SEGMENTING,

TARGETING AND
POSITIONING
(STP)
POSITIONING PROCESS
Segmentation Targeting Positioning

Identify positioning
Evaluate the
Identify variables that concepts for each
attractiveness of each
allow one to segment target segment, select
segment and choose a
the market the best, and
target
communicate it.
VALUES OF THE TWO SEGMENTS
WHAT IS A MARKET SEGMENT?

Market segmentation is the process of

dividing a maret into distinct subsets, where
any subset may concievably be selected at
as a marketing target to be reached with a
distinct marketing mix.
A MODEL OF THE MARKET
SEGMENTATION PROCESS
Delineate firm’s current situation

Determine consumer needs and wants

Divide markets on relevant dimensions

Decide segmentation strategy

Develop product positioning

Design marketing mix strategy

DELINEATE THE FIRM CURRENT
SITUATION
▶ A firm must do a complete situational analysis:

▪ To determine objectives, opportunities and

constraints

▪ To have a clear idea of the amount of resources

available
DETERMINE CONSUMER NEEDS AND
WANTS
Consumer needs and wants are usually
translated into more operational concepts:
▶ Consumer attitudes
▶ Consumer preferences
▶ Benefits sought
DIVIDE MARKET INTO RELEVANT
DIMENSIONS
1. Should the segmentation be a priori or post hoc?

2. How does one determine the relevant dimensions

or basis to use for segmentation?

3. What are some basis for segmenting consumer and

organizational buyer market?
 Market
segmentation
variables for
consumer
markets
 Market
segmentation
variables for
consumer
markets
Segmenting
business
markets
 MARKET SEGMENTATION EXAMPLES
Type of firm Segmentation basis Possible market segments

Banking Demographic segmentation Young couples, young families, older

families, pre-retirement, retired

Mobile phone carriers Benefit segmentation Highly social, work-oriented, safety

contact, status symbol

Frozen food manufacturers - Demographic segmentation Single households, diet-conscious,

- Psychographic segmentation family dining, parties,
- Behavioral segmentation budget-conscious, variety seekers

Toothpaste Benefit segmentation Teeth whitening, sensitive teeth, fresh

breath, cavity protection, tartar control

Restaurant Behavioral segmentation Regulars, special occasion, business

lunch, quick spot
PSYCHOGRAPHIC SEGMENTATION

▶ Psychographic segmentation divides buyers

into groups based on social class, lifestyle or
personality characteristics.
VALS TM

FRAMEWORK AND
SEGMENTS
WWW.
STRATEGICBUSINESSINSIGHTS.COM/VALS/P
RESURVEY.SHTML
 BENEFIT SEGMENTATION
▶ Mobile Phone Manufacturers
- Work-oriented customers: prefer buying phones that are inexpensive and
durable
- Highly social customers: expect mobile phones to be durable,
technologically advanced, and easy to use
- Customers who consider mobile phones as a status symbol: expect
their phone to be technologically advanced, expensive, sleek, and stylish.

▶ Toothpaste Manufacturers
Segmentation of toothpaste market can be done on the basis of the benefits
that users expect from the product. Some of the benefits users expect include
reduce sensitivity, teeth whitening, tartar control, cavity protection, and fresh
breath. Companies can manufacture products that offer one or more benefits.
 BEHAVIOURAL SEGMENTATION (1)
▶ Occasions
▶ Website through which you can order flowers to be delivered to them or their
loved ones. It understands that different occasions demand different flower
arrangements. Therefore they implement occasion segmentation. Like birthday
present, “get well wish” or a sympathy arrangement.
▶ Digging into the research data showed that people made very different drink
choices when on a date versus going to a girls’ night at a local club versus meeting
friends at the local bar. By understanding the environment the consumer was in, we
could start to understand why and whether someone chose a vodka martini or a
beer.

▶ User status
▶ Blood banks cannot rely only on regular donors. They must also recruit new
first-time donors and remind ex-donors – each will require different marketing
appeals. The UK’s National Blood Transfusion Service went event further, targeting
people with appeal based on a person’s blood group:
- People with O donors. Your blood is “so good” that anyone else can use it, so it
is very useful to have you around.
- AB – is the rarest blood of all so you are one of very few donors …
 BEHAVIOURAL SEGMENTATION (2)
▶ Usage rate
▶ Marketers of a broad range of goods and services utilize volume as a fundamental
segmentation criterion. This was the case with Quaker Oats Company when it segmented the
market for its breakfast cereal Life. The firm determined that large size families where house
wives were under 40 were the two characteristics that distinguished intensity of product use.
As a result, Quaker aimed its strongest efforts at this group.

