Segmentation Targeting And Positioning

Segmentation, Targeting, and Positioning (STP) are core components of a successful marketing strategy, helping businesses reach the right audience with the right message. Segmentation involves dividing a broad market into smaller, manageable groups based on shared characteristics such as demographics, behaviors, and preferences. Targeting is the process of evaluating these segments and selecting the ones that align best with a company’s goals and resources.

Once a target audience is chosen, Positioning comes into play, where the brand or product is strategically placed in the minds of consumers to stand out from competitors. Together, these three steps help businesses create tailored marketing campaigns that cater to specific needs, leading to more efficient resource use, better customer engagement, and increased brand loyalty

Table of Contents

What is Segmentation, Targeting, and Positioning?

STP stands for Segmentation, Targeting, and Positioning, a marketing framework that helps businesses effectively reach and engage with their desired audience. This process involves breaking down the broad market into smaller segments, selecting the most profitable target groups, and positioning the product or brand in a way that resonates with those consumers.

1. Segmentation

Segmentation is the first step in the Segmentation, Targeting, and Positioning process. It involves dividing a broad market into smaller, more manageable groups based on shared characteristics such as demographics, behavior, location, or psychographics. By segmenting the market, businesses can better understand the specific needs of different customer groups and cater to them more effectively.

Example:
Nike’s Market Segmentation

Demographics:

Age: Nike segments their market by age, targeting different age groups such as teenagers, young adults, and older adults. For example, Nike’s Air Jordan line may appeal more to younger, trend-conscious consumers, while the Nike Air Zoom series might cater more to middle-aged adults looking for comfort in athletic shoes.

Behavior:

Fitness Enthusiasts: Nike offers specialized shoes for running, training, or basketball, targeting consumers who are highly involved in sports and fitness. For example, the Nike Free RN is a product tailored for running enthusiasts.
Casual Gym-Goers: For those who go to the gym but aren’t as serious about sports, Nike offers more versatile and stylish shoes, like Nike Metcon, which are suitable for a variety of activities but also appeal to those looking for trendy footwear.

Geographics:

Urban Areas vs. Rural Areas: In urban areas, Nike may focus on trendy, stylish athletic shoes (like the Nike Air Max), which appeal to the fashion-conscious youth who enjoy both sports and streetwear culture. Meanwhile, in rural areas, Nike may emphasize durability and performance, catering to consumers involved in more traditional outdoor activities, like hiking and farming, with shoes like the Nike ACG (All Conditions Gear) line.

Psychographics:

Health-Conscious Consumers: Nike targets individuals who prioritize health and wellness with products designed for high-performance and comfort, such as their Nike React or Nike Air Zoom series.
Fashion-Conscious Consumers: Nike also appeals to those who seek fashionable sportswear, like the Nike Air Force 1 or Nike SB Dunk, which have become a streetwear staple beyond just sports.

By segmenting their market in this way, Nike ensures that their products and marketing campaigns resonate with the specific needs and desires of each group, improving their customer engagement and sales.

2. Targeting

After segmentation, businesses select the most appropriate segments to target. This step involves evaluating the potential of each segment based on factors like market size, profitability, and alignment with the company’s goals. By choosing the right target segment, businesses can maximize their return on investment.

Example:
Coca-Cola’s Market Targeting

Coca-Cola is one of the most recognized brands in the world, and its success can be attributed to its highly targeted marketing strategies. Here’s how Coca-Cola uses targeting based on different consumer segments:

1. Targeting Health-Conscious Consumers:

In response to the growing trend of health-consciousness, Coca-Cola introduced Coca-Cola Zero Sugar and Diet Coke. These products are specifically designed for consumers who want the taste of Coca-Cola without the sugar and calories. This segment is typically made up of individuals who are concerned with their health and fitness, such as those who regularly visit the gym or follow a healthy diet.

Marketing Strategy: Coca-Cola promotes these products through campaigns focused on health, fitness, and lifestyle, such as sponsoring health-related events and partnering with fitness influencers.

2. Targeting Younger Consumers (Millennials and Gen Z):

Coca-Cola also focuses heavily on younger consumers who seek convenience, innovation, and unique experiences. For this group, Coca-Cola offers limited-edition flavors, such as Coca-Cola with Coffee, and often leverages social media to engage with younger audiences.

