Market Segmentation, Targeting and Positioning
What this domain tests
Segmentation, targeting, and positioning (STP) tests whether you can divide a heterogeneous market, choose a viable segment, and state a clear position. The exam rewards precise variables and a defensible choice, not a list of slogans.
Core rules and concepts
- Segmentation variables include geographic, demographic, psychographic, and behavioural bases; business markets may use firm size, industry, and buying criteria.
- A useful segment is measurable, accessible, substantial, differentiable, and actionable.
- Targeting strategies are undifferentiated (mass), differentiated (several segments), concentrated (one niche), and micromarketing (local or individual).
- Positioning is the place a brand occupies in the customer's mind relative to competitors; it uses points of difference and points of parity.
- A positioning statement names the target, the frame of reference, the benefit, and the reason to believe.
Worked example
A shampoo brand finds that young professionals in humid coastal cities complain of oiliness within hours. It segments by geography and benefit, targets one concentrated segment, and positions as “24-hour oil control for humid weather, tested in Mumbai.” The reasoning: the segment is identifiable and reachable through chemists and e-commerce; the claim is specific and testable; resources are not spread across all hair types. A mass launch with “good for everyone” would be weaker.
Traps that cost marks
Do not treat segmentation as targeting; segmentation is analysis, targeting is choice. Do not pick many segments when the firm is small. Do not write a position that is only a feature (“contains neem”) without a benefit and target. Do not ignore competitors when claiming a difference.