How do I choose the right segmentation basis for an STP analysis?
- Expert answer
- Master's
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The question
For a marketing plan assignment I need to segment the UK market for a premium coffee subscription. I have listed demographic segments, but my tutor asked why I chose demographics over anything else.
Short answer
Choose the basis that best predicts differences in buying behaviour for this product, not the one easiest to describe. For a premium subscription, behavioural and psychographic bases usually explain purchase better than age or income alone, with demographics used to describe and reach each segment.
Full expert answer
Marketing lecturer
MSc Marketing, CIM Chartered Marketer
Your tutor's question is the right one. A segmentation basis is only useful if people in different segments respond differently to the marketing mix. Demographics are popular because data is easy to find, not because they always predict behaviour.
Test each possible basis
- Demographic: age, income, household. Useful for reach, weak at explaining why someone pays for premium coffee
- Geographic: urban versus rural. Relevant to delivery costs more than to demand
- Psychographic: values and lifestyle, such as ethical sourcing or home working rituals
- Behavioural: usage rate, occasions, benefits sought, loyalty. Often the strongest predictor for subscriptions
Justify with segment criteria
Evaluate your resulting segments against the standard tests: measurable, substantial, accessible, differentiable and actionable. A segment such as 'home workers who drink three or more cups a day and value provenance' passes most of these and gives the targeting section something concrete to work with.
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