Marketing Strategy: Coca-Cola frequently uses social media platforms like Instagram, TikTok, and Snapchat to create engaging content that resonates with younger consumers. They also sponsor events like music festivals (e.g., Coachella), which are popular among younger age groups.

3. Targeting Family and Traditional Consumers:

Traditional Coca-Cola products, such as Coca-Cola Classic, continue to be marketed towards families and individuals who enjoy a classic, refreshing soft drink with their meals or during social gatherings. This group often values nostalgia and tradition.

Marketing Strategy: Coca-Cola targets this group with classic TV ads, family-oriented promotions, and by sponsoring events that emphasize togetherness, such as family-oriented sports events or national holidays.

4. Targeting Premium Consumers:

Coca-Cola also targets premium consumers through its premium product offerings like Coca-Cola Life (sweetened with cane sugar) or Minute Maid Premium Juices.

Marketing Strategy: For this segment, Coca-Cola focuses on the higher quality, natural ingredients of these products, and markets them through more sophisticated campaigns that highlight their premium status.

3. Positioning

Positioning refers to how the target audience perceives a brand or product in relation to its competitors. This step is about crafting a unique message that makes the product stand out and appeals directly to the target market’s needs, desires, and emotions. The goal is to create a distinct identity for the product in the consumer’s mind.

Example:
For the athletic shoe company, they may position their brand as “the best performance shoe for serious athletes”, focusing on durability, comfort, and cutting-edge technology. For their target audience of fitness enthusiasts and young adults, the company’s advertising might highlight how their shoes are designed to enhance performance and keep up with the rigorous demands of an active lifestyle. This positioning could be further supported by endorsements from professional athletes or fitness influencers.

Importance of Segmentation, Targeting, and Positioning Marketing

STP (Segmentation, Targeting, and Positioning) is a fundamental concept in marketing, crucial for creating a well-structured marketing mix. It helps businesses understand customer behavior and identify the right target market for their products. By applying STP, companies can focus their efforts on the most relevant customer groups and avoid wasting resources on unrelated segments.

Enhanced Customer Focus: STP marketing forces businesses to dive deep into customer insights. By segmenting the market based on demographics, needs, and behavior, companies gain a clear understanding of their ideal customers. This enables them to directly address customer needs, ensuring communication resonates with the audience’s desires and pain points.
Increased Marketing Efficiency: Gone are the days of broad marketing efforts. STP encourages companies to focus their resources on high-potential segments, ensuring they spend money only where conversions are likely. This approach leads to more cost-effective advertising, resulting in better returns on investment.
Improved Customer Engagement: With STP, businesses can craft personalized marketing messages that speak directly to each target group’s specific needs and preferences. This personalization strengthens customer loyalty and deepens their connection to the brand.
Unique Brand Positioning: STP allows companies to carve out a distinctive market position in competitive landscapes. By targeting specific segments with tailored offerings, businesses differentiate themselves and attract the right audience while avoiding irrelevant ones.
Data-Driven Decisions: STP relies on detailed customer data to make informed choices about market segmentation, target audience selection, and product positioning. This approach minimizes uncertainty, ensuring that businesses make decisions based on concrete data about what their customers truly want.

How to Build a Segmentation, Targeting, and Positioning Marketing Strategy

Building a successful STP (Segmentation, Targeting, and Positioning) marketing strategy is key to identifying and appealing to the right audience for your product or service. By following these steps, you can optimize your marketing efforts and maximize your impact in the market.

Step 1: Define Your Market

The first step in building your Segmentation, Targeting, and Positioning strategy is to define your market. The global market is vast, and to target it effectively, you need to narrow your focus. Consider factors like Total Available Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM) to understand:

TAM: The entire market potential for your product or service.
SAM: The portion of the TAM that your product can realistically serve.
SOM: The share of SAM that you can capture based on your capabilities and resources.

This step is critical in establishing a clear view of the market size and narrowing your scope to the segments that matter the most for your business.

Step 2: Create Audience Segments

After defining your market, move to the segmentation phase. Segmenting your audience based on relevant criteria ensures you can focus on specific groups of consumers. You can segment your audience using the following variables:

Demographics: Age, income, education level, etc.
Geographics: Location, including city, region, or country.
Psychographics: Interests, lifestyle, attitudes, and values.
Behavioral: Purchase behavior, product usage, brand loyalty, website visits, etc.

