2.3 Marketing Strategy: Segmentation, Targeting, and Positioning

Market Segmentation

Market segmentation divides a broad market into smaller groups of consumers with shared needs or characteristics. Common bases include demographic (age, income, gender), geographic (location), psychographic (lifestyle, values), and behavioral (purchase habits, brand loyalty). Segmentation helps businesses understand diverse customer groups instead of treating the market as one uniform whole.

Targeting

After segmenting, a business chooses a target market — the specific segment(s) it will focus marketing efforts on. Firms evaluate segments by size, growth potential, profitability, and fit with company resources. Targeting strategies include mass marketing (everyone), niche marketing (one small segment), and differentiated marketing (multiple segments with tailored approaches).

Positioning

Positioning is how a company shapes consumer perception of its product relative to competitors. A strong position is often summarized in a value proposition or positioning statement, highlighting unique benefits. Businesses use marketing mix elements (product, price, place, promotion) to reinforce the desired image in the target customer's mind.

Key terms

Market Segmentation

Dividing a broad market into smaller groups of consumers with shared needs or characteristics.

Demographic Segmentation

Grouping consumers by measurable traits like age, income, gender, or education.

Target Market

The specific segment(s) of the market a business chooses to focus its marketing efforts on.

Niche Marketing

A targeting strategy focusing on one small, specialized market segment.

Positioning

The strategy of shaping how consumers perceive a product relative to competitors.

Try an AP-style question

Market segmentation means…

1. dividing a market into distinct groups
2. setting prices by cost only
3. selling one product to everyone
4. choosing where to sell goods