personalized marketing campaigns
Increase customer satisfaction
Utilize resources efficiently
Bases for Market Segmentation
Marketers can use various criteria, or bases, to segment the market. The main ones include:
1. Geographic Segmentation:
Dividing the market based on location such as country, region, city, or climate. For example, a clothing brand may offer winter wear in colder regions and summer wear in tropical areas.
2. Demographic Segmentation:
This is one of the most common methods, based on factors like age, gender, income, education, occupation, and family size. For instance, luxury car manufacturers often target higher income groups.
3. Psychographic Segmentation:
This approach considers lifestyle, personality traits, values, and interests. For example, an eco-friendly product brand might target environmentally conscious consumers.
4. Behavioral Segmentation:
Based on consumer behavior such as usage rate, brand loyalty, benefits sought, or purchase occasion. A good example is segmenting customers who buy gifts only during festivals versus regular buyers.
Using a mix of these bases helps marketers develop a more accurate profile of each customer segment.
Targeting – Strategies and Process
After segmentation, the next step is targeting, where the company evaluates each segment and selects one or more to serve. The goal is to focus marketing efforts on the most attractive segments in terms of profitability and alignment with the company’s strengths.
Types of Targeting Strategies:
Undifferentiated Marketing: A single marketing strategy for the entire market; useful for mass products like salt or sugar.
Differentiated Marketing: Separate strategies for different segments. For instance, a car brand may target young people with sporty models and families with SUVs.
Concentrated Marketing: Focusing on one niche segment, like a luxury watch brand targeting high-income professionals.
Micromarketing: Tailoring products and marketing programs to suit individual customers or local areas (e.g., customized clothing or local store promotions).
Targeting Process:
Evaluate the segment size and growth
Assess compatibility with company objectives
Analyze competition in the segment
Select one or more segments to target
Positioning – Concept, Importance, and Strategies
Positioning is about creating a distinct image of a product or brand in the customer’s mind. It answers the question: Why should a customer choose your product over a competitor’s?
A well-positioned brand communicates a unique value or benefit that appeals to the target audience. For example, Volvo is positioned around “safety,” while Apple focuses on “innovation and design.”
Importance of Positioning:
Builds brand identity and recognition
Differentiates the product in a crowded market
Influences consumer perception and buying behavior
Supports premium pricing for unique offerings
Positioning Strategies Include:
Attribute-based (e.g., Colgate – strong teeth)
Benefit-based (e.g., Sensodyne – relief from sensitivity)
Use or Application-based (e.g., Gatorade – hydration for athletes)
User-based (e.g., Johnson’s Baby – for infants)
Competitive-based (e.g., Pepsi vs. Coca-Cola)
Marketers often use a positioning map to visually compare how their brand is perceived against competitors on various attributes.
Differentiation vs. Positioning
While both terms are related, differentiation refers to the actual differences in product features or services, while positioning is about how these differences are communicated and perceived by consumers.
Differentiation creates competitive advantage (e.g., superior quality, unique design).
Positioning communicates that advantage to make a lasting impression in the consumer’s mind.
Both are essential to stand out in the market and attract loyal customers.