Competitive Market Segmentation

“If you’re not thinking segments, you’re not thinking.” - Theodore Levitt Here’s a brief history of market segmentation: 1950s: Segmentation started with basic demographics—age, location, gender—because that was the easiest data to collect and analyze. 1960s: Marketers began adding psychographics, gathering insights into customer attitudes and traits to create more specific profiles. 1970s: The rise of large transaction databases enabled real-time point-of-purchase data collection, leading to segments based on purchase behavior. 1980s: Needs-based segmentation emerged, driven by powerful computers and advanced clustering techniques. This allowed researchers to group customers based on desired product features and benefits. While needs-based segmentation was a step forward, it often missed the mark because customers aren’t product engineers. They struggle to articulate what specific products or features they need. But here’s the thing: Customers excel at describing the outcomes they want to achieve when using a product to get a "job" done. When discussing their desired outcomes, they can identify 100 to 150 different metrics to describe success at a granular level. Today's most effective market segmentation? It focuses on understanding how customers rate the importance and satisfaction of each outcome. This insight allows marketers to craft targeted messages and develop products that resonate deeply with each segment. Here’s 3 examples of Outcome-Based Segmentation in action: 1. J.R. Simplot Company identified a segment of restauranteurs who needed a French fry that stays appealing longer in holding, leading to a tailored product solution. 2. Dentsply found a segment of dentists who believed that the quality of a tooth restoration depended on consistently achieving solid bonds, allowing them to tailor their products to this need. 3. Bosch discovered a segment of drill–driver users who primarily wanted a tool optimized for driving, rarely using it as a drill. This insight helped Bosch create targeted and effective marketing strategies. Outcome-based segmentation represents a significant leap forward. It focuses on real opportunities... ...and measurable activities that are underserved by the competition. Outcome-based segments provide a clear path to innovation and market success.

Last week, I said that AI can’t replace marketing fundamentals. Today, I’ll tell you where AI can actually help: 𝐬𝐞𝐠𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧 𝐛𝐫𝐚𝐢𝐧𝐬𝐭𝐨𝐫𝐦𝐢𝐧𝐠 Let me explain: When I’m working on an unfamiliar category, I might use AI as a bouncing ball. My prompt: What are the possible ways to segment this market? It’ll give me a range of possibilities, likely by: → Company size → Project type (residential, commercial, infrastructure) → Procurement decision-making process → Price sensitivity vs. quality requirements → Order frequency & volume Now I have a starting point. I can decide which angles are worth exploring, then talk to my research partners to validate. This is valuable. AI has compressed what might’ve been hours of whiteboard into minutes. But here’s what AI can’t do: 1️⃣ 𝐊𝐧𝐨𝐰 𝐰𝐡𝐞𝐧 𝐭𝐨 𝐛𝐫𝐞𝐚𝐤 𝐭𝐡𝐞 𝐫𝐮𝐥𝐞𝐬 AI might suggest demographic segmentation for durian buyers. But if you’ve ever worked in this market, you'll know that demographics don't matter - rituals & timing do. 2️⃣ 𝐌𝐚𝐤𝐢𝐧𝐠 𝐭𝐫𝐚𝐝𝐞-𝐨𝐟𝐟𝐬 𝐰𝐢𝐭𝐡 𝐢𝐦𝐩𝐞𝐫𝐟𝐞𝐜𝐭 𝐝𝐚𝐭𝐚 Real-world data is often incomplete / outdated. You need to decide when to stop slicing because too much segmentation can kill scale. 3️⃣ 𝐒𝐞𝐞𝐢𝐧𝐠 𝐭𝐡𝐫𝐨𝐮𝐠𝐡 𝐭𝐡𝐞 𝐧𝐮𝐦𝐛𝐞𝐫𝐬 Sometimes, segments are mathematically clean but strategically useless. Which means that while the segments might look different on paper, they behave the same in the market. And in the real world, business impact > optimised statistics 4️⃣ 𝐒𝐩𝐨𝐭𝐭𝐢𝐧𝐠 𝐭𝐡𝐞 𝐡𝐮𝐦𝐚𝐧 𝐭𝐫𝐮𝐭𝐡 𝐛𝐞𝐧𝐞𝐚𝐭𝐡 𝐭𝐡𝐞 𝐝𝐚𝐭𝐚 Sometimes, a “value seeker” might actually be a “status seeker on a budget” This distinction changes everything - your messaging, your product design and even your pricing strategy. But to recognise this distinction, you need both experience & empathy. AI won’t suffice. * So how do you use AI for segmentation? Use it to: ✓ Brainstorm segmentation approaches you might not have considered ✓ Quickly generate hypotheses to test ✓ Organize your thinking when entering unfamiliar categories DON’T use it to: ✗ Treat the output as your first & final answer ✗ Skip talking to actual market experts ✗ Replace real research & lived market experience * In short, I consider AI to be a great starting point but not an endpoint. Don’t be lazy and think that it’ll do all the heavy lifting for you! ♻️ Reshare this if you found it helpful. 📩 DM me Long Yun Siang if you're working on segmentation and want to leverage the expertise of a real human (I’ve been doing this for 32+ years), DM me. I’d love to help.

