Segmentation, Targeting
and Positioning (STP)
What is Segmentation
Market segmentation is the process of dividing a varied
and differing group of buyers or potential buyers into
smaller groups within which broadly similar patterns of
buyers needs exist.
By doing this the marketing planner is attempting to
break the market into more strategically manageable
parts which can then be targeted and satisfied far more
precisely by making a series of perhaps small changes to
the marketing mix.
[Link]
Market segmentation
Market segmentation is the best strategy for targeting
customers by focusing on the characteristics of
customers. The customers with same characteristics are
formed within a group.
Market segmentation is the process of dividing a broad
consumer or business market into smaller, more
manageable groups based on shared characteristics such
as demographics, behaviors, and needs. This helps
businesses tailor their products, marketing strategies,
and services to meet specific customer preferences.
Why segmenting the market?
The rationale is straight forward and can be expressed most
readily in terms of the fact that only rarely does a single
product or marketing approach appeal to the needs and
wants of all buyers.
Because of this, marketing strategists need to categorise
buyers on the basis of both their characteristics and their
specific products needs with a view then to
adapting the product or the marketing programs or both to
satisfy these different tastes and demands.
It helps in the selection of a particular group of customers
that have similar needs and preferences in a market and also
in understanding the needs of different customers in respect
to their buying behaviour
Continued…
Businesses need to understand carefully the needs and
demands of their market as this is vital towards
designing and implementing the marketing stimuli that
responds well to the needs of customers.
A well segmented market is less costly in saving for
example if a small business targets Mashonaland west
province and interns to advertise its [Link] will be
very expensive to use the mass media such as national
television or print media which covers the whole nation.
Reason for Segmenting
Markets Summarised
Better Customer Understanding.
Efficient Use of Resources
Competitive Advantage.
Improved Customer Satisfaction
Higher Profitability
Conditions to justify
attention of a segment
In order for a market segment to justify attention six
conditions needs to be satisfied.
a) Measurable
Measurable means the market must be easy to measure
its size to determine its sustainability
businesses must venture into segments which are
sustainable as this means worthwhile investments
Continued…
b) The market must be accessible
Accessibility refers to the potential of the market to be
reachable in terms of road access, telecommunication
networks and broadcasting networks at a lower cost.
Costly segments will erode the profit margins
c) The market must be substantial
Substantial means that the segment must be big enough to
warrantee a substantial amount of profit.
Continued…
d) Unique
the market must be different from other markets so
that it can be distinguished from other markets
segments easily
e) Appropriate
The segment must be suitable and fitting the
organisation’s objectives and resources
Continued…
f)The segment must be stable
Stability of the market refers to the constant of the
market behaviour to allow predictability with the
sufficient degree of confidence.
Overally, before embarking on launching the product,
evaluate segments on the basis of two criteria’s namely the
attractiveness of the segment and the organisation’s ability
to exploit the value of the segment
Segment’s attractiveness
It is determined by factors such as:
The segment’s size
Growth potential
The intensity of competition
Market bases
Costs of competition
Opportunities for profit
Approaches to segmentation
The approach to market segmentation depends on the
nature and characteristics of the product, and the
market in which the company is operating
The task of segmenting the market involves deciding
upon the most appropriate single method or
combination of methods for dividing up the market.
In the case of consumer goods the mostly used methods
have been geographic, demographic and benefit
measures, while in the industrial sector they have been
using usage rate, source loyalty and location
Segmentation Criteria
Geographic segmentation
Demographic variables
Psychographic Segmentation
Behavioral Segmentation
Geographic segmentation
Geographic segmentation refers to the process of subdividing
the market according to geographic boundaries such as cities,
states, regions and even continents. In this type of
segmentation, an enterprise needs to study the respected
geographical area. The business owner should offer products
as per the needs and choice of local inhabitants.
The belief on geographic segmentation is based on the fact
that some products are demanded depending on the region
and group of people in the same region tend to have the same
needs. For example Africans are believed to share the same
beliefs and hence can be grouped into one market.
Demographic segmentation
This involves subdividing the market
according to demographic variables such
as age, gender, income, occupation,
religion, race, generation and social class
Businesses must understand their
customer’s demographics and tailor make
marketing mix variables according to
demographics.
Demographic segmentation
cont…
Age
It is important for businesses to cater for all age groups from
toddlers, teenagers, bachelors, spinsters, adults, widows and
widowers. This is because these age groups require different
products for example toddlers will require sweets while
adults may require common basics
Gender
Gender refers to segmenting the market according to sex. On
gender, it is important for business to have a section for
women and man as these categories requires different
products.
Demographic segmentation
cont…
Social class level
Businesses must be aware of different social classes’
core existing together in a geographical place
Morrish (1985) says wherever societies have existed
there has always existed some form of hierarchy or
stratification among their members.
This is due to the fact that human society the world
over has some of social inequalities in terms of social
rewards: wealth, power and prestige.
Demographic segmentation
cont…
Upper class
Is composed of 3% of the population. The so called ‘blue bloods’; people
who think they have special blood in their veins. They have wealth and
hence power inherited or earned; members of the high society.
Middle class
Have an average lifestyle which is below that of the upper class. Own a
good house, car and some property. Their work embodies a career and
possesses higher level of education and training. Their occupations are
associated with position of authority; include white collar jobs, (non
manual work)- doctors, university and college lecturers, teachers. Also
includes top level blue collar wage earners like artisans, engineers, skilled
craft workers e. g. Fitters, turners, boilermakers etc.
Lower class
Composed of the working class group who are however lowly paid. The
steadily employed, irregularly employed, semi-skilled workers, unskilled
workers.
Psychographic segmentation
Psychographic segmentation involves segmentation
on the basis of lifestyle, values and beliefs of an
individual. The individuals always prefer a product
or service that gives them a better feeling of
satisfaction. They want a product that suits their
values and character. For example vegans.
Behavioural segmentation
This segmentation approach is based on a series of
behavioural measures which includes attitudes, knowledge,
benefits sought by the buyer, a willingness to innovate,
loyalty status, usage rates and response to product.
Benefit segmentation is the best known and mostly widely
used behavioural segmentation method. It is premised on
the assumption that it is the benefits that people are
seeking from a product that provides the most appropriate
bases for dividing upon a market.
Behavioural segmentation
continued…
Benefits- Refers to the advantages of the product for
customers. The benefits of the product attract the
customer to purchase the product on a regular basis.
Occasions– this divides the customers based upon their
varied purchase requirements during various occasions.
Usage rates- classify products according to their use by
the customer and the usage can be divided into a heavy,
medium and light usage.
Loyalty status- the marketers analyse customers
according to different loyalty status and apply a
suitable marketing strategy. It includes four types of
customers
Behavioural segmentation
continued…
Loyalty customer types
Hardcore loyal-refer to the customers who stay with the
same brand for a very long period.
Split loyal-refer to the customers who prefer to buy two
or more brands of a product.
Shifting loyal-refer to the customers who keep on
changing their brand at frequent intervals.
Switchers-refer to the customers who have no brand
preference and seek variety in products
Target Marketing
Target marketing is the process of selecting
specific market segments to serve with customized
marketing efforts. Instead of trying to appeal to an
entire market, businesses focus on high-potential
segments.
Target Marketing Strategies
Undifferentiated Marketing (Mass Marketing) – A single
marketing strategy for all customers.
Differentiated Marketing (Segmented Marketing) – Different
strategies for different segments.
Concentrated Marketing (Niche Marketing) – Focusing on a
specific, well-defined segment.
Micromarketing (One-to-One Marketing) – Customizing
products and messages for individuals or local segments.
Aspect Market Segment Target Market
A subgroup of a broader market,
A specific segment (or multiple
categorized based on shared
segments) that a company
Definition characteristics like
decides to focus its marketing
demographics, behavior, or
efforts on.
needs.
Helps businesses classify Helps businesses develop
Purpose consumers into meaningful marketing strategies tailored to
groups. a chosen segment.
Larger; includes potential Smaller; consists only of the
Scope customer groups that may or customers a company aims to
may not be targeted. serve.
Selection of one or more
Identification and classification
Strategy segments to market a product or
of customer groups.
service to.
Fashion-conscious professional
Women aged 25–45 with a mid-
Example women in metropolitan cities
range income.
who shop online for workwear.
Further examples
1. Fitness App
Market Segment: Adults aged 18–40 interested in health and wellness.
Target Market: Urban millennials who work full-time and prefer home
workouts with minimal equipment.
The segment is broad (adults interested in fitness), while the target
market is a focused group the company chooses to serve.
2. Fintech App (Mobile Banking)
Market Segment: Smartphone users aged 20–50 with bank accounts.
Target Market: Young professionals aged 25–35 who prefer mobile-first,
fee-free digital banking solutions.
Segment is everyone with a smartphone and a bank account; the target
market is a tech-savvy, convenience-driven subgroup.
3. Telemedicine Service
Market Segment: Patients in remote or underserved areas.
Target Market: Chronic illness patients in rural towns aged 40+ who need
regular virtual doctor consultations.
The target market is a specific, high-need group within the larger
segment
Positioning
Positioning refers to how a brand is
perceived in the minds of consumers
compared to competitors.
It involves creating a distinct image,
message, and value proposition that
differentiates the brand from others in
the market.
Importance of Positioning
Creates Brand Identity – Helps customers associate
specific qualities with a brand.
Enhances Competitive Advantage – Differentiates a
business from its competitors.
Improves Customer Loyalty – Builds trust and long-term
relationships with consumers.
Justifies Pricing Strategy – Premium positioning allows
businesses to charge higher prices.
Guides Marketing Efforts – Ensures consistent messaging
across campaigns.
The End!