Segmentation, targeting and positioning Twenty good ideas for teaching year 10 economics and business


1. Successful businesses are likely to be market orientated rather than product orientated.

2. Within a market there are often a number of different market segments, that is groups of customers with common demand characteristics.

3. The common demand characteristics may be geographical (e.g. where they live), demographic (e.g. how old they are), behavioural (e.g. what interests they have), psychographic (e.g. their personality) or economic (e.g. their income).

4. Market segments can be mapped using diagrams that identify customer groups based on two broadly defined, selected demand factors. Different maps for the same market can be constructed using if demand factors are used.

5. There are three general approaches to marketing:

  • Mass or undifferentiated marketing (i.e. ignoring the segments and treating the market as one entity)
  • Niche marketing (selecting one segment in the market)
  • Segmented or differentiated marketing (making different versions of your product for different market segments)

6. Once segments have been identified, the business must select the sectors to target. It will target segments that are likely to contribute in a positive way to its business objectives.

7. Products can then be ‘positioned’ into specific segments by designing them to satisfy the demand characteristics of the people in the market segment.

8. There are a number of advantages of adopting the segmentation, targeting and position approach including:

  • An increase customer value in each market segment
  • An increase in sales and profits

9. There are, however, matters to consider.

  • The maps are only drawn using two broad demand characteristics. Insufficient attention may be placed on other important demand factors.
  • Market research, especially if based on data in social media, can be unreliable.
  • What the business thinks is important may not what customers think is important

10. Markets are dynamic. Changes in market conditions mean that a firm’s product range has adapt to changing conditions, i.e. be repositioned.

A market-orientated business follows a process of market segmentation, targeting and positioning before it develops its marketing mix.

Market orientated businesses

Successful businesses are likely to be market orientated rather than product orientated. Their products must meet the needs and wants of their customers.

Customers need to appreciate or value what the business is offering them. It will only buy a product that represents good value for money.

A market-orientated business is likely to design its marketing mix after following a process of segmentation, targeting and positioning.


Customers will buy products in a market for different reasons. However, within a market there are often groups of customers who share common demand characteristics that set them apart from other customers in the market. These are called market segments.

The basis of segmentation may be

  • Geographical (i.e. where people live)
  • Demographic (e.g. age, gender or occupation)
  • Behavioural (i.e. how often the product is purchased and the degree of customer loyalty that exists)
  • Psychographic (i.e. based on personality traits such as interests, attitudes, opinions, lifestyles and values)
  • Economic (e.g. income levels and willingness to buy, benefits desired)


A target market is a set of customers sharing common needs, wants and expectations that the business tries to sell to.

Firms will conduct market research to analyse the probable returns from the market segments identified (e.g. current sales, projected sales growth, profitability)

Firms will assess how targeting the selected sectors will help them achieve their business objectives.

Choice of target segment influenced by:

  • The ability to clearly identify segment
  • The returns expected from the sector (e.g. sales, value)
  • Whether promotional activities can succesfully target the sector
  • Whether the sector fits in with the policies and resources of the company.


Mass marketing (undifferentiated)

  • Business targets the WHOLE market, ignoring segments
  • Products will focus on the needs and wants that customers have in common (rather than how they differ)

Segmented (differentiated)

  • Business target several market segments within the same market
  • Different products will be designed and targeted for each segment
  • This will require separate marketing plans for each sector

Concentrated (niche)

  • Business focuses narrowly on smaller segments or niches
  • Aim is to achieve a strong market position (share) within those niches


This involves designing and producing the products that provide value to customers in each of the targeted market segments.

Advantages of segmentation, targeting and positioning

  • Businesses can provide products that match the needs and wants of more customers. Customer needs differ so it is sensible to provide different products.
  • Businesses are likely to retain customers whose needs and wants are being met.
  • The business can plan a separate focused marketing mix for each of the chosen target customer groups.
  • Opportunities for sales growth can be discovered and targeted
  • Total sales and profits will probably be higher


  • Segment and position mapping is over-simplifies market complexity. Using only two demand characteristics may cause businesses to ignore other important demand factors (e.g. the price and quality may be right but distribution could be poor)
  • The STP approach works better for simple, straightforward products where purchase decisions can be made with relatively ease.
  • Market research may not accurately discover what the customers think is important. What the business thinks is good value and what the customer thinks may not coincide (e.g. feedback on social media may be unrepresentative)
  • Markets are dynamic with demand characteristics changing on a regular basis.



Key words needed to describe:

  • Market segmentation
  • Targeting
  • Product positioning

Five general areas that provide basis for market segmentation

  • 1
  • 2
  • 3
  • 4
  • 5

Three criteria firms may use to choose target segments

  • 1
  • 2
  • 3

Sketch of a market segmentation and positioning map

Four advantages of market segmentation

  • 1
  • 2
  • 3
  • 4

Four evaluation points about STP approach

  • 1
  • 2
  • 3
  • 4


Created By
Andrew Tibbitt


Created with images by gustavmelin0 - "aircraft jet landing" • JeepersMedia - "Aldi"

Made with Adobe Slate

Make your words and images move.

Get Slate

Report Abuse

If you feel that this video content violates the Adobe Terms of Use, you may report this content by filling out this quick form.

To report a Copyright Violation, please follow Section 17 in the Terms of Use.