STP

Segmentation Targeting Positioning Process

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Establish Overall Strategy or
Objectives

Consistent with mission Derived from mission

statement

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Mission Unilever's
• To add Vitality to life. We meet everyday
needs for nutrition, hygiene, and personal
care with brands that help people feel good,
look good and get more out of life .
• From mass marketing to mass customization.

• Is mass marketing dead?

 Segmenting Patients-Adherence to
medication plan
• Skeptical (5-24%)-don’t trust physicians
• Proactive (76-91%)-active in managing health
• Resigned (13-45%) -afraid of consequences
• Confident(69-82%)- rarely think about risks
• Confused (37-56%)-feel they have little control over health
• Concerned(47-64%)- about risks of hypertension
 Segmentation: For firm
• Optimum resource utilization
• Unfulfilled needs identification
• Better product designs
• Targeted promotion
 Segmentation:For customer
• Tailored products and services
• Relevant offers
• Better CX
 How to segment-The variables
Geographic-urban, rural, Tier I,II

Demographic- Age, income, gender, Sec A, B, C,

Cohorts, FLC, Lifestage, culture
 Segmentation-Variables
Behavioral-purchase/transaction, usage rate,
loyalty, media usage, tech knowledge,
occasion

Psychological- Lifestyle(AIO,VALS,) Personality,

VALS Framework

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 What is customer behaviour
In a data rich world it is easy for firms to
collect and store transaction data, web
traffic, multichannel buying patterns,
and a host of other purchase-related
information. This allows firms to segment
customers based on variables such as
how recently and frequently they made
purchases, their brand loyalty, or their share
of wallet
 Loyalty Segmentation

Its inexpensive to retain a customer.

Valuation of the customers relationship with

firm-Lifetime value

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Finding Where to Live

How can geodemographic segmentation be used to help

consumers find the perfect place to live?
 Variables for Business Markets
Geographic

Firmographics

Buying Approach

Behavioural

Benefits sought
Segmentation in the Business-to-Business
Market: Case of Hill Rom

A healthcare equipment manufacturer and service

provider(including hospital beds, patient lifts, and non-invasive
therapeutic products) in the business-to-business (B2B) asked its
sales force to segment its customers
Conventional segmentation approach:

Based on the size of the healthcare facility using data such as

the number of staffed beds. Since hospital size was likely to
influence client spending on healthcare equipment, this
segmentation and sales force strategy seemed logical.
A study commissioned by the company unveiled eight
segments that were later grouped into two large groups for
ease of implementation. These two groups consisted
of key customers and prime customers.

Key customers -comprehensive solution and viewed purchases

as investments. Had higher capital expenditure on medical
products , replaced products 40% sooner than did prime
customers. The primary decision maker, the purchase drivers,
and the important brand factors were quite different for these
two groups .Facility size was no longer the driving factor—
there were 50-bed and 250-bed nursing facilities in the same
segment.
Decision Making Key Customer Prime Customer

Primary Decision maker Nurses Administrators

Purchase Drivers Patient satisfaction Necessity

Physician requirement Low maintenance costs
Low risk , low ability.
Deciding factors on brand Performance Reliability
Outcome and safety Ease of use
Care giver safety Price
Product preferences
Product configuration High-end to moderate Moderate to low end

System or stand alone System Stand alone

Replacement Cycle Shorter Longer

Required response time Shorter Longer

Product service
 Findings
• Further research revealed that the company was selling to
both segments in the same manner, resulting in overall high
sales costs. For example, the cost of sales to prime customers
was four to five times higher than it was for key customers,
because the sales force was trying to sell prime customers a
level of service and innovation that they neither valued nor
could afford.
• The company restructured its sales force to better align it with
the two segments. Within two years, customer satisfaction
improved significantly, revenue per employee increased by
11%, and operating income per employee increased by 51%.
 Step 3
Competition Segment characteristics
Competitive strategy, competitive intensity, Size, stability , growth, profitability
competitive resources
Porter’s model

Target market selection

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Good segments should be
• Identifiable
• Substantial
• Accessible
• Stable
• Differentiable
• Actionable
• Profitable
 Profitable
Segment profitability = Segment size
x Segment adoption percentage
x Purchase behavior
x Profit margin percentage
– Fixed costs,
where
Segment size = Number of people in the segment
Segment adoption percentage = Percentage of customers in the segment
who are likely to adopt the product
Purchase behavior = Purchase price x number of times the customer
would buy the product/service during a given
time period.

Fixed costs = Fixed costs (e.g., advertising expenditure).

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 How does the brand reside in mind
B.BCimage is on the receiver’s side. interpretation
Ccustomers
How the customers interpret
Sender Messages
Receiver

Products
People Brand Image
Brand identity
Places
Communication

Competition & noise

Positioning

Brand for what/why “Body Shop' (Environment

friendly)
Brand for whom "Tango” for teenagers, Dash for
Kids
Brand for when “Titan” for Occasions
Brand against whom Surf against Ariel
Against Whom For Whom

Horlicks

Why/what
When
 For whom
Against whom

Cadbury DM

When
Why
Positioning Statement
Mountain Dew:
To young, active soft-drink consumers who
have little time for sleep, Mountain Dew is the
soft drink that gives you more energy than any
other brand because it has the highest level of
caffeine. With Mountain Dew , you can stay
alert and keep going even when you haven't
been able to get a good night’s sleep.
Fiji claims that equatorial trade winds purify its water.

Perrier describes how its mineral water’s bubbles originate on the

Languedoc plain in southern France when rainwater seeps into the
ground and combines with volcanic gases.

Poland Spring touts its Maine roots, while Crystal Geyser

highlights its alpine origins near Mount Shasta.

Dasani and Aquafina, respectively owned by The Coca -Cola

Company and PepsiCo, attempt to hide their corporate parent
affiliations and their less glamorous sources (the public water
supply).

Dasani boasts about its environmentally conscious bottle design and

its reverse -osmosis filtering process.

Aquafina highlights its trademarked HydRO-7™ seven-step

 Defining Associations
Points-of-difference Points-of-parity
(PODs) (POPs)
• Attributes or benefits • Associations that
consumers strongly are not necessarily
associate with a brand,
positively evaluate, and unique to the brand
believe they could not but may be shared
find to the same extent with other brands
with a competitive
brand
Perceptual Maps

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Some examples
• Loreal- You are worth it.
• Michelin- Because so much is riding on your back.
• Oral B- bends and adjusts with contours of your
teeth to remove plaque
• Dove Soap- contains 1/4th moisturizing cream
• Harley Davidson-positioning its motorcycles as an
antidote to the tedium and lack of adventure.
Positioning focuses more on brands
Then

What to do with multi product brand?