THE MARKETING PROCESS – SEGMENTATION, TARGETING AND
POSITIONING (STP)
1. Introduction to the Marketing Process (STP Model)
The marketing process is a structured approach used by marketers to determine how
to effectively reach and serve consumers in a competitive marketplace. It comprises
three critical phases known collectively as STP: segmentation, targeting, and
positioning. These interconnected steps help marketers to divide the market based on
consumer differences, choose whom to focus on, and finally, communicate a
compelling value proposition that positions the product uniquely in the minds of
consumers.
Every product or service, regardless of its nature, cannot serve the entire market
uniformly due to diversity in consumer preferences, needs, income levels, geographic
conditions, psychological attributes, and behavioral patterns. Therefore, the STP
process allows businesses to narrow their focus, allocate resources efficiently, and
design products that resonate deeply with intended consumers. This strategic
alignment between the company’s offerings and customer expectations enhances
customer satisfaction, strengthens brand loyalty, and leads to improved profitability.
A commonly cited example is Coca-Cola offering regular Coke for general consumers
and Diet Coke for health-conscious or diabetic individuals. These variations show
how a single brand segments the market, targets specific groups, and positions the
products differently to meet distinct needs.
2. Market Segmentation: Dividing the Market
Market segmentation refers to the practice of dividing a broad consumer or business
market, normally consisting of existing and potential customers, into sub-groups of
consumers based on some type of shared characteristics. The goal is to group
customers who have similar needs and respond similarly to marketing strategies. This
enables marketers to customize their approach rather than use a one-size-fits-all
method.
Importance of Market Segmentation
It identifies distinct groups within a market.
Helps companies understand the needs and wants of their customer base.
Improves resource allocation by focusing on profitable segments.
Enhances the effectiveness of marketing campaigns.
Allows for tailored product offerings, pricing, distribution, and promotion.
Types or Bases of Market Segmentation (Consumer Markets)
Geographic Segmentation
This divides the market based on location such as continents, countries, regions,
cities, or even climate zones.
Example: In colder regions, companies may market woolen garments, while in hot
climates, cotton wear and cooling appliances may be preferred.
Multinational firms often begin segmentation by country and further refine it by
region.
Demographic Segmentation
Based on measurable statistics such as age, gender, income, education, religion, and
occupation.
Examples:
Age: Toys for children, anti-aging cream for older adults.
Gender: Beauty products for women, shaving kits for men.
Income: Luxury cars for high-income groups, budget cars for middle-income groups.
Occupation: Formal wear for professionals, safety gear for industrial workers.
Psychographic Segmentation
Considers psychological traits like personality, lifestyle, interests, values, and social
class.
Even consumers with the same demographics may have different psychographic
profiles.
Example: Health-conscious individuals are targeted with diet food, fitness gear, or
organic products, regardless of age or income.
Behavioral Segmentation
Segments consumers based on behavior toward products such as purchase occasions,
benefits sought, usage frequency, and brand loyalty.
Examples:
Occasion: Gifts marketed around holidays like Diwali or Valentine’s Day.
Benefit: Whitening toothpaste for dental aesthetics, herbal toothpaste for natural
preference.
Loyalty: Frequent flyer programs for loyal airline customers.
Requirements for Effective Segmentation
To be practically useful, a segment must be:
Measurable: Can its size and purchasing power be quantified?
Accessible: Can it be reached and served effectively?
Substantial: Is the segment large and profitable enough?
Differentiable: Are the segments distinguishable and respond differently to different
marketing strategies?
Actionable: Can the company design effective programs to attract and serve the
segment?
3. Market Targeting: Choosing the Right Segment
Once the market is segmented, the next step is targeting, which involves evaluating
the potential and commercial attractiveness of each segment and deciding which to
serve. Not all segments are equally valuable or viable, and thus marketers must use a
systematic approach.
Factors in Evaluating Market Segments
Segment Size and Growth Rate: Larger and fast-growing segments may be more
appealing.
Segment Structural Attractiveness: Includes competition, threat of substitutes, and
customer bargaining power.
Company Objectives and Resources: Does the firm have the capacity to serve the
segment?
Targeting Strategies
There are four major strategies to target a market:
Undifferentiated Marketing (Mass Marketing)
A single marketing strategy for the whole market.
Focus on common needs of consumers.
Example: Table salt, electricity, sugar.
Differentiated Marketing (Segmented Marketing)
Targets several segments with a separate offer for each.
Provides product variations to suit different needs.
Example: A garment company offering kidswear, teenswear, and formalwear.
Concentrated Marketing (Niche Marketing)
Targets a large share of a small segment.
Useful for firms with limited resources or unique products.
Example: Equipment for the physically challenged.
Micromarketing (Individual Marketing)
Tailoring products and marketing to individual customers.
Often used in services like architecture, custom tailoring, or online personalization.
Example: Custom-built furniture, personalized gifts.
4. Positioning: Creating a Unique Image
Product positioning refers to the process of establishing a brand or product in a
distinctive place in the minds of the target customers, especially in relation to
competitors. Positioning defines how the product is perceived in terms of benefits,
value, and brand promise.
Importance of Positioning
It differentiates the product in a crowded market.
It highlights the unique selling proposition.
Builds consumer perceptions and expectations.
Facilitates brand recall and customer loyalty.
Strategies for Product Positioning
Based on Product Characteristics or Customer Benefits
Highlights key features and benefits.
Example: Fair and Lovely promises fairness; Whirlpool Ice Magic highlights quick
ice making.
Based on Price
Positions as either a budget or premium product.
Example: Big Bazaar offers value-for-money pricing, while Hidesign is a premium
brand.
Based on Quality
High price used as a signal for superior quality.
Example: Da Milano luxury bags.
Based on User or Celebrity Endorsements
Associates product with famous personalities or specific user groups.
Example: Lux is the soap of film stars.
Based on Symbols or Illustrations
Uses logos, mascots, or imagery to appeal, especially to illiterate or younger
audiences.
Example: Vodafone's ZooZoos or Amul girl.
Based on Product Class
Competes by redefining product category.
Example: Sprite positioned as “Uncola” to differentiate from Pepsi and Coca-Cola.
5. Summary and Integration of the STP Process
The STP model is sequential and cumulative:
Segmentation breaks the market into distinct groups.
Targeting selects the most attractive segments to serve.
Positioning crafts a compelling message to place the product uniquely in the market.
These decisions shape all other elements of the marketing mix (product, price, place,
promotion). For instance, how you position a product will influence how it is priced,
where it is sold, and how it is promoted.
6. Educational Activities and Applications
To reinforce learning, the curriculum includes:
PowerPoint presentations on STP concepts.
Class activities such as segmenting a real product, selecting a target market, and
developing positioning statements.
Assessments and worksheets to evaluate comprehension through fill-in-the-blanks,
true or false, multiple-choice questions, and analytical questions.