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Summary on Market Segmentation, Targeting and Positioning

STP or Segmentation, Targeting and Positioning is an integral part of marketing strategy. It

analyses links between an overall market and how a company chooses to compete in that

Targeting Positioning
(Decide which (To appeal the
(Identify Marketing Mix
customer to target customer)

The objective of STP is to direct the organisation for development and implementation of
appropriate marketing mix. Key benefits of STP Process are:-

Enhancing a companys competitive position, providing direction, focus for marketing

strategies etc
Examining and identifying growth opportunities through identification of new
customers, growth segments and product uses.
Effective and efficient matching of company resources to targeted market segments so
as to warrant greatest return on marketing investment

Segmentation: It is division of a mass market into identifiable and distinct groups or segments,
each of which have common characteristics and needs and display similar responses to
marketing actions. To segment consumer markets, we use market information collected on
basis of certain variables, also called segmentation bases and include various profiles such as
behavioural and psychological.


Profile Behavioral Psychological

Demographic Purchase/Transaction Lifestyle

Socioeconomic Consumption/Usage Personality
Geographic Media Usage Perceptions
Technology Usage Attitudes
Benefits Sought
When selecting bases for segmentation, the trade-off between data acquisition costs and the
ability of the data to indicate predictable customer behaviour needs to be considered. While
Profile data is easier to measure and obtain, they suffer from low levels of accurate consumer
behaviour predictability. On other hand, behavioural or psychological data is more accurate
predictor of consumer behaviour but is costlier and difficult to obtain.

Targeting: After segmenting various markets, next task is to target markets considering
following criteria:-

Size How large is the target market? Is it worth pursuing?

Expected Growth What is its expected growth in the future?
Competitive Position How many competitors are presently in market?
Cost to Reach Is this market easily accessible?
Compatibility How the market is aligned to long term goals of the organisation?

Targeting Approaches
Undifferentiated Differentiated Focused Customised
Same product for Different product Focusing/concentrating Different
various market for different market on a specific market strategies/product
segments segments segment mix for each
individual customer

Positioning: It is the means by which goods and services can be differentiated from others and
so give consumers a reason to buy. A good positioning helps guide marketing strategy by
clarifying the brands essence, what goals it helps the consumer achieve, and how it does so in
unique way.

Functional Expressive
The physical attributes, the functionality and The way in which brand is communicated
capability that a brand offers and how consumers perceive the brand
relative to other competing brands