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STP

Segmentation, Targeting &Positioning



What Is Market Segmentation?

Market segmentation is the subdividing ofa market into distinct subsets, where any

subset may be selected as a marketingtarget to be reached with a distinctmarketing mix.



Segmentation Dilemma

MASS MARKETING

Economies of Scale

CUSTOMIZATION

Everyone Wants

Something Different



No Market Segmentation



Segmented by Sex



Segmented by Age



Market Segmentation

Market

MarketSegment

MarketSegmentation

People or organizations withneeds or wants and the ability and

willingness to buy

A subgroup of people or organizationssharing one or more characteristics that

cause them to have similar productneeds.

The process of dividing a market intomeaningful, relatively similar,

identifiable segments or groups.



Requirements forEffective Segmentation

• Measurable – Size, purchasing power, and profile of segment

• Accessible

– Can be reached and served• Substantial

– Large and profitable enough to serve

• Differentiable

– Respond differently

• Actionable – Effective programs can be developed

Goal 2: List and discuss major bases for segmentation



Market

segmentation

1) Carry outmarketing

research

2)Identifysegment variables

from analysis of

MR data

3)Prepare

profiles of

resulting

segments

Target

Marketing

1) Evaluate

resulting

segments

2)Select

target segments

3)Decide

target market

strategy

Positioning1) Identify

target customers

attributes for

differentiation

2)Selectright attributes

or benefits

3)Communicate

the chosen

position to each

target market

STP Process



Segmentation Variables for

Consumer Markets



Segmentation Variables

• Geographic Segmentation :

• People living in the same area havesimilar needs & wants.

• Rural customers are different from urbanones & urban customers of one region aredifferent from their counterparts in some

other region.• Clothing, food habits, consumption pattern

etc. differ drastically across regions.




• Demographic Segmentation :

• Age & stage of life cycle : People of different age groupsand having different responsibilities differ vastly in theirconsumption pattern.

• Eg : Compare a person of 26 years as a bachelor & as amarried person..

• Gender : Shaving kits, automobiles etc are products pre – dominantly purchased by males while cosmetics, jewelry etc are purchased by females.

• Income, education, occupation : Buying power is afunction of income, education & occupation.




• Psychographic Segmentation : Also calledas “ Lifestyle Segmentation”.

• Psychographic profile reveals how

consumers allocate their time, energy &money to activities & their interests &opinions about various issues.

• Marketers appeal to positive/favorablepersonal characteristics to influence thepurchase decision.



Benefit SegmentationWHAT BENEFIT DO YOU WANT?

• Rationale - The benefits people areseeking in consuming a given

product are the true reasons forthe existence of segments

• Example - Toothpaste

– Cavity prevention

– Fresh breath

– White teeth



Behavioral Variables

1. Occasions - Regular, special

2. Benefits- Quality, Service, Economy, Speed

3. User Status - Non- user, Regular, Potential

4. Usage rate - Light, Medium, Heavy

5. Loyalty Status- Non, Medium, Strong.

6. Buyer –readiness- Unaware, Aware,

Interested

7. Attitude towards Product – Enthusiastic,Positive, Indifferent, Negative



Market Targeting Strategies

• Evaluating Market Segments• Selecting Market Segments

• Market coverage (Targeting) strategies



Target Market

A group of people or organizations for which an

organization designs, implements, and maintains a

marketing mix intended to meet the needs of that

group, resulting in mutually satisfying exchanges.



Market TargetingEvaluating Market Segments

• Segment Size and Growth – Analyze sales, growth rates and expected

profitability.Segment Structural Attractiveness

– Consider effects of: Competitors, Availability ofSubstitute Products and, the Power of Buyers &Suppliers.Company Objectives and Resources

– Company skills & resources relative to thesegment(s).

– Look for Competitive Advantages.



Evaluating Market Segments

• Sales Estimates – Market potential

– Company sales potential

• Competitive Assessment

• Who, how many, how large, and how strong?

• Cost Estimates

• The expense of developing a marketing mix

• Costs of reaching segment relative tocompetitors’ costs



Selecting Market SegmentsFive Patterns

1.Single segment Specialization

2.Selective Specialization

3.Product Specialization4.Market Specialization

5.Full Market Coverage

- Undifferentiated Marketing- Differentiated Marketing



Single segment concentration

M-1 M-2 M-3

P-1

P-2

P-3

Be a Big fish in a small Pond.. Resembles to the Focus strategy where thecompany focuses all its strengths to serve a small well defined segment.



Selective specialization

M-1 M-2 M-3

P-1

P-2

P-3

The risks get diverted if it selects a few promising segments. The firmsPresence is more prominent with selective specialization.



Product specialization

M-1 M-2 M-3

P-1

P-2

P-3

A firm specializes in certain product & sells it in various segments.Eg. A firm specializing in water purifiers may decide to target households,Institutions, government establishments, retail malls etc.



Market specialization

M-2 M-3M-1

P-1

P-2

P-3

A firm concentrates on serving many needs of a particular customer group.Eg. An online seller of books after building a good customer base, may startSelling music cds, cameras etc to the same customers.



Full Market Coverage

M-1 M-2 M-3

P-1

P-2

P-3



Full market coverage

• Undifferentiated marketing : Coca-

cola’s early marketing of only one drink

in one bottle size in one taste to suiteveryone.

• Differentiated Marketing : Tata

Motors Ltd. Offers various cars todifferent segments of customers of theentire car market.

Market Targeting



Market TargetingMarket Coverage Strategies

Segment 1

Segment 2

Segment 3

Segment 1

Segment 2

Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1



Market

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing



Position & Positioning

• Position : The place a product, brand,

or group of products occupies in

consumers’ minds relative tocompeting offerings.

• Positioning : Developing a specific

marketing mix to influence potentialcustomers’ overall perception of a

brand, product line, or organization in

general.



ABC of Positioning

• Audience ( The target market )

• Benefit

• Compelling reason Why ??



Effective Positioning

1. Assess the positions of competingproducts

2. Determine the dimensions of thesepositions

3. Choose an effective market position

Possible Competitive Differentiation



Possible Competitive Differentiation

Product Service

Personnel Image

Areas for CompetitiveDifferentiation



Various Positioning Strategies

• Positioning on specific product features :• The “coolest” refrigerator.

• “Keeps food fresh for a longer period” etc. • “MasterCard is the worlds’ most widely accepted

card”.

• Positioning on the “ Best in Class” basis :

• Ferrari : Best sports car.• Mc Donald’s : Operational excellence in fastfood industry.




• Positioning on the “Pioneer’s Status :

people only remember the First in aparticular category.

• Fridge : Introduced refrigerators.

• Ford : Introduced the first car.

• Xerox : Introduced Photostat machines.




• Positioning by Benefit : Eg. Volvo, focuseson the safety of passengers.

• Positioning by application : Iodex, focuses

on backache.• Positioning by User Class : Manikchand,

Unche Log Unchi Pasand.

• Positioning by Competition : Rin vs. Tide• Positioning by Quality : Mercedes,

German engineering.

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