Most marketers assume consumers categories are stable taxonomies they pull out of a file cabinet when they are facing a decision. Cognitive science shows the opposite. For more than 40 years, research by Barsalou, Ratneshwar, Pechmann, Shocker and others has demonstrated that people mentally group options not by similarity, but by goals. These are called goal-derived categories: spontaneous sets of alternatives created to achieve a desired outcome, like “things to help me relax”, “quick healthy breakfast”, or “ways to boost energy before a meeting.” The evidence is remarkably consistent: • Consumers generate coherent lists of goal-based options that cut across product classes (Barsalou, 1983). • These lists show prototypical structure: some items are “better examples” of achieving the goal (Barsalou, 1985). • Reaction-time studies confirm that typical goal-fit items are retrieved faster, proving cognitive reality (Barsalou, 1991). • In multiple experiments, consumers include cross-category substitutes (e.g., yogurt, smoothies, cereal) when the same goal is activated (Ratneshwar, Pechmann & Shocker, 1996). • Field studies show that goal-framed displays shift choice and consideration more strongly than category-based ones (Lange, 2003). The conclusion is simple and powerful: Consumers choose between whatever helps them achieve the goal in front of them. Not between whatever marketing managers lazily assume is “the category”. This has major consequences for marketing. The real competitive set is defined by goals, situations, and usage contexts, not shelf labels. Mental availability is triggered by goal cues, not category reminders. Growth comes from being a typical solution in more goals and more moments, not from owning a category lane. If you want to understand choice, don’t ask “what category are we in?” Ask “what goals are we serving, and what else serves each of them?” That’s where the real competition lives - and opportunity for growth begins.

𝗧𝗵𝗲 𝗼𝗻𝗲 𝗮𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗜 𝗰𝗮𝗻’𝘁 𝗴𝗲𝘁 𝗲𝗻𝗼𝘂𝗴𝗵 𝗼𝗳? Customer segmentation by size, industry, and geography. Why? Because when you stop treating all customers the same, you start growing 𝗳𝗮𝘀𝘁𝗲𝗿, more 𝗽𝗿𝗼𝗳𝗶𝘁𝗮𝗯𝗹𝘆, and with fewer 𝘀𝘂𝗿𝗽𝗿𝗶𝘀𝗲𝘀. This analysis is the unlock for: 📈 Smarter growth strategies 💰 Healthier margins 🤝 Happier customers 𝗪𝗵𝘆 𝘀𝗲𝗴𝗺𝗲𝗻𝘁 𝗯𝘆 𝘀𝗶𝘇𝗲, 𝗶𝗻𝗱𝘂𝘀𝘁𝗿𝘆, 𝗮𝗻𝗱 𝗴𝗲𝗼𝗴𝗿𝗮𝗽𝗵𝘆? ✅ 1. Sales & service effectiveness • A $250M CPG distributor in the Midwest doesn’t need or want the same approach as a $7bn manufacturer in Germany. • Segmentation helps you sell and support the right way - for the right customer. ✅ 2. Better strategic & operational decisions • Want to know which customers are high-effort but low-margin? Which industries are expanding the fastest? Which region has the stickiest customers? • Segmentation brings that clarity. ✅ 3. Improved customer experience • Customers don’t expect to be treated equally - they expect to be treated relevantly. • When all your teams understand the nuances of the customer they're serving, retention and satisfaction go up. 𝗛𝗼𝘄 𝘁𝗼 𝗱𝗼 𝗶𝘁 𝘄𝗲𝗹𝗹: 1️⃣ Group customers by: • Size (revenue or headcount) - a useful proxy for complexity • Industry (manufacturing & industrials, tech, services, life sciences & healthcare, CPG, etc.) • Geography (region, market, country) 2️⃣ For each segment, analyze: • Profitability • Support/service effort • Sales cycle and retention • Volumes, expansion or upsell potential 3️⃣ Find your high-leverage segments 4️⃣ Align GTM, finance, ops, and support around them 5️⃣ Refresh regularly - your base will evolve 𝗧𝗵𝗲 𝗕𝗼𝘁𝘁𝗼𝗺 𝗟𝗶𝗻𝗲 • Customer segmentation isn’t just a data exercise. It’s a strategic advantage hiding in plain sight. • When you know who your best customers really are - you build better, sell smarter, and scale faster. #CustomerStrategy #Operations #Finance #Growth #Segmentation #BusinessStrategy #fpanda

