The STP Process

Segmentation is the process of classifying customers

into groups which share some common characteristic
Targeting involves the process of evaluating each
segments attractiveness and selecting one or more
segments to enter
Positioningg is arranging
g g for a pproduct to occupy
py a
clear, distinctive and desirable place relative to
competing products in the mind of the consumer

Steps in Segmentation, Targeting, and

Positioning
6. Develop Marketing
Mix for Each Target Segment
5. Develop Positioning
for Each Target Segment
4. Select Target
Segment(s)
3. Develop Selection Criteria

Market
Positioning

Market
Targeting

2. Develop
p Profiles
of Resulting Segments
1. Identify Bases
for Segmenting the Market

Market Segmentation

Market Segmentation
An undifferentiated market
Different needs in a market
But one with
many different
purchase
combinations

Segments in a market

The Market Segmentation Process

Stage 1: Your Market and How it Operates
Step 1 - Market Mapping
Structure and decision makers

Stage
g 2: Customers and Transactions
Step 2 - Who Buys
Customer profiling

Step 3 - What is Bought

Purchase options

Step 4 - Who Buys What

Customers and their purchases

Stage 3: Segmenting the Market

Step 5 - Why it is Bought
C
Customer
needs
d
Step 6 - Forming Segments
Combining similar customers
Step 7 - Segment Checklist
Reality check

Advantages of Segmentation
1. The process of breaking up a homogeneous market into
heterogeneous segments forces the marketer to analyse and
consider
id both
b th the
th needs
d off the
th market
k t andd the
th companys

ability to competently serve those needs thereby making

the company better informed about its customers
2. Competitor offerings and marketing positioning must also
be analysed in this context so the company must consider
what its competitive advantages and disadvantages are,
helping it to clarify its own positioning strategy
3. Limited resources are used to best advantage, targeted at
those segments that offer the best potential

Market Segmentation
Levels of Market Segmentation
Mass Marketing
Same product to all consumers
(no segmentation)
Segment Marketing
Different products to one or more segments
(some segmentation)
Niche Marketing
Different products to subgroups within segments
(more segmentation)
Micromarketing
Products to suit the tastes of individuals and locations
(complete segmentation)
Local Marketing

Individual Marketing

Tailoring brands/ promotions to

local customer groups

Tailoring products/ programs to

individual customers

Criteria for successful Segmentation

Measurable

Size, purchasing power, profiles

of segments can be measured.

Accessible

Segments can be effectively

reached and served.

Substantial

Segments are large or profitable

enough to serve.

Differential

Segments must respond differently

to different marketing mix elements
and programs.

Actionable

Effective programs can be designed

to attract and serve the segments.

Segmenting Consumer Markets

Consumer Segmentation

Behavioural

Psychographic

Profile

Benefits sought

Lifestyle

Demographic

Purchase occasion

Personality

Socio-economic

Purchase behaviour

Geographic

Usage
Perceptions and beliefs

B2C Consumer-Base Segmentation

Demographic
Geographic
Usage Rate
User Status
Benefit Sought
Socio Economic
Personality/Lifestyle

Age, S
A
Sex, R
Race, R
Religion
li i etc
t
Country, County, Type of Housing etc
Heavy users. Light, medium
First-Time users, Non Users, Regular
Quality Benefits, Economy Benefits
Income, Occupation
Extrovert, Introvert

B2B Industrial Base Segmentation

Demographic
Geographic
Usage Rate
User Status
Benefit Sought
Purchasing Organisation

IIndustry
d t ttype, company size
i etc
t
Country, county, region etc
Heavy users. Light, medium
First-Time users, Non Users, Regular
Quality Benefits, Economy Benefits
Centralized, decentralized

Micro-segments
Micro-segment

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Application
(if applicable)
What is bought
Where,
When,
and How
Who
Why
(benefits sought)

