• Market segmentation, targeting and

positioning (STP)
• Week 3

• Monica Hope
1
Thursday, 23
 Learning outcomes

Understand how and why organisations segment

markets ?

Explain how marketers develop a targeting strategy

Understand how an organisation develops and

implements a positioning strategy and differentiates
itself.

Guest speaker to put it into practice- Cynthia Silva

Designing a Customer-Driven
Marketing Strategy
 The STP process
Who is your potential customer?

Baines et al 2016
What is segmentation ?
The process of market segmentation
and target marketing
The disaggregated The segmented The target
market market market

c1 1 2 3 1 2 3
c3
c2 c1 c3 c1 c3
c4
c6 c5 c2 c4 c5 c2 Marketing c4
c5 mix
c7 c8 c7 c6 c8 c7 c6 targeted at c8
segment 3

The characteristics of Customers are Segment 3 is judged

individual customers grouped into segments to be most attractive
are understood on the basis of having and a marketing mix
similar characteristics strategy is designed
for that target market

6
Why is there a need for market segmentation in today’ s
business environment ?

£15,000 £28,000 £350,000

Small, family Executive, business status, sporty

As different groups of customers have

different needs and wants that can be
satisfied.
e.g. theatre tickets, hotel accommodation
lunchtime menus
Source: Doyle 1994
7
 The benefits of market segmentation

Enhanced
profitability
Enhanced More effective
opportunities targeting of
for growth communications
Better matching
of customer
needs
Improved Opportunities

Customer of segment

retention dominance
By segmenting markets companies can identify which segments they might
most effectively compete in and develop strategies suitable for that segment
Fahy and Kotler 2012
Consider how you can segment a
customer base?

This is a relevant question if you choose this topic as your assignment

 Segmenting consumer markets
Consumer segmentation

Behavioural Psychographic Demographic Geographic

Purchases/transaction Lifestyle
Age Region

Consumption/usage Personality
Socio-economic
Technology usage Perceptions
Gender
Media Usage Attitudes

Motives

Benefits sought
10
 :Demographics

This advert featuring singer Ellie Goulding for Pantene can be used to support
demographic segmentation –Age and Gender
 : Gender
• While the target market for a given product can
include females and males, one gender may
represent a larger share of a company's target
market.
• Businesses can segment their markets by
gender, and come up with variations of their
products devoted to serving a specific gender
or alter their marketing campaigns to appeal to
the male or female segment.
 : Geographic
Segment by region
 Psychographic

Health conscious foods

Dividing a Lifestyle The sports enthusiast –
market into football sponsorship
groups based
on lifestyle or
personality
Extrovert - Porsche
characteristics
Personality Introvert - Toyota
Practical = Skoda
Personality and Lifestyle

Extroverts

Family lifestyle
 Behavioural Criteria
Usage of a product
How would you segment the market for :

1.Concert tickets
2.Hotel rooms
3.Fashion Clothing Market

?
Suggestions at end of slides
 Segmentation Viability
Measurable

Substantial Differentiable

Accessible Actionable

Source: Kotler, Principles of Marketing

 Targeting approaches
The choice of which market segment(s) to serve with a tailored marketing mix.

Undifferentiated Differentiated

Concentrated Mass Customisation

 Undifferentiated marketing
• This strategy can occur by default when a
company lacks marketing orientation and
practices undifferentiated marketing
through lack of customer knowledge

• Any easy process for a company to follow

as only a single product/marketing
strategy is developed …………..but not a
market leading strategy !
 Differentiated
• Estee Lauder, different products(brands) for
different Segments

Estee Lauder Clinique Aveda MAC MenExpert

Older 50 + Mums New Age Fashion Men

Marketing Marketing Marketing Marketing Marketing

Mix 1 Mix 2 Mix 3 Mix 4 Mix 5
Just as relevant for a hospitality event, hotel accommodation, or dining experience
 Differentiated
• Product and marketing variations = higher
sales
• BUT!!
• Increased costs due to number of different
products.
• Separate market plans for separate
segments
– Packaging
– Promotions
– Channels
Armstrong et al 2016
 Concentrated (Niche)