In the latest installment of our Business GIS for Everyone series, Dr. Murray Rice deepens the discussion on spatial segmentation, showing how you can elevate broad market analysis into targeted business strategy using your own customer data. This post highlights the importance of blending a company's internal customer database, like purchase history and geolocated addresses, with demographic segmentation frameworks. The result? A rich, multi-layered view of where your product or service truly resonates. See how this method reveals zones of high market penetration, identifies the key segment types driving performance, and enables you to repeat success by locating similar segments in new markets. For example, insights from San Antonio segments can guide your expansion into Houston while also signaling areas that need validation, such as competition and real estate availability. Discover how making your data spatially intelligent moves GIS from "nice tool" to strategic cornerstone.

You can't treat every customer the same. Does every customer deserve a great experience? Absolutely.  Should every customer have the same engagement model? Absolutely not. I said it. I'll die on this hill. Something I've seen in many Series A/B companies, the customer engagement model is the same for a $5K customer as a $500K customer. Same onboarding. Same check-in cadence. Same QBR format. Small customers are over-serviced—too many meetings, too formal for their needs.Teams are on a literal hamster wheel. Large customers are under-served—not enough strategic partnership, you can’t get the execs into a conversation because you’re not having the right conversations or delivering the right value. CS teams are exhausted trying to be everything to everyone. And efficiency is in the toilet. This approach isn't sustainable but many companies default into it while waiting for the “right” time to tackle it. Ready is a decision, not a feeling. Every customer deserves the right engagement model to maximize the value of their investment in your product. But that model has to vary. Different customer sizes, complexity levels, maturity stages, and industries have fundamentally different needs. And economically, it doesn't make sense to deliver the same experience across the board. When you get honest about segmentation, everything changes. In one company I worked with, this is how we approached the first phase of segmentation—we kept it simple: Strategic Accounts (Top 20% of ARR): Named CSM with <30 accounts. Quarterly business reviews with executive sponsors. Custom success plans tied to their business goals. Proactive roadmap discussions. Growth Accounts (Next 30% of ARR): Named CSM with ~60 accounts. Digital engagement supplemented with personal touch. Bi-annual strategic check-ins. Standardized playbooks with customization. Scale Accounts (Remaining 50% of ARR): Pooled support with specialized experts. Digital-first engagement. Automated health monitoring with human escalation when triggered by risk or opportunity. We made the changes and we made no excuses. Customers appreciated the honesty. In the company I mentioned above, customer satisfaction improved across ALL segments. Strategic account retention hit 97%. Scale account retention improved from 86% to 91%. CS costs as a percentage of revenue dropped 35%. CS team engagement scores went up. They were no longer context switching all day every day. Your customer engagement model should be developed and iterated based on what actually works for each customer group. Segmentation isn't about treating customers unfairly—it's about serving them appropriately so each one can achieve maximum value. The model you design today won't be the model you need in 18 months. Customer mix changes. Product evolves. Market shifts. Your engagement approach has to evolve with it. #CustomerSuccess #CustomerExperience #CustomerJourney #RevenueGrowth

