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The STP Process

Segmentation is the process of classifying customers

into groups which share some common characteristicinto groups which share some common characteristic

Targeting involves the process of evaluating each

segments attractiveness and selecting one or more

segments to enter

Positioning is arranging for a product to occupy ag g g p py

clear, distinctive and desirable place relative to

competing products in the mind of the consumer

Steps in Segmentation, Targeting, and Positioning

6. Develop Marketing

2. Develop Profiles

3. Develop Selection Criteria

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

1. Identify Basesfor Segmenting the Market

pof Resulting Segments

Market Segmentation

2

Market Segmentation

But one with

An undifferentiated market

Different needs in a marketBut one with many different purchase combinations Segments in a market

Stage 2: Customers and Transactions

Stage 1: Your Market and How it Operates

Step 1 - Market MappingStructure and decision makers

The Market Segmentation Process

gStep 3 - What is Bought

Purchase options

Step 4 - Who Buys WhatCustomers and their purchases

Step 2 - Who BuysCustomer profiling

Stage 3: Segmenting the Market

Step 5 - Why it is BoughtC dCustomer needs

Step 6 - Forming SegmentsCombining similar customers

Step 7 - Segment ChecklistReality check

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Advantages of Segmentation

1. The process of breaking up a homogeneous market intoheterogeneous segments forces the marketer to analyse and

id b th th d f th k t d th ’consider both the needs of the market and the company’sability to competently serve those needs – thereby makingthe company better informed about its customers

2. Competitor offerings and marketing positioning must alsobe analysed in this context so the company must considerwhat its competitive advantages and disadvantages are,helping it to clarify its own positioning strategyhelping it to clarify its own positioning strategy

3. Limited resources are used to best advantage, targeted atthose segments that offer the best potential

Market SegmentationLevels of Market Segmentation

Mass MarketingSame product to all consumers

(no segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

Niche MarketingDifferent products to subgroups within segments

(more segmentation)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

Local Marketing

Tailoring brands/ promotions to local customer groups

Individual Marketing

Tailoring products/ programs to individual customers

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

Measurable

Criteria for successful Segmentation

Segments can be effectivelyreached and served.

Segments are large or profitableenough to serve.

Accessible

Substantial

Segments must respond differentlyDifferential

Actionable

Segments must respond differently to different marketing mix elementsand programs.

Effective programs can be designedto attract and serve the segments.

Segmenting Consumer MarketsConsumer Segmentation

Behavioural

Benefits sought

Purchase occasion

Lifestyle

Personality

Demographic

Socio-economic

Psychographic Profile

Purchase behaviour

Usage

Perceptions and beliefs

Geographic

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B2C Consumer-Base Segmentation

A S R R li i tDemographicGeographicUsage RateUser StatusBenefit SoughtSocio EconomicPersonality/Lifestyle

Age, Sex, Race, Religion etcCountry, County, Type of Housing etcHeavy users. Light, mediumFirst-Time users, Non Users, RegularQuality Benefits, Economy BenefitsIncome, OccupationExtrovert, Introvert

B2B Industrial Base Segmentation

I d t t i tDemographicGeographicUsage RateUser StatusBenefit SoughtPurchasing Organisation

Industry type, company size etcCountry, county, region etcHeavy users. Light, mediumFirst-Time users, Non Users, RegularQuality Benefits, Economy BenefitsCentralized, decentralized

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Micro-segmentsMicro-segment 1 2 3 4 5 6 7 8 9 10Application(if applicable)

What is bought

Where,

When,

and How

Who

Why(benefits sought)

Segmentation Structure Selected MarketSegment name 1 2 3 4 5 6 7 8Who Demo-

buys graphic

Geo-graphicgraphic

Psycho-graphic

Other

What is Product

bought or service

Where Channel

When Purchasefrequency

How Paymentmethod

Why it is Benefits

bought sought

Price paid

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Prioritising & Selecting Segments

High LowHigh

Relative company competitiveness

SegmentAttractiveness

KEYPresentposition

Forecastposition in3

?

3 years

Low

No change

Process of Market Segmentationand Promotion Mix

c1c

c3

The disaggregated market The segmented market The target market

1 2 3 1 2 3

c1

c5

c7

c2

c6

c3

c4

c8

c1

c5

c7

c2

c6

c3

c4

c8c5

c7

c2

c6c4

c8

The characteristics of individual customers are understood

Customers are grouped into segments on the basis of having similar

Segment 3 is judged to be most attractive and a promotion mix

Promotionmix

targeted at segment 3

are understood basis of having similar characteristics

and a promotion mix strategy is designed for that target market

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Market Segmentation Strategies

Traditional Approaches to Market Segmentation• M M k ti• Mass Marketing• Differentiated Marketing

– Multi-segment Approach– Market Concentration Approach

• Niche Marketing

Mass Marketing Strategy

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Multi-segment Strategy

Market Concentration Strategy

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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 i ti f thidescription of this.

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Fi e basic strategies for target market selection:

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

Basic Target Marketing Strategies

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Relative perception

Differentiation and Positioning

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

positioningpositioning(4) Comparison of product offerings with competitors(5) Identification of unique position(6) Development of a marketing program(7) Continual reassessment

Differentiation Strategies– Product Descriptors

Differentiation and Positioning

• Product features• Advantages• Benefits

– Customer Support Services– Image

Positioning Strategies– Strengthen the Current Position– Repositioning– Reposition the Competition

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PositioningAlthough from the company’s perspective a product is judgedto be different from the competitors’ products, thesedifferences 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• 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 theyOver Positioning: Mercedes may make buyers think that they won’t 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;

D btf l P iti i b fi d it h d t b li th l iDoubtful Positioning: buyers may find it hard to believe the claims (would you buy jewelry at Shopper’s Stop only because Shopper’s 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• Benefit Positioning: the most comfortable 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 hasCompetitor Positioning: X is better than Y, X has twice as much meat than Y, A relieves the pain in ¼ of the time in comparison to B etc…

Positioning Strategies

BREADTH OF PRODUCTS OFFERED

Narrow Wide

NUMBER OF MARKETS SERVED

Many

F

ProductFocused

Unfocused (Everything

for everyone)

Market Focused

Fully Focused(Product and

k f d)Few Focusedmarket focused)

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Principles of Positioning Strategy

1. Must establish position for firm or product in minds of customerscustomers

2. Position should be distinctive, providing one simple, consistent message

3. Position must set firm/product apart from competitors4. Firm cannot be all things to all people--must focus

Market-Positioning Strategies

High Price

High QualityLow Quality

Sony VaioLaptops

Low Price

ZenithLaptops

Acer Laptops