segmentation, targeting, and

positioning
the STP process

Segmenting
 Divide market based on needs/benefits,
demographics, lifestyles, behavioral measures
Targeting
 Select most appropriate market(s)
Positioning
 Target marketing messages through 4P’s
what is a market?

a group of people seeking products in a

specific product category

need/desire able

willing authority
how many segments are there?

Status

Dependability
how many segments are there?

Status

Dependability
how many segments are there?

Status

Dependability
segmentation, targeting and positioning process

determine
evaluate select
establish which develop
relevant specific
strategic segmentation positioning
market target
objectives variables to strategy
segments markets
use
segmentation, targeting, and
positioning process, steps 1-2
segmentation, targeting and positioning process

determine
evaluate select
establish which develop
relevant specific
strategic segmentation positioning
market target
objectives variables to strategy
segments markets
use
step 1: segmentation

identifying a group of customers in your

market who share a similar set of needs and
wants
importance of segmenting markets

 Markets have a variety of product

needs and preferences
 A market segment has specific needs and wants as well
as the ability and willingness to buy
 Marketers can better define
customer needs
 Two words: Competitive advantage
why segment markets?

By understanding variance in customer needs, we

can:
 Develop offerings that are higher value to each
segment than an undifferentiated offer
 Charge more for providing higher value
products and services
 Achieve higher sales volume overall by better
meeting the needs of each segment
segmentation, targeting and positioning process

determine
evaluate select
establish which develop
relevant specific
strategic segmentation positioning
market target
objectives variables to strategy
segments markets
use
step 2: segmentation variables

demographics psychographics

behavioral needs
demographic segmentation

 Age
 Occupation
 Gender
 Income
 Ethnicity
 Geography
 Family life cycle
psychographic segmentation

 Values
 Lifestyle
 Personality
 Activities
 Interests
 Opinions
values and lifestyles (VALS)
Ideals Achievement Self-Expression
Orientation Orientation Orientation
Innovators

Thinkers Achiever Experiencers

Resource
Level
Believers Striver Makers

Survivors
behavioral segmentation

 Dividing a market by the amount of product bought or

consumed
 Usage rate
 80 / 20 Principle
 20 percent of all customers generate 80 percent of the
demand
needs segmentation

The process of grouping customers into market segments

according to the benefits they seek from the product
segmentation, targeting, and
positioning process, steps 3-4
segmentation, targeting and positioning process

determine
evaluate select
establish which develop
relevant specific
strategic segmentation positioning
market target
objectives variables to strategy
segments markets
use
step 3: targeting

The process of evaluating the various segments

and then selecting the most viable segment(s)
who share a similar set of needs and wants
targeting strategies

Undifferentiated Differentiated Niche Micro

 undifferentiated targeting strategy

Marketing approach that views

the market as one big market
with no individual segments
status

and thus requires a single

marketing mix

dependability
 differentiated targeting strategy

A strategy that chooses two or

more well-defined market
segments and develops a
status

distinct marketing mix for each

dependability
 niche targeting strategy

A concentrated strategy of
focusing on a narrow market is
sometimes more profitable than
status

spreading resources over

several different segments

dependability
 micromarketing targeting strategy

One-to-one marketing which is

individualized, information
intensive, with a long-term
status

perspective and goal of

increasing customer loyalty

dependability
segmentation, targeting and positioning process

determine
evaluate select
establish which develop
relevant specific
strategic segmentation positioning
market target
objectives variables to strategy
segments markets
use
step 4: select a target market

Do customers’ needs differ

In which market segment(s)
enough to warrant the use
should the firm participate?
of market segmentation?

Does the firm have the

What is the long-term
resources and skills to
growth potential of the
compete effectively in the
market segment?
target market?
segmentation, targeting, and
positioning process, step 5
segmentation, targeting and positioning process

determine
evaluate select
establish which develop
relevant specific
strategic segmentation positioning
market target
objectives variables to strategy
segments markets
use
step 5: positioning

Act of designing the company’s

offering and image
to occupy
a distinctive place
in the mind of
the target market.
 perceptual mapping

A means of displaying or
ASU graphing, in two or more
Stanford
Innovation

dimensions, the location

MIT of products, brands, or
groups of products in
customers’ minds
UC-Irvine
Ohio State

Cool Mascot
value proposition
 The brand’s full mix of benefits on which a brand is
differentiated and positioned
 Answers the question of “Why should I buy your brand?”
 Value is a relationship between price and quality
 More quality for more/same/less price
 The same quality for a lower price
 Less quality for a much lower price
 Unique selling proposition
positioning statement

For [Target Market], the [Brand] is the [Point of

Differentiation] among all [Frame of Reference] because
[Reason to Believe]
 The point of differentiation (POD) describes how your brand or product
benefits customers in ways that set you apart from your competitors
 The frame of reference is the segment or category in which your company
competes
 The reason to believe is a statement providing compelling evidence and
reasons why customers in your target market can have confidence in your
differentiation claims