How to target and segment markets

**Segmentation** is the process of dividing a broad consumer market into smaller, more manageable groups (segments) based on shared characteristics like demographics, geography, behavior, or psychographics.

**Targeting** is the act of selecting one or more of these segments to focus marketing efforts on, based on their potential profitability, accessibility, and alignment with the company's capabilities.

**Positioning** is the strategy of creating a unique image and offering in the minds of the target market relative to competitors. It's about how the company wants its brand or product to be perceived by the chosen segment.

**Market segmentation** is the foundational step where the total market is broken down into identifiable sub-groups. **Targeting** is the subsequent step where the company evaluates these segments and chooses which ones to actively pursue with tailored marketing strategies.

**Target market segments** are the specific, chosen sub-groups within a larger market that a company decides to focus its marketing efforts on. These are the segments that the company believes it can serve most effectively and profitably.

**Target market segmentation** is essentially the same as market segmentation, referring to the process of dividing a total market into segments from which a target market can be selected. The term emphasizes that the *purpose* of segmentation is often to identify potential target markets.

The primary reason for segmenting a market (which then allows for targeting) is to understand and serve specific customer groups more effectively. By breaking down a large market, companies can develop more relevant products, messages, and channels, leading to increased customer satisfaction, loyalty, and profitability compared to a one-size-fits-all approach.

Behavioral segmentation identifies potential target markets by grouping customers based on their actions, knowledge, attitudes, or responses to a product or service. This includes purchase history, usage rate, loyalty status, benefits sought, readiness to buy, and response to promotions. Analyzing these behaviors helps pinpoint segments with specific needs or purchase patterns that a company can effectively target.

**Market segmentation** is the initial process of dividing the whole market. **Target markets** are the chosen segments from this process. **Customer profiles** (often called buyer personas) are detailed descriptions of typical individuals within the target market segments, bringing the segment characteristics to life with specific demographics, psychographics, needs, goals, and behaviors, making the target market more tangible for marketing planning.

A company should target market segments in which it can **generate the greatest customer value and capture value in return**. This means segments that are attractive (size, growth, profitability), accessible (reachable), differentiable (respond differently to marketing mix), and within the company's capabilities to serve effectively and defend against competitors.

STP is crucial because it allows companies to move away from mass marketing and inefficiently scattering their efforts. By segmenting, targeting specific groups, and positioning effectively, companies can focus their resources, tailor their offerings and messages, build stronger relationships with customers, and achieve a competitive advantage, leading to higher profitability and growth.