Markets are not homogeneous. A company cannot serve all customers. It needs to identify which market segments it can serve effectively, and are profitable.
It Management Lite & Ezy 4, I described target marketing. An effective target marketing strategy involves the following steps:
- Identify and profile distinct groups of buyers who differ in their needs and preferences (market segmentation).
- Select one or more market segments to enter (market targeting).
- For each target segment, establish and communicate the distinctive benefit(s) of the company’s market offering (market positioning).
These three steps are sometimes known as STP.
Reference: Kotler & Keller, “Marketing Management”, 12th edition