Segmentation is about dividing consumers into groups, called customer segments, based on what they value.

Targeting is about determining which of the customer segments to focus on in marketing efforts to achieve a high Return on Marketing Investment (ROMI). The targeted customer segments should be selected to maximize long-term profit. Consider factors such as:

• Likelihood to convert/purchase
• Cost to serve
• Price sensitivity
• Segment size
• Expected segment growth
• Competitors’ ability to serve the segment
• Our ability to serve the segment
• Whether to focus on B2B or B2C

Defining how a product/service should be perceived by customers in the target customer segment is called positioning.

Defining the positioning of a product or service for each target customer segment is done using a positioning statement.