# Segmentation - Segmentation, Targeting and Positioning (STP): **identifies** potential [[customer|customers]], **selects** specific [[customer|customers]] to pursue and **formulates** its [[value-proposition|value proposition]] for its target [[customer|customers]]. > [!note] Definition > > The **separation of a heterogeneous group of customers with different needs into homogeneous subgroups** or segments of customers with similar needs and preferences. - Companies don't create segments, they *find* them. ## Purpose - Benefits to the customer - Tailored products/services - Convenience and time savings - Personalized experience - Benefits to the company - Identification of unfilled needs - Increased customer satisfaction - More targeted promotions - Better product designs [[value-chain]] - Market Segmentation Strategy **drives the entire [[value-chain|value chain]]** -- the entire company needs to act in harmony (FIT) and align every activity. ## Variables - Geographic - Demographic - Psychographic - Behavioral: Usage rate, loyalty, product knowledge, involvement, purchase occasion, [[customer-buying-process|buying stage]] - Benefits Sought For selling to businesses: - Firmographics: Industry, firm size, global/regional, ownership - Buying Approach: Centralized or decentralized purchase, purchase policies, involvement of [[customer-decision-making|decision makers]] - Behavioral: Volume, purchase frequency, attitude toward risk, loyalty, urgency ## Characteristics - Identifiable - Substantial - Differentiable - Accessible - Stable - Actionable ## Targeting Targeting involves evaluating the attractiveness of each market segment, selecting one or more to pursue and designing marketing programs to serve them. Deciding a segment based on: - Characteristics - Size - Growth Rate - Profitability - Competition - Strengths - Intensity - Resources - Company Fit - Objectives - Competencies - Resources