Every Saturday morning, I summarize and share a chapter of our book “Real Impact Marketing, 3rd edition. This chapter consolidates the concepts from the book into a practical 1-Page Marketing Plan template, designed for creating real impact. The plan integrates eight key elements in an iterative process: 1.   Market Definition and Sizing: Define the market (product-based, needs-based, constraints-based; narrow vs. broad). 2.   Competitive #Positioning: Create a positioning map identifying the two most relevant Key Success Factors (#KSFs) for differentiation (relevant to customers and allowing differentiation) and plotting your offering against competitors. KSFs should link to customer insights (#laddering). 3.   Customer Insights (Laddering): Central to the plan, this visualizes the links between your offering's Attributes/Features, the #Benefits (relieving/enabling) customers receive, and the underlying Values customers seek. This informs market definition, positioning, #valueproposition, #brand promise, and the #marketingmix. 4.   Value Proposition(s): Derived from laddering, these articulate why a customer should choose your specific offering. They are context-specific, potentially differing for user/buyer/payer roles, and follow the structure: connect to customer Value, state the Benefit, explain the differentiating Attribute ("Because..."). 5.   Brand Promise: Also derived from laddering, this summarizes what the brand stands for across identity, meaning, response, and relationships, often using a brand pyramid. It guides consistency across all #marketing activities and links to competitive positioning. 6.   Customer #Segmentation and Personas: Group similar customers into segments based on relevant criteria (demographics, behavior, needs, value sought) to tailor the marketing mix effectively. 7.   Marketing Mix (6 Ps): This plan uses Product, Price, Place, Promotion, People, and Process. The mix must align with the brand promise, value propositions, segments, and positioning. 8.   Marketing Budget and Metrics: Summarize the investment (budget) required for the marketing mix activities. Source: Michel/Duke (2022): Real Impact Marketing: Create a 1-page marketing plan, 3rd edition. ISBN 978-3907311035, available on Amazon as paperback, hardcover and e-book. If you like this post, follow me on LinkedIn. Go to my profile, click “follow”, click the bell icon, and click “all notifications”. If you think someone else would love to have this chapter for free, please repost.

STP and Market Penetration In competitive markets, business success depends on understanding customers and maximizing sales potential with them. Two essential concepts that drive this success are: ➡️ STP (Segmentation, Targeting, Positioning): It is the process of defining the market focus and brand perception. ➡️ Market Penetration: It is the growth strategy that focuses on selling the existing products to existing target customers. When applied together, STP defines where to compete, while market penetration outlines how to capture more value within that chosen space and as described below: ✅ I. STP: Building the Foundation a) Segmentation: Breaking the total market into smaller and more defined groups based on: - Demographic: Age, gender, income, occupation - Geographic: City, region, climate - Psychographic: Lifestyle, values, personality - Behavioral: Purchase habits, brand loyalty, product usage Eg. Segment by lifestyle and consumption patterns of FMCG b) Targeting: Choosing the most attractive segment to serve based on profitability, size, and fit with your capabilities. Eg. Target health conscious young professionals in Addis Ababa c) Positioning: Crafting a clear and unique value image in the target customer’s mind. Eg. The premium, healthy smoothie for busy lifestyles ✅ II. Market Penetration: Driving growth in the Target Market Once STP is defined, market penetration concentrates on increasing market share within the selected segments. Key Tactics for Market Penetration 1. Increase Usage by Existing Customers - Promotions for bulk purchases - Loyalty programs - Seasonal upgrade packages 2. Attract Competitors’ Customers - Better pricing or value bundles - Faster delivery or superior after sales service - Exclusive designs or flavors 3. Enhance Visibility - Stronger ATL, BTL, TTL marketing campaigns - More retail presence in high traffic locations - Social media engagement 4. Improve Product or Service Quality - Improved recipe or packaging 5. Expand Distribution Channels - Partner with more resellers or distributors - Offer online ordering and delivery - Presence in more supermarkets or corporate procurement lists In summary, STP defines the strategic market focus while market penetration converts that strategy into measurable growth. Together, they strengthen loyalty, expand market share and optimize revenue before pursuing higher risk growth initiatives.

