Flevy Management Insights Q&A
How does customer segmentation inform the development of a targeted positioning strategy?
     David Tang    |    Positioning


This article provides a detailed response to: How does customer segmentation inform the development of a targeted positioning strategy? For a comprehensive understanding of Positioning, we also include relevant case studies for further reading and links to Positioning best practice resources.

TLDR Customer segmentation informs targeted positioning strategies by aligning product development, marketing, sales, and customer service with the specific needs of distinct market segments.

Reading time: 5 minutes

Before we begin, let's review some important management concepts, as they related to this question.

What does Customer Segmentation mean?
What does Targeted Positioning Strategy mean?
What does Value Proposition mean?


Customer segmentation serves as the foundation for developing a targeted positioning strategy that ensures an organization's offerings resonate deeply with specific segments of the market. This approach not only enhances the effectiveness of marketing efforts but also drives superior business performance by aligning product development, marketing, sales, and customer service strategies with the distinct needs and preferences of each segment.

Understanding Customer Segmentation

Customer segmentation involves dividing a market into distinct groups of buyers based on various criteria such as demographics, psychographics, buying behavior, and needs. The objective is to identify high-yield segments to which customized products, services, and marketing messages can be directed. According to McKinsey, organizations that excel in personalization—rooted in deep customer segmentation—can deliver five to eight times the ROI on marketing spend and lift sales by 10% or more. This underscores the critical role of customer segmentation in driving financial performance through targeted marketing strategies.

Effective customer segmentation allows organizations to focus their resources on the most profitable segments, tailor offerings to meet specific needs, and communicate in a way that resonates with each unique segment. It moves beyond traditional one-size-fits-all marketing approaches, enabling more efficient allocation of marketing budgets and higher conversion rates. For instance, a luxury car manufacturer might segment its market into luxury seekers, performance enthusiasts, and eco-conscious buyers, tailoring its positioning strategy to appeal specifically to each group's unique desires and expectations.

Moreover, segmentation helps in identifying underserved or niche markets, presenting opportunities for innovation and expansion. By understanding the specific needs and gaps in these segments, organizations can develop differentiated products or services, securing a competitive advantage and fostering loyalty among these customers.

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Developing a Targeted Positioning Strategy

A targeted positioning strategy ensures that an organization's products and services are perceived as uniquely suited to the needs of specific customer segments. This involves crafting distinct value propositions that speak directly to the identified needs, desires, and pain points of each segment. For example, Apple's success can be partly attributed to its ability to segment its market and position its products as not just technology devices but as lifestyle choices that reflect creativity, simplicity, and innovation.

Positioning strategies are informed by the insights derived from customer segmentation, guiding decisions around product features, pricing, distribution channels, and promotional tactics. This strategic alignment ensures that marketing messages are relevant and compelling to the targeted segments, improving engagement and conversion rates. A report by Accenture highlights that 91% of consumers are more likely to shop with brands that recognize, remember, and provide relevant offers and recommendations. This statistic emphasizes the importance of a well-informed positioning strategy in meeting customer expectations and driving loyalty.

Additionally, a targeted positioning strategy allows organizations to differentiate themselves in a crowded market. By clearly articulating how their offerings are tailored to meet the specific needs of their target segments, organizations can stand out from competitors who may be taking a more generalized approach. This differentiation is crucial in building a strong brand identity and preference among target customers, ultimately leading to increased market share and profitability.

Real-World Application and Success

Netflix provides a compelling example of how customer segmentation and targeted positioning can drive business success. By using data analytics to understand viewing habits and preferences, Netflix segments its audience into highly specific groups. This enables the streaming giant to not only recommend personalized content but also to develop original programming that appeals to the tastes of different segments. Netflix's targeted positioning strategy, emphasizing personalization and a vast, diverse content library, has been instrumental in its growth to over 200 million subscribers globally.

Another example is Nike, which segments its market by sport and lifestyle preferences, among other factors. This segmentation informs its positioning strategy, with product lines and marketing campaigns tailored to each segment's unique characteristics. For instance, Nike's marketing and product development for runners differ significantly from those for basketball players, ensuring that each segment feels understood and valued. This targeted approach has solidified Nike's position as a leader in the global sportswear market.

In conclusion, customer segmentation and targeted positioning strategies are inseparable tools in the arsenal of modern marketing. They enable organizations to understand their markets deeply, tailor their offerings and messages, and ultimately, achieve competitive differentiation and superior financial performance. The examples of Netflix and Nike underscore the tangible benefits of this approach, demonstrating its critical role in driving business success in today's highly competitive and diverse market landscape.

Best Practices in Positioning

Here are best practices relevant to Positioning from the Flevy Marketplace. View all our Positioning materials here.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Explore all of our best practices in: Positioning

Positioning Case Studies

For a practical understanding of Positioning, take a look at these case studies.

Telecom Network Optimization for Rural Connectivity

Scenario: The organization is a mid-sized telecom operator focused on expanding rural connectivity.

Read Full Case Study

Market Positioning Strategy for Infrastructure Firm in Renewable Energy

Scenario: The organization is a key player in the renewable energy sector within the infrastructure industry, facing challenges in differentiating its offerings in a highly competitive market.

Read Full Case Study

Positioning Strategy Development for a Renewable Energy Firm

Scenario: A renewable energy company that has made significant strides in the industry finds itself struggling with its positioning strategy.

Read Full Case Study

Telecom Vertical Market Positioning Strategy

Scenario: The organization is a mid-sized telecom provider specializing in high-speed internet services for urban areas.

Read Full Case Study

Brand Positioning Strategy for High-End Retailer in Luxury Segment

Scenario: The company is a high-end retailer specializing in luxury goods, dealing with a saturated market and increased competition.

Read Full Case Study

Brand Positioning Strategy for Midsize Cosmetics Firm in the Luxury Segment

Scenario: A midsize firm in the luxury cosmetics industry is struggling to distinguish itself amidst a saturated market.

Read Full Case Study




Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials

  •  
    "As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."

    – Michael Evans, Managing Director at Newport LLC
  •  
    "Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.

    The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."

    – Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
  •  
    "Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I "

    – M. E., Chief Commercial Officer, International Logistics Service Provider
  •  
    "[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it give me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."

    – Royston Knowles, Executive with 50+ Years of Board Level Experience
  •  
    "FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."

    – David Harris, Managing Director at Futures Strategy
  •  
    "I have found Flevy to be an amazing resource and library of useful presentations for lean sigma, change management and so many other topics. This has reduced the time I need to spend on preparing for my performance consultation. The library is easily accessible and updates are regularly provided. A wealth of great information."

    – Cynthia Howard RN, PhD, Executive Coach at Ei Leadership
  •  
    "FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The "

    – Roderick Cameron, Founding Partner at SGFE Ltd
  •  
    "I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact "

    – Roberto Pelliccia, Senior Executive in International Hospitality



Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.