Segmentation, Targeting and Positioning (STP) is one of the most important and fundamental processes of

marketing. Segmenting the market, identifying the right target segment and positioning a company within
this market to cater to the target segment, is a crucial process that any product or service needs to
go through in order to attract consumers.

Market Segmentation can be defined as the process of splitting a market into smaller groups with similar
product needs for the purpose of selecting appropriate target markets. It helps in optimising a company’s
marketing program and making best use of its resources. The basis for segmentation of a market are:

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A great example to understand this is McDonald’s, which caters to all its market segment in a unique
manner. It has a ‘Happy Meal’ targeted at kids, has an economically priced range of burgers and wraps for

the teens and tweens on a budget. Lately, they have also come up with the McCafe offering for its
premium customers.

In order to focus on its marketing resources, an organisation needs to define its targeting strategy. After
segmenting the marketing into relevant consumer groups, the next step is to define the segments that the
company wishes to cater to. There are several considerations one needs to make when defining the actual
strategy i.e.

Some of the segments that a brand identifies may not be its potential target. Therefore, a brand needs to
consider the following factors before evaluating a segment:

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This is also known as the 3Cs.

Positioning is the process of occupying a meaningful and distinctive space in the mind of our target
consumers, relative to our competition. After Identifying the right segment and the targeting strategy i.e.
mass or niche marketing, as a marketer, we will have to decide on the positioning that we want to create in
the market in order to cater to the defined target segments. Along with the positioning, we have to decide on
marketing channels, taglines, logos, tone of communication, but also price, place and product
specifications - the 4P model which will help us create a distinct positioning in the consumer’s mind.

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