The STP Process

Segmentation is the process of classifying customers

into 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 a

clear, distinctive and desirable place relative to

competing products in the mind of the consumer

Market SegmentationThe process of dividing a

potential market into distinct subsets of

consumers and selecting one or more segments as a target market to be reached

with a distinct marketing mix.

Why Segment?

Marketsegmentation

Marketsegmentation

More precise definition of customers needs and wants

More precise definition of customers needs and wants

More accurate marketing objectives

More accurate marketing objectives

Improved resource allocation

Improved resource allocation

Better marketing results

Better marketing results

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

Steps in Segmentation, Targeting, and Positioning

1. Identify Basesfor Segmenting the Market

2. Develop Profilesof Resulting Segments

3. Develop Selection Criteria

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

Market Segmentation

• 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 Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• 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

Levels of Market Segmentation

Mass MarketingSame product to all consumers

(no segmentation)

Mass MarketingSame product to all consumers

(no segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

Niche MarketingDifferent products to subgroups within segments

(more segmentation)

Niche MarketingDifferent products to subgroups within segments

(more segmentation)

Local Marketing

Tailoring brands/ promotions to local customer groups

Individual Marketing

Tailoring products/ programs to individual customers

Bases for Segmenting Consumer Markets

Geographic

Demographic

Age, gender, family size and or income

Psychographic

Social class, lifestyle, or personality

Behavioural

Occasions, benefits sought, user status, usage rate, loyalty

Nations, states, regions or cities

Summary of Basic Methods

Market Segmentation

Occupation

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLESGeographic Segmentation

Climate

Density of area

City Size

Region Southwest, Mountain States

Major metropolitan areas, small cities, towns

Urban, suburban, rural

Temperate, hot, humid, rainy

Demographic Segmentation

Income

Marital statusSexAge Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+

Male, femaleSingle, married, divorced, living together, widowed

Under 25,000, 25,000-34,999, 35,000-49,999, 50,000-74,999, 75,000-99,999, 100,000 and over

Education Some high school, high school graduate, some college, college graduate, postgraduate

Professional, blue-collar, agricultural, military

continuedSEGMENTATION BASE SELECTED SEGMENTATION VARIABLESPsychological Segmentation

Learning-involvement

Perception

Personality

Needs-motivation Shelter, safety, security, affection

Extroverts, aggressives,

Low-risk, moderate-risk, high-risk

Low-involvement, high-involvement

Psychographic

Subcultures (Race/ethnic)

Religion

Cultures

(Lifestyle) Segmentation Economy-minded, outdoors enthusiasts, status seekers

American, Italian, Chinese, Mexican, French, Pakistani

Catholic, Protestant, Jewish, Moslem, other

African-American, Asian

Family life cycle

Social class Lower, middle, upper

Bachelors, young married, full nesters, empty nesters

Attitudes Positive attitude, negative attitude

Sociocultural Segmentation

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLESUse-Related Segmentation

Brand loyalty

Awareness status

Usage rate Heavy users, medium users, light users, non users

Unaware, aware, interested, enthusiastic

None, some, strong

Use-Situation Segmentation

Location

Objective

Time Leisure, work, rush, morning, night

Personal, gift, fun, achievement

Home, work, friend’s home, in-store

Person Self, family members, friends, boss, peers

Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money

Indian car market Segmentation

THE TOOTHPASTE MARKETThe package of benefits sought

WHITENESS FRESHNESS GOOD TASTING PRODUCT APPEARANCE DECAY PREVENTION GUMS PROTECTION TEETH SENSITIVITY ECONOMY