MKTG 203 Chap.5 Segmentation, Targeting and Positioning
Segmentation, Targeting and Positioning
STP converts market variation into strategic focus. This chapter compares geographic, demographic, psychographic and behavioural bases, tests segments for size, measurability, access and responsiveness, contrasts five targeting approaches, and uses positioning and perceptual maps to express a meaningful choice relative to competitors.
What this chapter covers
- 01
Similarity within and difference between segments
- 02
Four bases reveal different response patterns
- 03
Segments must be substantial and reachable
- 04
Targeting breadth trades fit and complexity
- 05
Positioning guides the full marketing mix
Worked example · free
Choose a target for repair workshops
- +2Compare segment size and likely response.
- +2Test identifiability, measurement and access.
- +2Match the choice to organisational capabilities.
- +2State a comparative position and reason to believe.
Key terms
- Market segment
- A group with similar wants and needs that responds similarly to a marketing action.
- Target market
- The segment or segments selected for marketing action.
- Concentrated targeting
- Focusing the marketing effort on one selected segment.
- Perceptual map
- A two-dimensional plot of competing offers on attributes meaningful to customers.
Segmentation, Targeting and Positioning FAQ
What makes a segment useful?
Members should be similar on variables that predict response, while different segments should respond differently. The group must also be substantial enough, identifiable and measurable, accessible at reasonable cost and responsive to a tailored approach. A colourful profile is not useful when it cannot change product, message or channel decisions.
Is differentiated targeting always better than concentration?
No. Differentiation can cover several groups but requires multiple offers or mixes and greater organisational capacity. Concentration can create deeper relevance for one segment, though dependence increases risk. Choose the breadth that fits segment attractiveness, access, capabilities and the ability to deliver distinct value consistently.
What should a perceptual map show?
Choose two attributes that customers use to compare the relevant alternatives, plot credible competitors and interpret gaps carefully. Empty space is not automatically an opportunity; it may reflect low demand or difficult economics. The recommended position should match the written strategy and the product, price, channel and communication decisions that follow.
How do I test whether a segment label matters?
Ask which product, price, channel or message decision changes when a person enters that group. A description that predicts no different response is weak segmentation. Then test whether the group is substantial, measurable, accessible and responsive before comparing its attractiveness with organisational capability and risk.
Exam move
Draw the four segmentation bases and create one response-relevant variable under each. Test proposed segments using substantiality, identifiability and measurability, accessibility and responsiveness rather than choosing the largest group automatically. Compare undifferentiated, concentrated, differentiated, customised and mass-customised approaches through customer fit, cost, complexity and risk.
Keep segment, target and position on separate lines in every practice answer. For positioning, choose attributes the customer actually uses, plot alternatives and explain why the desired space is attractive and credible. End by auditing the marketing mix: if later choices do not reinforce the position, either the position or the actions need repair. Add a response test to every proposed variable.
Ask what marketing action would change if the customer fell into one category rather than another. Age, location or lifestyle can describe people without predicting a different need or response, so reject labels that do not alter a decision. Build three candidate segments from the same market and score each on size, measurability, access, responsiveness, competitive intensity and organisational fit.
Keep the evidence and judgement in separate columns so a large segment does not win automatically. Next, recommend a targeting breadth and write the capability cost it creates. Concentration can increase relevance while increasing dependence; differentiation can cover more demand while multiplying offers and coordination. State the trade-off directly.
For positioning, complete the sentence for a named target, frame of reference, point of difference and reason to believe. Then choose two attributes customers use to compare real alternatives and draw a perceptual map. Treat empty space as a question rather than proof of opportunity: investigate demand, credibility and economics before recommending it.
Run the downstream audit by writing one product, price, place and promotion implication beside the position. Highlight any choice that sends a different signal. Finally, practise a compact answer in three labelled lines: segment definition and evidence, target selection and trade-off, position and proof. Remove any sentence that mixes the three decisions.
This separation makes the logic visible and helps the reader test whether the selected target follows from analysis and whether the position can actually guide the marketing mix.
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