Segmentation, Targeting and
Positioning
(STP)
Learning Objectives
1. In what ways can a company divide the
consumer market into segments?
2. How should business markets be segmented?
3. How should a company choose the most
attractive target markets?
4. How a company should position itself?
Bases for Segmenting
Consumer Markets
• Market segment
– A group of customers who share a similar set
of needs and wants
Geographic Demographic
segmentation segmentation
Psychographic Behavioral
segmentation segmentation
BASES OF GEOGRAPHIC S.
• Pin/Zip code
• City
• Country
• Radius around a certain location
• Climate
• Urban or rural
ASSIGNMENT
How can you geographically segment Indian
market for an ice cream manufacturing
company?
How can you geographically segment Indian
market for a health insurance company?
Demographic Segmentation
It refers to splitting up audiences based on
observable, people-based differences.
Age, Marital Life cycle
status stage
Family size,
Religion, Gender,
Culture Education
Income,
Generation
Occupation
Demographic Segmentation
• Age
– Our wants and abilities change with age
• Life cycle stage
– A person’s major concern (e.g. After retirement)
Demographic Segmentation
• Gender
– Men and women have different attitudes
and behave differently
• Income
– Income segmentation is a long-standing
practice
Demographic Segmentation
• Generation
Millennials (Gen Y) Gen X
Baby Boomers Silent Generation
Demographic Segmentation
• In USA
Hispanic Americans Asian Americans
African Americans LGBT
SOCIO-ECONOMIC
CLASSIFICATION IN INDIA
DURABLES
ASSIGNMENT?
• How can we demographically segment
baby soaps in India?
• How can we demographically segment
MBA aspirants in India?
Psychographic Segmentation
• Buyers are divided into groups on the
basis of psychological/personality traits,
lifestyle, or values
EXAMPLES
• Personality traits (Rugged, Open, introvert,
extrovert etc.)
• Values
• Interests
• Lifestyles
• Psychological influences (sensitive,
impulsive etc.)
• Motivations
ROYAL ENFIELD RIDERS
BEHAVIORAL
SEGMENTATION
• Marketers divide buyers into groups on the
basis of their knowledge of, attitude
toward, usage of, or response to a product
BEHAVIORAL
SEGMENTATION
• Needs and benefits
• Decision roles
– Initiator
– Influencer
– Decider
– Buyer
– User
USER AND USAGE-RELATED
VARIABLES
Occasions User status
Attitude Usage rate
Loyalty Spending
status habits
Effective
Segmentation Criteria
Measurable
Substantial
Accessible
Differentiable
Actionable
One-to-one marketing
Identify your prospects and customers
Differentiate customers in terms of their needs
and value to your company
Interact to improve your knowledge about
customers’ needs and to build relationships
Customize products, services,
and messages to each customer
How Should Business Markets
Be Segmented?
Demographic
Geographic
Operating variables like usage rate,
benefits sought etc.
Purchasing approaches
Situational factors
Personal characteristics
TARGETING
• Evaluating Market Segments (developing
selection criteria)
• Segment Size and Growth
– Analyze sales, growth rates and expected profitability for
various segments.
• Segment Structural Attractiveness
– Consider effects of: Competitors, Availability of Substitute
Products, threat of new entrants, and the Power of Buyers
& Suppliers (Porters Five Forces Model).
• Company Objectives and Resources
– Company skills & resources relative to the segment(s).
– Look for Competitive Advantages.
MARKET TARGETING
MARKET COVERAGE STRATEGIES
Company
Marketing Market
Mix
A. Undifferentiated Targeting
Company
Marketing Mix 1 Segment 1
Company
Segment 2
Marketing Mix 2
Company
Segment 3
Marketing Mix 3
B. Differentiated Targeting
Segment 1
Company
Marketing Segment 2
Mix
Segment 3
C. Concentrated Targeting
• Customized Targeting
• It is tailoring customized products to
individual customer needs
Crafting the
Positioning Strategy
Positioning
• Positioning
– The act of designing a
company’s offering and
image to occupy a
distinctive place in the
minds of the target
market
– Value proposition
Value proposition
A value proposition refers to the value a
company promises to deliver to customers
should they choose to buy their product.
Porters Generic Competitive
Strategies
Competitive Advantage
Lower Cost Differentiation
Cost Leadership Differentiation
Broad Target
Strategy Strategy
Competitive
Scope Focus Strategy
Focus Strategy
Narrow Target (Differentiation
(Cost Based)
Based)
Source: Adapted from Michael Porter, Competitive Advantage,New York: The Free Press, 1985, p. 12.
STEPS TO CHOOSING AND
IMPLEMENTING
A POSITIONING STRATEGY
• Step 1. Identifying Possible Competitive
Advantages: Competitive Differentiation.
• Step 2. Selecting the Right Competitive
Advantage: Unique Selling Proposition
(USP).
• Step 3. Communicating and Delivering
the Chosen Positioning.
• Step 4. Support the positioning strategy
with a unique marketing mix
Compétitive Frame
of Reference
• Competitive frame of reference
– Defines which other brands a brand competes
with and which should thus be the focus of
competitive analysis
– Identifying and analyzing competitors
Compétitive Frame
of Reference
PERCEPTUAL MAP
Points-of-Difference
and Points-of-Parity
• Points-of-difference
(PODs)
– Attributes/benefits that
consumers strongly
associate with a brand,
positively evaluate,
and believe they could
not find to the same
extent with a
competitive brand
Points-of-Parity
• Points-of-parity (POPs)
– Attribute/benefit associations that are not
necessarily unique to the brand but may in
fact be shared with other brands
Points-of-Difference
and Points-of-Parity
• Choosing specific
POPs and PODs
– Competitive
advantage
– Means of
differentiation
– Perceptual map
– Emotional
branding
“JUST DO IT.”
“We Understand Your World”
Positioning/Branding
for A Small Business
• Find compelling product • Create buzz and a loyal
performance advantage brand community
• Focus on building one or • Employ a well-integrated
two strong brands based set of brand elements
on one or two key • Leverage as many
associations secondary associations as
• Encourage product trial in possible
any way possible • Creatively conduct low-cost
• Develop cohesive digital marketing research
strategy to make the brand
“bigger and better”
Thank You