STP in FMCG: Why Segmentation, Targeting & Positioning Matter 🧠📦 In FMCG, growth isn’t about selling more products — 💯it’s about selling the right product to the right consumer in the right way. 💬That’s where STP (Segmentation, Targeting & Positioning) becomes a core growth lever. 🔍 Segmentation: Knowing Who Your Consumer Is 📌Segmentation means dividing a mass market into smaller consumer groups with similar needs, lifestyles, or buying behaviour. 👶 Kids’ snacks rely on bright colours, fun shapes, and cartoon or superhero branding to influence choices. 🌆🌾 Geography matters — urban consumers are more experimental and convenience-driven, while rural consumers are highly price-sensitive, directly impacting pack size and pricing. 🧘♂️ Health-conscious buyers prefer protein, zero-sugar, or nutraceutical products, while 🌱 eco-conscious consumers look for clean labels and sustainable packaging. 🛒 Behaviour also plays a role — heavy users prefer large packs, while first-time or value-seeking consumers opt for sachets and small SKUs. Segmentation ensures brands don’t speak to everyone in the same language. 🎯 Targeting: Focusing Where It Matters Targeting is about choosing which consumer group to serve. 🧬Is the brand meant for Gen Z, millennials, families, or seniors? 🔬Are they value-driven or premium buyers? 🏃🏃♀️Can they be reached better through social media, general trade, modern trade, or e-commerce? 🔥Clear targeting improves reach efficiency, communication clarity, and ROI.🔥 🧩 Positioning: Standing Out on the Shelf ✔️Positioning defines why a consumer should choose your brand. 💰 Best value for money 👶 Trusted for kids 🩺 Zero sugar or health-focused 🔥 Fitness and fat-loss support 🌿 Natural and sustainable Strong positioning is simple, consistent, and visible across packaging, pricing, and promotion. 🚀 Why STP Is Critical in FMCG FMCG markets are crowded and competitive. STP helps brands deliver relevant messages, choose the right channels, optimise pack sizes, and build scalable growth strategies. 💡 Final Thought 🧠Winning FMCG brands don’t try to please everyone. ⭐️They segment smartly, target sharply, and position clearly. #STPMarketing #FMCG #FMCGMarketing #MarketingStrategy #BrandStrategy #BrandPositioning #ConsumerInsights #Segmentation #Targeting #Positioning #GoToMarket #GTMStrategy #ProductMarketing #PackagingStrategy #ConsumerBehavior #MarketingFundamentals #Marketing101 #IndianFMCG #FMCGIndia #D2C #RetailMarketing #GeneralTrade #ModernTrade #Ecommerce #BusinessStrategy #GrowthMarketing #BrandBuilding #MarketingThoughts #LinkedInMarketing

𝐂𝐄𝐎𝐬, 𝐂𝐌𝐎𝐬: 𝐂𝐨𝐩𝐲𝐜𝐚𝐭𝐭𝐢𝐧𝐠 𝐆𝐢𝐚𝐧𝐭𝐬 𝐖𝐨𝐧’𝐭 𝐌𝐚𝐤𝐞 𝐘𝐨𝐮 𝐎𝐧𝐞 What small brands should do instead We love big & shiny brands. Case studies cover Big Boy Stories. Nike, Apple, Starbucks & Co. The motto: Let’s learn from the best. But if you’re a small brand... Is copycatting giants the way to go? NO. Because small and large brands are different. 🚨Here’s 4 critical differences (1) Resources Large brands have vast financial resources for marketing, R&D etc. (2) Market Position Large brands enjoy pre-existing mental availability (3) Strategic Advantage Large brands have a proven right to win and mass penetration potential (4) Scale Large brands benefit from economies of scale reducing per-unit costs   Small brands don’t have any of that. 𝐖𝐡𝐚𝐭 𝐢𝐭 𝐦𝐞𝐚𝐧𝐬 𝐟𝐨𝐫 𝐬𝐦𝐚𝐥𝐥 𝐛𝐫𝐚𝐧𝐝𝐬 They need growth strategies that account for - limited resources - lower mental availability - more fragile P&L - unproven right to win   𝐖𝐡𝐚𝐭’𝐬 𝐭𝐡𝐚𝐭 𝐠𝐫𝐨𝐰𝐭𝐡 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐲 It’s called STP (Segmentation, Targeting, Positioning) - Segment your market - Focus high value + high right to win segments - Tailor your 4Ps accordingly - Develop a right to win   𝐖𝐡𝐲 𝐭𝐡𝐢𝐬 𝐢𝐬 𝐭𝐡𝐞 𝐰𝐚𝐲 𝐭𝐨 𝐠𝐨 It allows small brands to... (1)  ... focus their resources on a smaller subsegment of the market and get excess share of voice (2)  ... build a strong relative position within that segment (3)  ... adop to segment needs and develop a high right to win (4) ... reduce risk and inefficiencies   Dale W. Harrison phrased it brilliantly: “If you can’t have a bigger megaphone (=more resources), you need a smaller market. That's STP. ---- 📕 Interested in my book How Small Brands Grow? Comment "oh yes" below. 🔔 Hit the bell in my profile to never miss a post. ♻️ Your network might appreciate a repost.   --- I'm Julia Kinner My consulting firm JK & Associates SA focuses on growth strategy and execution for digital products and services.