▶ Loyalty status
▶ Many Apple customers show absolute loyalty to Apple and even dislike competing products.
Apple fans identify with its trendy brand and love its integrated and smart solutions, sleek
design and excellent product quality. These customers seem to increasingly live in an
“Apple-world”, where they tightly integrate the use of several Apple products such as their
MacBook, iPod, iPhone and iPad).  They frequently download and buy software, apps, songs
and ebooks from Apple’s Store and iTunes. These customers have a deeply held commitment
to re-buy and re-patronise Apple products and services consistently in the future, against all
odds and at all costs despite strong marketing efforts of competitors.
 BEHAVIOURAL SEGMENTATION (3)

▶ Cohort analysis

Depression Cohort Post-War Cohort Boomers 2 Cohort

Born: 1912-1921 Born: 1946-1963 Born: 1955-1965
Coming of age: 1930-1939 Coming of age: 1964-1981 Coming of age: 1972-1983
Share of pop: 7% Share of pop: 21% Share of pop: 25%

World War II Cohort Boomers 1 Cohort Generation X Cohort

Born: 1922-1927 Born: 1946-1954 Born: 1966-1976
Coming of age: 1940-1945 Coming of age: 1963-1972 Coming of age: 1984-1994
Share of pop: 6% Share of pop: 17% Share of pop: 21%
 BEHAVIOURAL SEGMENTATION (4)
▶ Cohort analysis

Likes
Generation Y Cohort
Free content
Born: 1977-19997
Tele-commuting
Coming of age: 1995-2015
Social network
Share of pop: 30%
Wireless
Customization, the ‘right fit’

Dislikes
Anonymous mass marketing
Millenials
Restricted access
Generation Why
Beaten paths
 BEHAVIOURAL SEGMENTATION (5)
▶ Cohort analysis

Generation Y
Millenials
Big Shoppers Multitasking
- co-purchase with
parents Co-creator of
- Many live with or are content/product/media
supported by parents
Connected
All information is
experiences electronically Socially responsible
GEOGRAPHIC SEGMENTATION (1)

▶ Definition

▶ Zip clustering
▶ Distinct marketing strategies created for similar types of
neighborhoods stretched across the nation

▶ e.g. PRIZM
source: http://www.MyBestSegments.com
PRIZM SOCIAL GROUPS
GEOGRAPHIC SEGMENTATION (2)
SELECT A TARGET SEGMENT
▶ What makes a segment attractive?
▶ Balancing segment attractiveness with your capability
▶ Continuously monitoring whether the actual buyers match the target
segment
SEGMENT SELECTION CRITERIA
- Segment size
- Growth of segment
- Value of segment ($)
- Stability
- Current company position
within segment
- Ease of entry into segment

- Ease of competitive entry

into segment
- Number and strength of
competitors
 MARKET TARGETING
Segment attractiveness
HIGH LOW

- Develop measures of HIGH

Domination
segment Perfect!
is essential.
attractiveness

Competitive
strength
- Select among Profit Potential
attractive segments
based on business
capabilities Beware of
LOW the Stay away!
shake-out.
DEVELOP PRODUCT POSITIONING
▶ Brand positioning
▶ What is a brand?
▶ Formally… A proprietary trademark for a specific product or service
▶ Conceptually… A “contract” from the company to its customers; A
promise of specific benefits, quality, and value. A relationship.

▶ “A brand is no longer what we tell the consumer it is – it is what

consumers tell each other it is.” (Scott D. Cook, Founder and
Chairman if the Executive Committee – Intuit Board of Directors – P
& G)
▶ “It’s not about telling and selling. It’s about bring a relationship
mind-set to everything we do” (Jim Stengel, CMO – Procter &
Gamble)
SOME EXAMPLES OF POSITIONING
STATETEMENTS
Apple Computers offers… the best personal
computing experience to students, educators, creative
professionls and consumers around the world through
its innovative hardware, software and Internet
offerings.

IBM… for businesses who need computers, IBM is

the company you can trust for all your needs.
 SOME EXAMPLES OF POSITIONING
STATETEMENTS

Apple Computers offers… the best

personal computing experience to students,
educators, creative professionls and consumers
around the world through its innovative
hardware, software and Internet offerings.

Positioning Target Segment Point of Difference Frame of Reference

statement (or Point of Parity)
POSITIONING
▶ A positioning statement defines the value proposition of product to the
target market
▶ Target Market (For Whom)
▶ Point of Difference (Reason to buy)
▶ Frame of Reference (Points of Parity)
▶ Positioning is implemented through all elements of the marketing mix:
product, price, promotion, place.
▶ Positioning should be clear and focus on a few key benefits (unique
selling proposition)
▶ Position must be defensible
▶ Positioning requires making choices
THE ROLE OF POSITIONING

POSITIONING

Strategic &
Technological Vision

Product
Messaging
Development

Tells the story

Provides customer benefits
SUCCESSFUL PRODUCT POSITIONING

Recall that successful product positioning strategies should:

1. differentiate your product,
2. address important customer buying criteria,
3. and articulate key product attributes.

To achieve all three objectives, you must have an in-depth understanding of:
1. How your target market makes purchasing decisions
2. How your competition positions their products
3. What your product has to offer
POSITIONING TRIANGLE
POINT OF PARITY (POP)
▶ Associations that are not unique to the brand; they are
shared with other brands

▶ Category POPs: associations consumer views as necessary

to be considered credible
▶ Ex: Grocery storemust have certain products (e.g., milk, eggs,
produce) to be truly considered a ‘grocery store’.

▶ Competitive POPs: associations designed to negate

competitors’ point of difference
▶ All toothpastes prevent cavities
CHANGE ON JANUARY 9, 2007