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 clear,
distinctive and desirable place relative to competing
products in the mind of the consumer
 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.
 Advantages of Segmentation

1.The process of breaking up a homogeneous market into

heterogeneous segments forces the marketer to analyse and
consider both the needs of the market and the company’s 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
Requirements for Effective Segmentation

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

Accessible
Accessible • Segments can be effectively
reached and served.

Substantial
Substantial • Segments are large or
profitable enough to serve.

Differential • Segments must respond

Differential
differently to different marketing
mix elements & programs.

Actionable
Actionable • Effective programs can be
designed to attract and serve
the segments.
 Steps in Segmentation, Targeting, and
Positioning

6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Selection Criteria
Targeting

2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
Step 1. Market Segmentation
Levels of Market Segmentation
Mass
Mass Marketing
Marketing
Same
Same product
product to
to all
all consumers
consumers
(no
(no segmentation)
segmentation)
Segment
Segment Marketing
Marketing
Different
Different products
products to
to one
one or
or more
more segments
segments
(some
(some segmentation)
segmentation)
Niche
Niche Marketing
Marketing
Different
Different products
products to
to subgroups
subgroups within
within segments
segments
(more
(more segmentation)
segmentation)
Micromarketing
Micromarketing
Products
Products to
to suit
suit the
the tastes
tastes of
of individuals
individuals and
and locations
locations
(complete
(complete segmentation)
segmentation)
Local Marketing Individual Marketing
Tailoring brands/ promotions Tailoring products/ programs
to local customer groups to individual customers
Mass Marketing Strategy
Multisegment Strategy
Niche Marketing Strategy
 Step 1. Market Segmentation
Bases for Segmenting Consumer Markets

Geographic
Nations, states,
regions or cities

Demographic
Age, gender, family size
and life cycle,
or income

Psychographic
Social class, lifestyle,
or personality

Behavioural
Occasions, benefits
sought, user status,
usage rate, loyalty
Step 1. Market Segmentation
Bases for Segmenting Business Markets

Personal Demographics
Characteristics

Bases
Bases
for
for Segmenting
Segmenting
Business
Business
Situational Operating
Factors Markets
Markets Characteristics

Purchasing
Approaches
Segmenting Business Markets

• Segmentation by customer size or geographic location

• Four segments of business customers

– Programmed buyers

– Relationship buyers

– Transaction buyers

– Bargain hunters
 Step 1. Market Segmentation
Bases for Segmenting International Markets

Industrial
IndustrialMarkets
Markets

Political/
Political/
Geographic
Geographic Economic
Economic Legal
Legal

Cultural
Cultural Intermarket
Intermarket
 Linking the Concepts

• Using the segmentation bases you’ve just

heard about, segment the Irish clothing
market.
• Describe each of the major segments and
subsegments.
 Step 2. Market 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
and, the Power of Buyers & Suppliers.

• Company Objectives and Resources

– Company skills & resources relative to the segment(s).
– Look for Competitive Advantages.
 Step 2. Market Targeting
Market Coverage Strategies
Company
Company
Marketing
Marketing Market
Market
Mix
Mix

A. Undifferentiated Marketing
Company
Company
Marketing Segment
Segment11
MarketingMix
Mix11
Company
Company Segment
Segment22
Marketing
MarketingMix
Mix22
Company
Company Segment
Segment33
Marketing
MarketingMix
Mix33
B. Differentiated Marketing

Segment
Segment11
Company
Company
Marketing
Marketing Segment
Mix Segment22
Mix
Segment
Segment33
C. Concentrated Marketing
 Step 2. Market Targeting
Choosing a Market-Coverage Strategy

Company
Resources

Product
Variability

Product’s Life-Cycle
Stage

Market
Variability

Competitors’
Marketing Strategies
 Linking the Concepts

• At the last ‘linking the concepts’, you segmented

the Irish clothing market.
> Now, pick two companies that serve this market and
describe their segmentation and targeting strategies.
> Can you come up with one that targets many different
segments versus another that focuses on only one or
a few segments?
• How does each company you choose
differentiate its marketing offer and image?
• How has each done a good job of establishing
this differentiation in the minds of targeted
consumers?
Step 3. Positioning for Competitive
Advantage
• Product’s Position - the way the product is
defined by consumers on important attributes -
the place the product occupies in consumers’
minds relative to competing products.

• Marketers must:
– Plan positions to give their products the greatest
advantage in selected target markets,
– Design marketing mixes to create these planned
positions.
 Step 3. Positioning for Competitive
Advantage: Strategies

Product
Product Product
Product
Class
Class Attributes
Attributes

Away
Away from
from Benefits
Benefits
Competitors
Competitors HH
GG
Offered
Offered
CC

A
A
DD
Against
Against aa E
E
B
Usage
Usage
B
Competitor
Competitor
FF
Occasions
Occasions

User
User Class
Class
 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

Position.

• Step 4. Support the positioning strategy with a unique

marketing mix
Developing Competitive
Differentiation
Product
Product Service
Service

Areas
Areas for
for Competitive
Competitive
Differentiation
Differentiation

Image
Image People
People
Selecting the Right Competitive
Advantages

Important
Important

Profitable
Profitable Criteria
Criteria Distinctive
Distinctive
for
for
Determining
Determining
Which
Which
Differences
Differences
Affordable
Affordable to
to Superior
Superior
Promote
Promote

Preemptive
Preemptive Communicable
Communicable
Step 4 – Supporting the
positioning strategy

• At this stage the company has decided on its

positioning strategy and must now design a marketing

mix to support this strategy. The next part of the

course looks at ‘Developing the Marketing Mix’

 Reviewing the Concepts

• Define the three steps of target marketing: market

segmentation, market targeting, and market
positioning.
• List and discuss the major levels of market
segmentation and bases for segmenting consumer
and business markets.
• Explain how companies identify attractive market
segments and choose a market coverage strategy.
• Discuss how companies position their products
for maximum competitive advantage in the
marketplace.