TOPIC: SEGMENTATION, TARGETING

AND POSITIONING (STP)

This topic will discuss the following:
1. Segmentation
2. Targeting
3. Positioning
1. Segmentation
• Segmentation is the process of dividing a broad market
into distinct consumer groups with everyday needs,
preferences, or characteristics.
• Segmentation can also be defined as a strategy for developing different
marketing programmes for different customer groups.
OR
• It is the division of a market into homogenous groups of potential
customers.
• Segments can be defined in many ways, such as demographic,
geographic Psychographic and behavioural factors.
• It recognizes that the market is different.
• Each customer segment will have its unique demand function
Segmentation aims to identify high-yield segments – those
segments that are likely to be the most profitable or have growth
potential – so that these can be selected for special attention.
Although several factors may be employed in the segmentation
process, it’s important to ensure that the segments created are
measurable, accessible, substantial, differentiable, and
actionable. This is known as the criteria for effective
segmentation.
For example,
• People using airport facility can be divided into VIPs, business class
and the ordinary.
• Banking customers can be divided into executives and ordinary.
• Loan disbursements rates can be divided into urban and rural areas
Types of segmentation in detail
Depending on the factors that lead to segmentation, the following are some of
the types of segmentation
1. Demographic Segmentation:
This is where the market is divided into groups based on
variables such as age, gender, income, occupation, education,
religion, race, and nationality.
For example, a clothing brand might target different age
groups with different styles and designs.
2. Geographic Segmentation:
This type of segmentation divides customers into segments
based on their physical location.
It could be as broad as a country or region or as specific as a
city or neighbourhood.
3.Psychographic Segmentation:
This segmentation is based on lifestyle, personality traits,
attitudes, values, and interests. For example, a travel company
might segment the market into VIPs and Economy class.
4. Behavioral Segmentation:
This divides customers based on their knowledge of, use or
based on response to a product.
It could be based on customer loyalty, purchase frequency,
readiness to buy, benefits sought, usage rate, etc.
5. Technographic Segmentation:
This is relatively a new form of segmentation, enabled by
the rise of technology,
It categorizes customers based on their relationship with
technology – their use, knowledge
2. Targeting:
• Aftermarket segments are identified, marketers must
decide which segments to focus on.
• This decision depends on factors such as the segment’s
profitability, the company’s ability to serve the segment
effectively, and how competitive the segment is.
• Therefore targeting is the process which involves the
attractiveness of each segment and deciding which
ones to focus your market effort on.
• The targeting step aims to identify the segments most
likely to respond to the company’s offerings and where
the company’s resources can be most effectively used.
In summary, targeting is about finding the best match
between your products and the customers most likely to
need or want them.
Targeting strategies
Depending on several factors such as
*company resources
*Product Variability
*Competitors marketing strategies. A company can have several
strategies for targeting the segments.
• Some of the strategies can be:
1. Mass ( undifferentiated )marketing
In this strategy, the company ignores segment differences
and targets the whole market with one offer.
This approach focuses on what is common in the needs of
consumers rather than on what is different.
2. Segmented (Differentiated )marketing
This is a strategy where a company targets several market
segments and designs separate offers for each.
For example, a car company might produce different
models for different income levels.
3. Concentrated (Niche) Marketing:
Here, the company targets a large share of one or a few
smaller segments or niches.
Businesses with limited resources often choose this strategy as
it allows them to focus their efforts and specialize.
4. Micro-marketing (Local or Individual Marketing):
In this strategy, the company tailors products and marketing
programs to suit the tastes of specific individuals and
locations. This includes local marketing (tailoring to specific
cities or neighbourhoods) and individual marketing (tailoring to
individual people).
3. Positioning:
This is the final step in the STP (Segmentation, Targeting, and Positioning) process.
- It involves creating a unique, consistent, and recognized customer perception of
a brand or a product in the target market.
- It’s about crafting the brand’s image so the target customers can distinguish it
from the competitors’ offerings.
OR
- Once the target segments are selected, the company must decide how to
position its products or services in the market.
- Positioning involves developing a marketing mix that will appeal to the target
market.
- It’s about creating a unique, clear, and desirable place for the product in the
minds of target customers relative to competing products.
• The main goal of positioning is to create a unique impression
in the customer’s mind so that the customer associates
something desirable and different with your brand that they
do not associate with other brands.
Positioning strategies:
There are several ways products can be positioned and some of
them are:
1.By Product Attributes:
A product can be positioned based on its attributes or qualities.
For example, a car might be the most fuel-efficient car in the
market
2.By Benefits:
The product can also be positioned based on the benefits it offers to
customers.
3. By User: Positioning is done by associating a product with a user
or class of users.
4. By Competitor: Positioning can also be done relative to the
competition. A brand might position itself as superior to competitors
on certain key aspects. For example, a smartphone might be
positioned as having a better camera than its competitors.
5.By Price or Quality:
Products can be positioned based on price or quality. A brand might
position itself as an affordable or luxury, high-quality option.