Market Segmentation,

Targeting and Positioning

(STP)

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 Key Terms
• Market: people or institutions with sufficient purchasing
power, authority, and willingness to buy.
• Market segmentation is the process of dividing a market of
potential customers into groups, or segments, based on
different characteristics.
• Market segmentation is the act of dividing a large target
market into distinct groups of consumers who have similar
characteristics, needs or behaviors.
• A target market is a group of customers within a business's
serviceable available market at which a business aims its
marketing efforts and resources. A target market is a subset of
the total market for a product or service.
• Positioning refers to the place that a brand occupies in the
minds of the customers and how it is distinguished from the
products of the competitors.
Overview: Segmentation, Targeting & Positioning

Why do this?
Market segmentation

Definition:
 This is the process of dividing the total
market for a good or service into
several smaller, internally similar (or
homogeneous) groups.
 All members in a group have similar
factors that influence their demand for
the particular product.

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Segmenting Consumer Markets
Geographic Psychographic Behavioral
Segmentation Demographic Segmentation segmentation
Segmentation (based on AIO)

World region Age Social class Occasions

Country Gender Lifestyle Benefits
City Family size Personality User status
Climate Income Usage rates
Occupation Loyalty status
Education Readiness stage
Religion Attitude toward
Nationality product
Bases for segmentation
 Geographic — The city size, urban/ suburban/ rural
population distribution and climate.
 Demographic — The distribution of a
population’s age, sex, income, stage in
family cycle and ethnic background.
 Psychographic — Personalities, lifestyles, social class
including activities, interests and opinions (AIO).
 Behaviour towards products.
◦ Benefits desired or sought.
◦ Product usage rate.

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Market Segmentation: Levels

No segmentation

Segment
Mass marketing Niche marketing Micromarketing
marketing

Complete segmentation

 A niche market is the subset of the market on which a specific product is focused. The market
niche defines the product features aimed at satisfying specific market needs, as well as the price
range, production quality and the demographics that it is intended to target.
 Micromarketing is an approach to advertising that tends to target a specific group of people
in a niche market. With micromarketing, products or services are marketed directly to a
targeted group of customers.
Benefits of segmentation

Segmentation enables marketers to:

 Identify and satisfy specific benefits sought
by particular groups.
 Divide the market into segments by
separating marketing programs.
 Select target market.
 Action the market segmentation plan.

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Market segmentation process
The process involves:
 Identifying the needs and wants of
customers.
 Identifying the different characteristics
between market segments.
 Estimating the market potential.

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Conditions for effective
segmentation
A segmentation process must meet 3 conditions:
1. The characteristics used to categorise customers
must be measurable and the data obtainable.
2. The segment itself must be accessible through
existing marketing institutions with a minimum
of cost and waste.
3. A segment must be large enough to be profitable.

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Target market strategies

 The target market should be compatible with

an organisation’s goals and image.
 The marketing opportunity presented by the
segment must match the company’s resources.
 The business must generate a profit if it is
to continue its existence.

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Market coverage strategies
A. Undifferentiated marketing (Aggregation)

Company
marketing Market
mix

B. Differentiated marketing (Single segment)

Company mix 1 Segment 1
Company mix 2 Segment 2
Company mix 3 Segment 3

C. Concentrated marketing (Multiple segments)

Company Segment 1
marketing Segment 2
mix
Segment 3

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Undifferentiated Strategy/ Mass
Marketing Strategy

Single
Marketing
Mix

Organization
Target Market
 Differentiated Strategy

Marketing Mix 1

Marketing Mix 2
Organization

Target Market
Differentiation strategy
Businesses have the option of differentiating
their marketing strategy in three ways:
 by modifying the product
 by offering different levels of service
 by offering products through different
channels

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Concentrated Strategy

Single
Marketing
Mix

Organization
Target Market
Positioning

Definition:
 Customers’ image or perception of a
particular brand or company, relative to
their perceptions of others in the same
category.

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Positioning strategies
Positioning is assessed:
• In relation to a competitor.
• According to a product class or attribute.
• By price and quality.
Positioning can be in various forms,
although it always incorporates a
statement that identifies, (based on the
marketing mix) how a business wants its
products or services to be perceived
by the consumer.
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Positioning of a brand
 The positioning of a brand or product is a
strategic process that involves marketing
the brand or product in a certain way to
create and establish an image or identity
within the minds of the consumers in the
target market.

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Selecting a position
Factors to consider:
 Competition — look for a gap or niche.
 Customers — seek product attributes.
 Company image — what is the current image?
 Target market — have the needs of the target
market changed? Do we need repositioning?
 The marketing mix — does it support the
selected position?

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BCG Matrix/ Growth Share Matrix
 BCG matrix is a framework created by Boston Consulting
Group to evaluate the strategic position of the business brand
portfolio and its potential. It classifies business portfolio into four
categories based on industry attractiveness (growth rate of that
industry) and competitive position (relative market share).
 A BCG matrix helps organizations determine which areas of
their business deserve more resources and investment.
 It is based on the product life cycle theory that can be used to
determine what priorities should be given in the product portfolio
of a business unit.
 BCG matrix (or growth-share matrix) is a corporate planning
tool, which uses relative market share and industry growth rate
factors to evaluate the potential of business brand portfolio and
suggest further investment strategies.

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BCG Matrix
 Cash Cows – High market share but low growth rate
(most profitable). Retention strategy
 Stars – High market share and High growth rate (high
competition). the concentration and investment
strategy
 Question marks – Low market share and high growth
rate (uncertainty). New Customer acquisition
strategies and marker research
 Dogs – Low market share and low growth rate (less
profitable or may even be negative profitability).
divestment strategy (i.e. stop investment or reduce
investment)
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BCG Matrix

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Examples
 An example that can be considered as a ‘Dog’ in the
BCG Matrix is the plasma TV from Philips.
 An example that can be considered as a ‘Question
mark’ in the BCG Matrix is the tablet from Philips.
 An example of a product that can be classified as a
‘Cash Cow’ is the Philips energy-saving lamp.
 An example of a product that can be classified as 'Star'
in the BCG Matrix is the LED lamp from Philips.

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The Porter's Generic Strategies

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Porter’s Five Forces Model
 Porter's Five Forces is a model that identifies and analyzes five competitive
forces that shape every industry and helps determine an industry's
weaknesses and strengths.
 Five Forces analysis is frequently used to identify an industry's structure to
determine corporate strategy. Porter's model can be applied to any
segment of the economy to understand the level of competition within the
industry and enhance a company's long-term profitability.
 The Five Forces model is widely used to analyze the industry structure of a
company as well as its corporate strategy.
 Five Forces analysis can be used to guide business strategy to increase
competitive advantage.

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THANK YOU

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