📖 Glossary

Targeting and Segmentation — Definition, Evidence & Pitfalls

Segmentation divides a market into groups; targeting selects which to serve. The evidence says growth comes from broad reach, not narrowing. Here's why.

·5 min read

Definition (≤25 words). Segmentation divides a market into groups of buyers; targeting selects which groups to serve. The evidence says growth comes from broad reach, not from narrowing.

TL;DR. Segmentation and targeting are two of the most taught and least questioned ideas in marketing. The orthodoxy says: divide the market into segments, pick the most attractive, and focus your resources there. The evidence — chiefly from Byron Sharp and the Ehrenberg-Bass Institute — says that for brand growth, this is largely wrong. Brands grow by reaching more category buyers, not fewer; your customers are statistically similar to your competitors' customers; and the most profitable move is usually to widen, not narrow, your target. Segmentation still has legitimate uses in research and media planning, but using it to shrink the audience you communicate to is one of the most common growth-destroying mistakes in the discipline.

What are segmentation and targeting?

The two terms travel together under the classic STP model — Segmentation, Targeting, Positioning — codified in Philip Kotler's marketing textbooks and taught in nearly every business school.

Segmentation is the act of dividing a total market into groups of buyers who differ from one another in some way thought to be commercially relevant: demographics, psychographics, behaviours, needs, attitudes. The logic is that different groups want different things, and a single offer cannot serve all of them equally well.

Targeting is the decision that follows: of these segments, which will we prioritise? Which group gets the bulk of the budget, the tailored message, and the product features? The standard advice is to focus — concentrate resources on the most attractive, best-fitting, most profitable segment rather than spreading thinly.

It all sounds sensible. And it has a half-truth baked in: understanding differences between buyers is genuinely useful for research, product development, and media planning. The problem is what the model implies about growth — and that is where the evidence pushes back hard.

Why does the evidence push back?

The Ehrenberg-Bass Institute, working from consumer panel data across dozens of categories and countries, has produced a set of findings that complicate the segmentation story:

  1. Your buyers are similar to your competitors' buyers. The law of duplication of purchase shows that customers of competing brands look statistically alike — same demographics, same psychographics, same purchase frequency, same category involvement. The people who buy your brand are, demographically, the same people who buy the rival. There is rarely a tidy, reachable segment that "belongs" to you.

  2. Growth comes from penetration, not from deepening loyalty to a segment. Sharp's How Brands Grow (2010) demonstrates that brands grow by acquiring more customers — increasing market penetration — not by getting the existing segment to buy more often. The buyers you add are lighter, more occasional buyers, not the loyal core the segmentation model tells you to cherish.

  3. The "heavy half" is a mirage. The idea that a small segment of heavy buyers drives the business is seductive. But Ehrenberg-Bass shows that heavy buyers of your brand are also heavy buyers of the category — and of your competitors. They are not exclusively reachable, and over-investing in them limits growth because there are far more light and occasional buyers to win.

  4. Most buyers aren't in the market right now. This is the 95:5 rule: at any given moment, the large majority of category buyers are not actively shopping. If you target only the in-market segment, you reach a tiny sliver of potential demand. Building mental availability among the 95% who aren't buying today is what positions you to win them when they are ready.

The combined implication is direct: narrowing your target tends to shrink your growth, not accelerate it.

When is targeting still useful?

The evidence doesn't say segmentation is useless — it says it's misused. Segmentation remains valuable for three things:

  • Research and understanding. Segmenting the market to study differences in needs, usage, and attitudes is excellent research. The error is treating a research segmentation as a targeting instruction.
  • Media planning, not audience narrowing. You can use segment insight to buy media efficiently — to know where your category buyers are reachable — without reducing the number of people you aim to reach. Romaniuk and Sharp (How Brands Grow 2, 2016) make the distinction: target the category entry points (the buying situations) broadly, and let media planning handle the efficiency.
  • Tactical activation. For short-term, direct-response work — promotions, retargeting, remarketing — targeting the in-market few is entirely appropriate. Just don't mistake it for the growth strategy.

The line to hold is this: use segmentation to understand and to buy media smartly, but communicate to the whole category, because that is where your future buyers are.

Where people get it wrong

  • Targeting the segment you already own. If your "target audience" is a description of your current best customers, you are marketing to the converted. Growth lives among the category buyers who don't yet buy you — and they look different from your loyalists mainly in that they buy you less, not that they are a different kind of person.
  • Shrinking the audience to sharpen the message. The instinct to "focus" on a narrow segment feels disciplined. But it reduces reach, and reach is the primary driver of market penetration growth. You can craft a relevant message without reducing the number of people who hear it.
  • Confusing a segmentation study with a growth strategy. A segmentation deck is a description of the market, not a prescription for what to do. Too many teams treat the segments as commandments and organise the whole brand around one.
  • Ignoring the 95:5 reality. If your targeting only reaches the in-market buyers, you are invisible to the far larger group who will be in-market next month, next quarter, next year. Brand building exists precisely to reach them — and that is why Binet and Field advocate broad-reach brand investment alongside activation (the 60:40 rule).
  • Believing "personalisation" solves the reach problem. Hyper-targeted digital creative feels precise and modern. But if each micro-segment gets a tiny audience, the brand never builds the shared mental availability and distinctive assets that drive growth. Personalisation is a tactic, not a substitute for reach.

In practice — how to use segmentation without sabotaging growth

  1. Segment for understanding, not for exclusion. Study the market to learn how buyers differ — then design your offer and communication to appeal to as many category buyers as possible.
  2. Communicate to the whole category. Treat your addressable audience as all category buyers, not a single segment. Growth comes from the light and occasional buyers on the margin.
  3. Target category entry points, not demographic slices. Use Romaniuk and Sharp's framework: identify the buying situations in which your brand should be thought of, and build mental availability across a broad set of them.
  4. Use targeting for media efficiency, not audience reduction. Buy media to reach category buyers efficiently, but don't shrink the total reach ambition below what growth requires.
  5. Reserve narrow targeting for activation. Let the short-term, conversion-focused work target the in-market few. Keep the long-term, brand-building work broad — and protect the marketing ROI that comes from it.

So what?

Segmentation and targeting are taught as the foundation of marketing strategy, and the instinct to "focus" feels responsible. But the evidence is unambiguous: brands that grow are brands that reach more category buyers, not fewer. Your customers are not a special tribe that only you can win; they are, statistically, the same people who buy your rivals. Use segmentation to understand the market and to buy media smartly — and then communicate as broadly as you can, because the buyers you need next year are the ones you are not talking to today.

Evidence & sources

  • Sharp, B. (2010). How Brands Grow. Oxford University Press — on duplication of purchase, penetration-led growth, and the weakness of segment-based loyalty.
  • Romaniuk, J. & Sharp, B. (2016). How Brands Grow 2. Oxford University Press — category entry points as a replacement for demographic targeting.
  • Ehrenberg-Bass Institute — published work on the double jeopardy law and the 95:5 rule (most buyers not in-market at any time).
  • Binet, L. & Field, P. (2013). The Long and the Short of It. IPA — broad-reach brand building versus narrow activation.
  • Kotler, P. — Marketing Management (multiple editions) — the STP model that the evidence complicates.

Definition type: DefinedTerm. Reviewed: 2026-07-09. Written by Andrei Tarnovski for Boringly Effective. Fundamentals over fashion.