Segmentation, Targeting, and Positioning
Segmentation, targeting, and positioning (STP) asks you to divide a market into meaningful groups, choose which groups to serve, and design an offer that occupies a distinct place in the target customer's mind. Exam questions often supply segment data and ask for the best target or the strongest positioning statement.
Segmentation bases and tests
- Consumer bases: geographic, demographic, psychographic (lifestyle, values, personality), and behavioral (usage rate, benefits sought, occasion, loyalty).
- Business bases: firmographics, operating variables, purchasing approaches, situational factors, and personal characteristics of buyers.
- A useful segment is measurable, accessible, substantial, differentiable, and actionable. Stability helps but is not one of the classic five criteria.
Targeting choices
- Undifferentiated (mass): one offer for the whole market; efficient but vulnerable to focused rivals.
- Differentiated: separate offers for several segments; broader reach, higher cost.
- Concentrated (niche): one segment; strong fit, higher risk.
- Micromarketing: local or individual tailoring.
- Evaluate segments on size and growth, structural attractiveness, and fit with company objectives and resources.
Positioning
- Positioning is the place a brand occupies in the customer's mind relative to competitors, built from points of difference and points of parity.
- A positioning statement names the target, the frame of reference, the benefit, and the reason to believe.
- A perceptual map plots brands on attributes customers actually use; gaps are not automatically opportunities.
Worked example
A regional gym can serve busy professionals, families, or seniors. Professionals are numerous, willing to pay, and underserved at 6 a.m.; the gym has downtown space and app capability. It chooses a concentrated strategy: a 24/7 boutique with app coaching, a premium price, a downtown location, and promotion through LinkedIn and commuter radio. Families are rejected because the facility lacks childcare. Reasoning: the chosen segment meets the five tests and fits resources; the mix reinforces one position.
Traps that cost marks
- Treating segmentation as targeting; segmentation is analysis, targeting is the choice.
- Assuming more segments is always better.
- Using demographics alone when benefits sought explain purchase.
- Confusing a slogan with a positioning strategy.
- Choosing a perceptual-map gap that customers do not value.