Jordans
Organic Range

Ferrari

• Limited resources
• Exclusive target market
• In-depth knowledge of smaller segment
• Niche players can become major players
 Mass customisation :
Personally design your own shoes

Nikeid personalise your trainers or boots from choosing from hundreds

of colours and finishes
 Socially responsible targeting

Breweries accused of targeting

under-age drinkers with alcopops

Internet increases accessibility to vulnerable groups who are not supervised

 Positioning
• Having decided which segments of the
market it will target, the company must
decide what position it wants to occupy in
those segments

• “ a product’s/service position is the way it

is defined by consumers on important
attributes – the place the product/service
occupies in consumers’ minds relative to
competing products” Armstrong et al 2016
 Positioning
“ Competitive positioning has been defined
as the act of designing the company’s
offer and image so that they occupy a
meaningful and distinctive position in the
target customers mind”
Kotler & Keller (2006)

1. Plan position that will give the product the greatest

advantage in selected target markets
2. Must design marketing mixes to create these planned
positions
27
Positioning
 Differentiation and Positioning
• A firm can create
differentiation on:
– Product
– Services
– Channels
– People
– Image Seventh Generation, a maker
of household cleaning
supplies, differentiates itself
not by how its products
perform but by the fact that
its products are greener
6 - 29
Customer Perception of a product
... Put the following brands for jeans on a
perceptual map.
... Decide the axis to use and their position

Armani Tesco Jeans

M&S Diesel
Zara Levis
H&M FCUK
 Price & Quality

High
Armani

Diesal
Quality

M &S FCUK
Zara Levis
H&M
Tesco

Low

Low High
Price
How can STP help an organisation ?
Challenges all faced by any company

• Satisfying customer demands

• Understanding a new consumer

• Adapting to the every changing market

• Maintenance and enhancement of brand loyalty-

• Assessing the pricing strategy to meet the target

consumer
 Key Points
• Segmenting – grouping consumers
according to similar characteristics

• Targeting – Deciding which segments to

enter and how to reach them

• Positioning – How to position

product/service in relation to competitors
(Differentiation & Competitive Advantage a
SWOT analysis can help you with this –
see video on surreylearn) 33
How do you see Redbulls
positioning ?
1. Lifestyle drink for
the extreme
crowd.
2. Soft drink for
families
3. Energy drink for
students to pass
exams
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4. Sweet drink for
1 2 3 4
young children
 What kind of Target Marketing Strategy
do you think L’Oreal pursues ?

1. Undifferentiated
2. Differentiated
3. Focussed
4. Customised
5. Niche

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1 2 3 4 5
 The process of dividing a market into distinct
groups of buyers with different needs,
characteristics, or behaviors is called ________.

1. Target Marketing
2. Positioning
3. Marketing Strategy
4. Market
Segmentation
5. Market Extension

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1 2 3 4 5
________ is the place a product occupies in the
consumer's mind relative to competition.

1. Product
Placement
2. Product Position
3. Market
Segmentation
4. Market targeting
5. Product Promotion
0% 0% 0% 0% 0%

1 2 3 4 5
 The Marketing Mix can help convey
the Market Positioning ?
1. True
2. False

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1 2
Which of the following segments would you choose,
to launch a new High factor Sunscreen ?

1. Concerned consumers: sun

protection is really important
2. Sun avoiders – prefer to stay
out of sun and regard sun care
as a hassle
3. Sun Lovers – worship the sun
and understand value of
protection and SPFs
4. Beauty conscious – like to
tan, know protection is
important but don’t understand
or worry about SPFs
5. Careless tanners – like the
sun but don’t bother to protect
0% 0% 0% 0% 0%
themselves
1 2 3 4 5
• Segmentation…..?

• Concert tickets : Lifestyle ;

• Hotel room : Geographic;
• Fashion Clothing Market : Age;