Segmentation, Targeting, and Positioning (STP)

Introduction to Marketing

• Welcome to Week 6 of Introduction to Marketing.
• Today we will explore Segmentation, Targeting, and Positioning (STP).
• We will cover the bases for segmenting markets, evaluating and selecting target markets, and developing a compelling positioning strategy.

• Market segmentation involves dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors.
• These distinct groups might require separate products or marketing programs.
• The goal is to identify segments that are measurable, accessible, substantial, differentiable, and actionable.

• Geographic segmentation divides the market into different geographical units, such as nations, states, regions, counties, cities, or even neighborhoods.
• Demographic segmentation divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.
• Demographic variables are the most popular bases for segmenting customer groups because they are easier to measure.

• Psychographic segmentation divides buyers into different segments based on lifestyle or personality characteristics.
• People in the same demographic group can have very different psychographic characteristics.
• Marketers often use personality variables to segment markets, offering products that align with consumer lifestyles.

• Behavioral segmentation divides buyers into segments based on their knowledge, attitudes, uses, or responses to a product.
• Variables include occasions, benefits sought, user status, usage rate, and loyalty status.
• Benefit segmentation requires finding the major benefits people look for in a product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit.

• Consumer and business marketers use many of the same variables to segment their markets.
• Business buyers can be segmented geographically, demographically, or by benefits sought, user status, usage rate, and loyalty status.
• However, business marketers also use additional variables, such as customer operating characteristics, purchasing approaches, situational factors, and personal characteristics.

• Market targeting involves evaluating each market segment's attractiveness and selecting one or more segments to enter.
• A company should target segments in which it can profitably generate the greatest customer value and sustain it over time.
• The target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.

• In evaluating different market segments, a firm must look at three factors: segment size and growth, segment structural attractiveness, and company objectives and resources.
• A segment is less attractive if it already contains many strong and aggressive competitors or if it is easy for new entrants to come into the segment.
• The company must also consider whether it has the skills and resources needed to succeed in that segment.

• Beyond deciding which segments to target, the company must decide on a value proposition.
• Differentiation involves actually differentiating the firm's market offering to create superior customer value.
• Positioning consists of arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

• In planning their differentiation and positioning strategies, marketers often prepare perceptual positioning maps.
• These maps show consumer perceptions of their brands versus competing products on important buying dimensions.
• The position of each circle on the map indicates the brand's perceived positioning, and the size of the circle may indicate the brand's relative market share.

• The differentiation and positioning task consists of three steps:
• 1) Identifying a set of differentiating competitive advantages.
• 2) Choosing the right competitive advantages.
• 3) Selecting an overall positioning strategy.
• To build profitable relationships with target customers, marketers must understand customer needs better than competitors do and deliver more customer value.

• The full positioning of a brand is called the brand's value proposition.
• It is the full mix of benefits on which a brand is differentiated and positioned.
• Possible value propositions include "More for More," "More for the Same," "The Same for Less," "Less for much Less," and "More for Less."

• Once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to its target consumers.
• All the company's marketing mix efforts (the 4 Ps) must support the positioning strategy.
• Establishing a position or changing one usually takes a long time, but maintaining it requires consistent performance and communication.

• The STP process is essential for creating customer value and building profitable relationships.
• Segmentation allows marketers to identify distinct groups with unique needs.
• Targeting selects the most attractive segments to serve.
• Positioning ensures the brand occupies a clear, distinctive place in the consumer's mind.