The Art of Market Segmentation, Targeting & Positioning

Segmentation, targeting, and positioning (STP) are three important concepts in order to gain a complete insight into the marketing landscape. Along with the various types of segmentation and the parameters, you'll be able to understand the importance of STP and its relevance in marketing as every marketing plan needs to consider STP to find the right customer correctly, target him through the proper marketing channels, and influence his perception of the product against competitors.

Exploring Segmentation, Targeting, and Positioning

Every marketing plan needs to consider STP to find the right customer correctly, target them through the proper marketing channels, and influence their perception of the product against competitors. Before we dive into the inner workings of STP, let us take a brief look at what these three concepts consist of. As the image below shows, segmentation refers to a process of categorizing clients into different and smaller groups which respond to their characteristics and particularities, targeting focuses on choosing the individuals who are the recipients of marketing action, and finally, positioning is used to create an image or identity for a product, brand, or company.

More Insights into Segmentation

A market comprises people and organizations with needs, money to spend, and the desire to spend it. However, in most markets, buyers' needs and wants are not the same. The big question is: How can the company adapt to such diversity? As you can see in the image below, each segment comprises users with similar criteria and aspects, making them feel motivated and comfortable with the same stimuli and strategies. In this way, brands manage to strategically adapt marketing approaches toward each group to make them more effective and profitable.  

In marketing, stimuli refer to materials used in market research which is intended to gain any sort of reaction or response from the audience it's targeted at. In the case of segmentation, different criteria will have selected responses to the stimuli that are applied.

The Main Segmentation Parameters

The four primary types of segmentation variables are socio-demographic, geographic, psychographic, and behavioral characteristics. Let us take a look at what these parameters are and how they apply to a marketing landscape.  

The Socio-demographic Parameter

Socio-demographic targeting occupies an essential place in a winning marketing strategy. This type of segmentation consists of classifying customers according to social parameters while considering properties relating to populations and their dynamics. As the criteria mentioned are numerous, it's sufficient that you choose the most important to achieve relevant and effective targeting. Here are some of the more notable parameters that fall under socio-demographic parameters.  

• The economic parameter: This revolves around financial data relating to the target client, namely their profession, professional hierarchical level, and the approximate value of their income.
• The demographic parameter: This involves identifying the personal profile of the ideal client, starting with their gender, age, marital and family status, diplomas, etc.
• The geographic parameter: This criterion makes it possible to locate the target customer, starting with the country of residence or employment. For better targeting quality, it is strongly recommended to go for more precision, such as utilizing the region, city, and department.

The Psychographic Parameter

Once you have studied the socio-demographic data, gathering the elements related to your customers' personalities is in your interest. But what is personality? This is a very broad concept; however, you can familiarize yourself with the aspects of a personality; attitudes, lifestyle, values, social status, and political opinions. Although it may be challenging to segment audiences with psychographic segmentation, this approach leads to effective marketing campaigns as it provides insights into buying behaviors.

A brand that focuses on plant-based food products such as Beyond Meat may have an audience segment of vegans, vegetarians, or pescatarians and meat eaters who wish to consume less meat. As the image below shows, most of Beyond Meat's products are made to represent dishes that were originally made from real meat, which can appeal to those a particular segment.

The Behavioral Parameter

This criterion shows customer purchasing habits for B2B and B2C. It helps create portfolios based on whether customers buy occasionally or regularly, prioritize promotions, prefer quality or quantity, as well as showing concern towards customer care, design, or functionality. To understand the behavioral parameters better, here are some of the reasons how it can be of assistance:

• Helps understand how to address the particular needs and desires of the customer groups
• Tailors your product or service to meet those needs and desires
• Discovers opportunities to optimize the buyer’s journey
• Quantifies their potential value to your business
• Develops a smart marketing strategy to improve and expand your customer base

‍

More Insights into Targeting

Targeting is usually considered to be a one-time operation repeated every time you create a new marketing automation campaign or scenario for each segment. To improve business performance and gain a satisfactory ROI (return on investment) from any marketing endeavor, you need to be able to segment and target your customer base properly. By now, you might be able to come to the conclusion that segmentation and targeting are two interlinked concepts in the marketing realm. Here are some stand-out features of targeting:

• The ability to classify and divide your customers according to pre-established parameters.
• Establishing groups with similarities in terms of interests  
• Creating a commercial proposal in line with these groups

Demographic segmentation involves grouping consumers based on factors like age, gender, income, occupation, etc. Behavioral segmentation divides consumers into groups according to their observed behaviors, particularly concerning specific products or services. These behaviors can include status, usage rate, and buying attitudes and habits. Psychographic segmentation is the process of dividing a market into segments based upon different personality traits, beliefs, values, attitudes, interests, and lifestyles of consumers. This type of segmentation is advantageous because it allows marketers to create a more precise profile of their target audience.

More Insights into Positioning

Positioning is the technique used to create an image or identity for a product, brand, or company. It is the "place" that a product occupies in a given market as perceived by the target audience. Positioning is something that is placed in the mind of the market. For example, brands like Nike or Coca-Cola, or companies like Google and Amazon, will immediately have you visualize their logos and even know what sector they are dedicated to.

A product position is the way buyers perceive the product. The concept of positioning is based on the position of the product or brand in relation to its competitors.

Successful positioning strategies translate into a product's acquisition of competitive advantage. The most common bases to build a product positioning strategy are:

• positioning on the specific characteristics of a product
• positioning on solutions, benefits, or specific needs
• positioning on the specific use of categories
• positioning on specific occasions of use
• positioning against another product
• positioning through dissociation by product type

For example, a fast-food restaurant chain like McDonalds may position itself as a provider of cheap meals. By giving consumers a full meal for a very low price, McDonalds' has positioned itself as one of the most popular fast food franchises that are trusted by anyone looking for a quick and cheap meal.

Perceptual Map in Marketing Positioning

Among the strategies for positioning, there is the perceptual map of market positioning or perceptual mapping which is a visual guide to consumer perceptions. It is used to show consumer perception of certain brands. The map allows you to identify how competitors are positioned relative to you and to identify opportunities in the marketplace.

While a perceptual map is useful for market positioning, it does not show the actual brand positioning or desired goals. Businesses can use it to identify gaps or opportunities in the perceived marketplace and visualize how consumers perceive their products compared to competitors. It's important to note that the map is based on consumer perceptions, which may not always align with the actual attributes of a product or the intended brand image.  For more valuable insights in market positioning and other concepts, make sure to engage in our immersive Fundamentals of Digital Marketing Online Training.

References

[1] https://www.referralcandy.com/blog/how-to-define-target-market-examples#3-lego-target-market

[2] https://rb.gy/7gvtv

‍

‍