By segmenting your audience effectively, you can ensure that your marketing efforts are precisely tailored to the needs and behaviors of each group.

Step 3: Develop Segment Profiles

Once you have segmented your audience, develop detailed segment profiles. These profiles should include:

Needs and desires of each segment.
Demographics and behaviors specific to the group.
Brand preferences and attitudes towards products or services.
Shopping behaviors: Where and how they make their purchases (online vs. in-store).

Developing detailed profiles allows you to understand the unique characteristics of each segment and make informed decisions about which ones to target.

Step 4: Evaluate Segment Attractiveness

After developing your segment profiles, evaluate the attractiveness of each segment. Key factors to consider include:

Size of the segment: Is it large enough to generate sufficient demand?
Growth rate: Is the segment expanding, stable, or shrinking over time?
Price sensitivity: How sensitive is this segment to price changes?
Brand loyalty: How loyal is this segment to existing brands and products?

This evaluation helps prioritize the segments that offer the most potential for growth and profitability.

Step 5: Select Target Audience

From your evaluations, select the target audience that best aligns with your business strategy and objectives. When choosing your target audience, consider:

Segment size: Is it large enough to justify focusing marketing efforts on it?
Competitive landscape: How much competition exists within this segment?
Potential growth: Does the segment show long-term growth potential?

By carefully selecting your target audience, you can maximize your segmentation, targeting, and positioning efforts and ensure you are focusing on the right people.

Difference Between Segmentation, Targeting and Positioning

Segmentation, Targeting, and Positioning (STP) are three fundamental components of a marketing strategy that help businesses effectively reach and engage their target audience. Each element plays a unique role in understanding the market, selecting the right customer groups, and crafting messages that resonate with those customers. Here’s a breakdown of the differences between Segmentation, Targeting, and Positioning in a concise table format:

Aspect	Segmentation	Targeting	Positioning
Definition	Dividing a broad market into smaller, distinct groups based on shared characteristics (e.g., demographics, behaviors).	Choosing which specific segments to focus on based on their potential and alignment with business goals.	Creating a unique image and identity of the brand in the minds of the selected target audience.
Purpose	To identify the different needs and wants of various customer groups.	To select the most appropriate segments to serve.	To differentiate the brand/product and make it stand out from competitors.
Key Focus	Grouping customers based on similarities (e.g., age, location, interests).	Evaluating and choosing the best-fit segment(s) for the product/service.	Developing a distinct position that appeals to the target segment.
Question It Answers	Who are the potential customers?	Which customers should we focus on?	How do we want our product to be perceived by the target audience?
Output	Market segments (e.g., high-income individuals, fitness enthusiasts, millennials).	A specific target market or segment(s) selected for focus (e.g., tech-savvy millennials).	A positioning statement or unique value proposition that appeals to the target market.
Time Frame	Often a one-time or periodic analysis to understand market groups.	Ongoing as market conditions and consumer preferences shift.	Continuous, but can be adjusted based on changing market dynamics.
Example	Segmenting a market based on age, gender, lifestyle, etc. (e.g., teenagers, working professionals).	Choosing to target “fitness-conscious women between 25-35 who prefer eco-friendly products.”	Positioning the brand as “the most reliable, sustainable fitness brand for women.”

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Segmentation Targeting And Positioning FAQs

Can Segmentation, Targeting, and Positioning work together?

Yes, STP works together as a cohesive strategy. Segmentation identifies distinct customer groups, targeting selects the most relevant segments, and positioning ensures that the product is marketed in a way that appeals to those segments. This strategic approach enables businesses to deliver tailored marketing messages that resonate with their audience.

What are the benefits of STP marketing?

The main benefits of STP marketing include improved customer focus, more effective use of marketing resources, enhanced customer engagement, and the ability to create a unique brand identity. By focusing on specific segments, businesses can increase conversion rates and customer loyalty.

Can STP be applied to all types of businesses?

Yes, STP can be applied to businesses of all sizes and industries. Whether a company is in B2B or B2C, product-based or service-based, STP helps create more personalized marketing strategies that effectively reach and engage the right audience.