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 g 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 Mix for Each Target Segment 5. Develop Positioning for Each Target Segment 4. Select Target Segment(s) 3. Develop Selection Criteria 2. Develop Profiles p of Resulting Segments 1. Identify Bases for Segmenting the Market

Market Positioning

Market Targeting

Market Segmentation

Market Segmentation
An undifferentiated market Different needs in a market
But one with many different purchase combinations

Segments in a market

The Market Segmentation Process

Stage 1: Your Market and How it Operates
Step 1 - Market Mapping Structure and decision makers

Stage 2: Customers and Transactions g

Step 2 - Who Buys Customer profiling Step 3 - What is Bought Purchase options

Step 4 - Who Buys What Customers and their purchases

Stage 3: Segmenting the Market

Step 5 - Why it is Bought Customer needs C d Step 6 - Forming Segments Combining similar customers Step 7 - Segment Checklist Reality check

Advantages of Segmentation
1. The process of breaking up a homogeneous market into heterogeneous segments forces the marketer to analyse and consider b th th needs of th market and th companys id both the d f the k t d the 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

Market Segmentation
Levels of Market Segmentation
Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation) Niche Marketing Different products to subgroups within segments (more segmentation) Micromarketing Products 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

Criteria for successful Segmentation

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

Accessible

Segments can be effectively reached and served. Segments are large or profitable enough to serve. Segments must respond differently to different marketing mix elements and programs.

Substantial

Differential

Actionable

Effective programs can be designed to attract and serve the segments.

Segmenting Consumer Markets

Consumer Segmentation

Behavioural

Psychographic

Profile

Benefits sought Purchase occasion Purchase behaviour Usage Perceptions and beliefs

Lifestyle Personality

Demographic Socio-economic Geographic

B2C Consumer-Base Segmentation

Demographic Geographic Usage Rate User Status Benefit Sought Socio Economic Personality/Lifestyle

Age, Sex, Race, R li i etc A S R Religion t Country, County, Type of Housing etc Heavy users. Light, medium First-Time users, Non Users, Regular Quality Benefits, Economy Benefits Income, Occupation Extrovert, Introvert

B2B Industrial Base Segmentation

Demographic Geographic Usage Rate User Status Benefit Sought Purchasing Organisation

Industry type, company size etc I d t t i t Country, county, region etc Heavy users. Light, medium First-Time users, Non Users, Regular Quality Benefits, Economy Benefits Centralized, decentralized

Micro-segments
Micro-segment Application (if applicable) What is bought Where, When, and How Who Why (benefits sought) 1 2 3 4 5 6 7 8 9 10

Segmentation Structure Selected Market

Segment name
Who buys Demographic Geographic Psychographic Other What is bought Where When How Why it is bought Price paid Product or service Channel Purchase frequency Payment method Benefits sought

Prioritising & Selecting Segments

Relative company competitiveness High High Low

?
KEY

Segment Attractiveness

Present position Forecast position in 3 years

No change

Low

Process of Market Segmentation and Promotion Mix

The disaggregated market The segmented market 1 2 3 1 The target market 2 3

c1 c4 c7 c2 c5 c8

c3 c6

c1 c3 c5 c2 c4 c7 c6 c8
Customers are grouped into segments on the basis of having similar characteristics

c1 c5 c2 c7 c6

Promotion mix targeted at segment 3

c3 c4 c8

The characteristics of individual customers are understood

Segment 3 is judged to be most attractive and a promotion mix strategy is designed for that target market

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

Multi-segment Strategy

Market Concentration Strategy

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) description of this. d i ti f thi

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Target Marketing Strategies

Five Fi e 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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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

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Positioning
Although from the companys perspective a product is judged to be different from the competitors products, these differences 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 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 they wont 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; Doubtful P iti i D btf l Positioning: b buyers may find it hard to believe the claims fi d h d t b li th l i (would you buy jewelry at Shoppers Stop only because Shoppers 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, 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 has twice as much meat than Y, A relieves the pain in of the time in comparison to B etc

Positioning Strategies
BREADTH OF PRODUCTS OFFERED

Narrow
Product Focused

Wide
Unfocused (Everything for everyone)

Many
NUMBER OF MARKETS SERVED

Few F

Fully Focused (Product and market focused) k f d)

Market Focused

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Principles of Positioning Strategy

1. Must establish position for firm or product in minds of customers 2. Position should be distinctive, providing one simple, consistent message 3. Position must set firm/product apart from competitors 4. Firm cannot be all things to all people--must focus

Market-Positioning Strategies
High Price

Sony Vaio Laptops

Low Quality

High Quality

Acer Laptops Zenith Laptops

Low Price

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