Week 3: Customer-Driven Strategy (STP) — Part 1
Learning objectives
- Decide when and how to segment a market.
- Relate global, sustainable, relationship, and mass-customization strategies to STP.
- Distinguish segmentation bases used in consumer markets.
STP — Segmentation, Targeting, Positioning — is the backbone of a customer-driven marketing strategy. This week focuses on deciding a segmentation strategy and several strategic lenses that shape how firms cut the market.
Why segment?
Markets are rarely uniform. Segmentation divides a heterogeneous market into smaller groups of buyers with distinct needs, characteristics, or behaviors that might require separate products or marketing mixes. Without segmentation, firms either mass-market blindly or customize one-by-one at unsustainable cost.
Common consumer segmentation bases
- Geographic — Region, city size, climate (coastal vs inland packaging).
- Demographic — Age, gender, income, education, family life cycle.
- Psychographic — Lifestyle, personality, values.
- Behavioral — Occasions, benefits sought, user status, loyalty, usage rate.
Effective segments are measurable, accessible, substantial, differentiable, and actionable (MASDA).
Strategic themes that interact with segmentation
- Global marketing — Decide how much to standardize vs adapt across countries. A skincare brand may keep brand identity global but adapt SPF claims and fragrance locally.
- Sustainable marketing — Meet present needs without compromising future generations; align offers with environmental and social responsibility (links to SDG thinking).
- Relationship marketing — Design segments around relationship depth (transactional buyers vs advocates), not only demographics.
- Mass customization — Use flexible operations and digital tools to deliver tailored offerings at near-mass-market efficiency (e.g., configured apparel, personalized learning apps).
Pakistan example
A dairy brand might segment by city vs rural distribution constraints, by household income for SKU sizes, and by benefit sought (taste vs fortified nutrition for children). Export-oriented mango processors segment by destination country standards — a form of global segmentation.
Next week we convert segments into target market choices and positioning statements.
Key terms
- Market segmentation
- Dividing a market into distinct groups with different needs or behaviors.
- MASDA criteria
- Measurable, Accessible, Substantial, Differentiable, Actionable.
- Mass customization
- Tailoring products to individual customers at scale.
- Sustainable marketing
- Socially and environmentally responsible marketing that meets present and future needs.
Self-check
- Name the four classic consumer segmentation bases and give one variable for each.
- When would mass customization beat simple demographic segmentation?
- How can sustainable marketing change which segments a firm prioritizes?
- Why might a Pakistani exporter use different segments for domestic vs Gulf markets?