Segmentation Structure Selected Market

Segment name
Who

Demo-

buys

graphic

Geographic
Psychographic
Other
What is

Product

bought

or service

Where

Channel

When

Purchase
frequency

How

Payment
method

Why it is

Benefits

bought

sought

Price paid

Prioritising & Selecting Segments

Relative company competitiveness
High

Low

High

?
KEY
Present
position

Segment
Attractiveness

Forecast
position in
3 years

No change

Low

Process of Market Segmentation

and Promotion Mix
The disaggregated market

c1
c4
c7

c3

c2
c5

c6
c8

The characteristics of
individual customers
are understood

The segmented market

1

The target market

1

c1
c3
c5 c2 c4
c7 c6 c8

c1
c5 c2
c7 c6

Customers are grouped

into segments on the
basis of having similar
characteristics

Segment 3 is judged
to be most attractive
and a promotion mix
strategy is designed
for that target market

Promotion
mix
targeted at
segment 3

c3
c4
c8

Market Segmentation Strategies

Traditional Approaches to Market Segmentation
Mass
M M
Marketing
k ti
Differentiated Marketing
Multi-segment Approach
Market Concentration Approach

Niche Marketing

Mass Marketing Strategy

Multi-segment Strategy

Market Concentration Strategy

Niche Marketing Strategy

Target Market
A market is a set of all actual and potential buyers
A target market is a group of people toward whom a firm
markets its goods, services, or ideas with a strategy
designed to satisfy their specific needs and preferences.
Any marketing strategy must include a detailed (specific)
d
description
i ti off this.
thi

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Target Marketing Strategies

Fivee basic strategies for target market selection:
Fi
(1) Single Segment Targeting
(2) Selective Targeting
(3) Mass Market Targeting
(4) Product Specialization
(5) Market Specialization

Basic Target Marketing Strategies

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Differentiation and Positioning

Relative perception
Process of creating favorable relative position:
(1) Identification of target market
(2) Determination of needs, wants, preferences and
benefits desired
(3) Examination of competitors characteristics and
positioning
(4) Comparison of product offerings with competitors
(5) Identification of unique position
(6) Development of a marketing program
(7) Continual reassessment

Differentiation and Positioning

Differentiation Strategies
Product Descriptors
Product features
Advantages
Benefits
Customer Support Services
Image

Positioning Strategies
Strengthen the Current Position
Repositioning
Reposition the Competition

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Positioning
Although from the companys perspective a product is judged
to be different from the competitors products, these
differences may not be meaningful to customers.
Thus, a company has to choose a way to distinguish itself (or its
products) from competitors.
A difference is worth establishing when it is:

Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable

Potential Problems
Under Positioning: buyers have only a vague idea of the brand;
Over Positioning: Mercedes may make buyers think that they
wont find cars for less than Rs.50lacs when they have more
affordable (cheaper) models;
Confused Positioning: confused image about the company/brand as
a consequence of making too many claims or frequent
repositioning;
Doubtful
D
btf l Positioning:
P iti i
b
buyers
may find
fi d it hard
h d to
t believe
b li
the
th claims
l i
(would you buy jewelry at Shoppers Stop only because Shoppers
Stop was claiming to have the same supplier as Tribhuvandas
Bhimji Javeri?)

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Types of Positioning
Attribute Positioning: the larger, the cleanest, the
highest resolution, etc
Benefit Positioning: the most comfortable bedroom,
bedroom
wonderful TV image, make your teeth whiter.
Use/application Positioning: for the summer, for the
cold weather, for special occasions, at work, at night...
User Positioning: for the fun seeker, for the one with
a classical taste, for the traveler
Competitor Positioning: X is better than Y, X has
twice as much meat than Y, A relieves the pain in of
the time in comparison to B etc

Positioning Strategies
BREADTH OF PRODUCTS OFFERED

Narrow

Many
NUMBER
OF MARKETS
SERVED

F
Few

Wide

Product
Focused

Unfocused
(Everything
for everyone)

Fully Focused
(Product and
market
k focused)
f
d)

Market
Focused

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Principles of Positioning Strategy

1. Must establish position for firm or product in minds of
customers
2. Position should be distinctive, providing one simple,
consistent message
3. Position must set firm/product apart from competitors
4. Firm cannot be all things to all people--must focus

Market-Positioning Strategies
High Price

Sony Vaio
Laptops

Low Quality

High Quality

Acer
Laptops
Zenith
Laptops

Low Price

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