STP: segmentation, targeting and positioning
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The STP process involves segmentation, targeting, and positioning. Segmentation involves dividing the market into subgroups with distinct characteristics. Targeting involves selecting which market segments to focus on. Positioning involves managing consumer perception of a brand relative to competitors. The goal of STP is to guide development of an appropriate marketing mix. Common segmentation bases include geographic, demographic, psychographic, and behavioral characteristics.
STP: segmentation, targeting and positioning
- 2. • Segmentation - grouping consumers by some criteria • Targeting - choosing which group(s) to sell to • Positioning - consumer perception of a brand or product relative to the perception of competing brands or products
- 3. The STP process demonstrates the links between an overall market and how a company chooses to compete in that market. It is sometimes referred to as a process, with segmentation being conducted first, then the selection of one or more target markets and then finally the implementation of positioning. The goal of the STP process is to guide the organization to the development and implementation of an appropriate marketing mix. STP PROCESS
- 4. Segmentation is diving the market into smaller groups of buyers with distinct needs, characteristics, or behaviours that might require separate marketing strategies or mixes.
- 5. Geographic Segmentation - grouping consumers based on their region, city, climate etc. Demographic - group consumers based on age, gender, race etc. Geodemographics - used for classifying and characterizing neighborhoods or localities based on the principal that residents living near each other are likely to have similar demographic, socio-economic and lifestyle characteristics. Psychographic - divides a market into different groups based on social class, lifestyle, or personality characteristics Behavioral – Divides buyers into segments based on consumer knowledge, attitudes, uses or response to a product
- 6. After dividing the market into segments, the organization then evaluates the different segments and decide how many or which segment it can serve best. Almost all organizations use Market Segmentation approach to target marketing because people are different and seek different ways to satisfy their needs. This approach divides broad markets, consisting of customers possessing different characteristics, into smaller market segments in which customers are grouped by characteristic shared by others in the segment.
- 7. 1. Undifferentiated Marketing (Mass Marketing) – Under this strategy the marketer attempts to appeal to one large market with a single marketing strategy. While this approach offers advantages in terms of lowering development and production costs, since only one product is marketed, there are few markets in which all customers seek the same benefits. While this approach was very popular in the early days of marketing (e.g., Ford Model-T), few companies now view this as a feasible strategy.
- 8. 2. Differentiated Marketing – This is were the firm targets more than one market segments by introducing several products, each aiming at a different segment. (e.g. running shoes, basketball shoes)
- 9. 3.Concentrated Marketing (Niche Marketing) - This strategy combines mass and segmentation marketing by using a single marketing strategy to appeal to one or more very small markets. It is primarily used by smaller marketers who have identified small sub-segments of a larger segment that are not served well by larger firms that follow a segmentation marketing approach. In these situations a smaller company can do quite well marketing a single product to a narrowly defined target market.
- 10. 4. Customized or Micro-Marketing – This target marketing strategy attempts to appeal to customers with specific wants. For micro-marketing segmentation to be effective the marketer must, to some degree, allow customers to “build-their-own” products. E.g. Dell
- 11. Positioning is concerned with the perception customers hold regarding a product or company. In particular, it relates to marketing decisions an organization undertakes to get customers to think about a product or company in a certain way compared to its competitors. Consumer typically form their understanding of the product over a period of time using information from a variety of sources, some of which are shown in the following diagram: