Segmentation, Targeting, &

Positioning (STP)

Segmentation

Process of identifying and categorizing specific groups of potential customers with homogeneous attributes who are likely to exhibit similar responses to a company’s marketing mix

Market Segmentation Strategies

Traditional Approaches to Market SegmentationMass MarketingDifferentiated Marketing

Multisegment Approach Market Concentration Approach

Niche Marketing

Mass Marketing Strategy

Multisegment Strategy

Market Concentration Strategy

Niche Marketing Strategy

Market Segmentation Strategies Emerging Approaches to SegmentationOne-to-One MarketingMass CustomizationPermission Marketing Interruption marketingGuerrilla Marketing

Criteria for Successful Segmentation Identifiable and MeasurableSubstantialAccessibleResponsive

Bases for SegmentingConsumer Markets

Behavioral Segmentation Segments based on actual behavior or

product usage e.g. Heavy diesel users, light diesel users, non-users of diesel.

Demographic Segmentation Segments based on demographic factors

(e.g., gender, age, income, education, etc.)Psychographic Segmentation

Segments based on state-of-mind issues (e.g., motives, attitudes, opinions, values, lifestyles, interests, personality, etc.)

Geographic Segmentation Segments based on geographic location

Benefit Segmentation ofthe Snack Food Market

Bases for SegmentingBusiness Markets

Type of OrganizationOrganizational CharacteristicsBenefits Sought or Buying Processes

Personal and PsychologicalRelationship Intensity

Targeting

The process of evaluating segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond

Criteria for Targeting: 9 W’sWho buys our product?Who does not buy it?What need or function does it serve?What are customers buying to satisfy the

need for which our product is targeted?What price are they paying?When is the product purchased?Where is it purchased?Why is it purchased?

Target Marketing Strategies

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

Advantages of Segmentation

1. The process of breaking up a homogeneous market into heterogeneous segments forces the marketer to analyse and consider both the needs of the market and the company’s 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

• Size, purchasing power, profiles of segments can be measured.

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable

Accessible

Substantial

Differential

Actionable

• Segments must respond differently to different marketing mix elements & programs.

• Effective programs can be designed to attract and serve

the segments.

Requirements for effective Segmentation

Basic Target Marketing Strategies

Positioning

Locating a brand in consumers’ minds over and against competitors in terms of attributes and benefits that the brand does and does not offer Attribute or Benefit Quality and Price Use or User Competition

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

Using Product Descriptorsfor Product Differentiation