The STP Process- The method by which whole markets
are subdivided into different segments is referred to as
the STP process. STP refers to the three activities that
should be undertaken, usually sequentially, if
segmentation is to be successful.
Segmentation,Targeting,Positioning
BENEFITS OF STP PROCESS
•Enhancing a company’s competitive position by
providing direction and focus for marketing strategies
such as targeted advertising, new product development
& brand differentiation.
•Examining and identifying growth opportunities in the
market through the identification of new customers,
growth segments, or new product uses.
•More effective and efficient matching of company
resources to targeted market segments promises the
greatest return on marketing investment (ROMI).
The Concept of Market Segmentation
Market segmentation is the division of a market into
different groups of customers with distinctly similar
needs and product/ service requirements. Or to put it
another way, market segmentation is the division of a
mass market into identifiable and distinct groups or
segments, each of which have common characteristics
and needs and display similar responses to marketing
actions.
Bases for Segmenting Consumer Markets
•Geographic Segmentation
•Demographic Segmentation
•Psychographic Segmentation
•Behavior Segmentation
•Benefits Sought
Target Markets
•The second important part of the STP process is to
determine which, if any, of the segments uncovered
should be targeted and made the focus of a
comprehensive marketing program. Ultimately,
managerial discretion and judgment determines which
markets are selected and exploited and which others
are ignored.
•Decisions need to be made about whether a single
product is to be offered to a range of segments,
whether a range of products should be offered to
multiple segments or a single segment or whether one
product should be offered to a single segment.
Targeting Approaches
•Once identified, the organization needs to select its
approach to target marketing it is going to adopt. Four
differing approaches can be considered. These include
undifferentiated, differentiated, concentrated or
focused, and customized target marketing approaches.
Undifferentiated approach there is no delineation
between market segments, and instead the market is
viewed as one mass market with one marketing
strategy for the entire market. Although very expensive,
this targeting approach is often selected in markets
where there is limited segment differentiation. For
example, the Olympics is marketed at a world market.
Colgate, Coca-Cola, General Motors and M&M’s
Targeting Approaches
Example of Undifferentiated Marketing
M&M’s-Famous brands and manufacturers of everyday
products use mass marketing. So let’s find out how
exactly they do it.
Colgate-The company sells a widely used personal care
product like toothpaste and reaps the benefits of its
successful strategy. Toothpaste is a product that
doesn’t have any age categories or particularly group of
people who use it.
Coca-Cola-The world-known multinational corporation
founded in 1892, Coca-Cola uses mass marketing. The
company presented a single product to the market, a
carbonated soft drink. The brand has done and
continues to do a lot to promote it product to a huge
number of consumers worldwide who are ready to buy
this famous drink.
Differentiated targeting approach recognizes that there
are several market segments to target, each being
attractive to the marketing organization. As such, to
exploit market segments, a marketing strategy is
developed for each segment. For example, A business
selling organic dog food is looking to a target a specific
type of person a health conscious and eco friendly
individual.
Niche-marketing strategy recognizes that there are
segments in the market, but implements a concentrated
strategy by focusing on just a few market segments.
This is often adopted by firms that either have limited
resources by which to fund their marketing strategy, or
are adopting a very exclusive strategy in the market.
Customized targeting strategy in which a marketing
strategy is developed for each customer as opposed to
each market segment. This approach is more
predominant in B2B markets (e.g. marketing research or
advertising services) or consumer markets with high-
value highly customized products (e.g. purchase of a
custom-made car).
Market Positioning-Having segmented the market,
determined the size and potential of market segments,
and selected specific target markets, the third part of
the STP process is to position a brand within the target
market(s).
Positioning is what the customer believes about your
product’s value, features, and benefits; it’s a
comparison to the other available alternatives offered
by the competition. These beliefs tend to based on
customer experiences and evidence, rather than
awareness created by advertising or promotion.
7 Positioning Strategies
1. Positioning by Product Attributes & Benefits-
Associating a product with an attribute, a product
Feature or a consumer feature. Sometimes a product
can be positioned in terms of two or more attributes
simultaneously. Consider the example of Ariel that
offers a specific benefit of cleaning even the dirtiest of
clothes because of the micro cleaning system in the
product.
2. Positioning by Price / Quality-focuses on the
relationship between price and quality and the
consumer’s perception of the value of a product. In
comparing jacket prices, a buyer might assume that a
jacket higher in price is higher in quality. Designer jeans
boast quality because of price, while department store
jeans are accessible to all.
3. Positioning by Use or Application-when a brand
reaches a larger market or changes the purpose of the
brand, positioning bases on use if functioning. For
example, a company that advertises its hot tea during
colder seasons begins to advertise an iced version
during summer to alter its brand’s use to reach a larger
market through modifying applications. Tape or
adhesive often used for home repairs can reposition the
brand for decorative of craft projects.
4. Positioning by Product Class-This consists of
positioning two related product in the same product
class simultaneously, resulting in an increased customer
base. By positioning dried milk as both a breakfast
substitute ad protein shake, the appeal is doubled to
two different customer needs.
5. Positioning by Product User-Positioning a product by
associating it with a particular user or group of users.
Common examples are Facebook, Sunsilk.
6. Positioning by Competitor-Competitors may be as
important as positioning strategy as a firm’s own
product or services. This approach is similar to
positioning by product class,
although in this case the competition is within the same
product category.
7. Positioning by Cultural Symbols-An additional
positioning strategy where in the cultural symbols are
used to differentiate the brands. Airlines have done this
with cultural symbols to associate with royal treatment.
Positioning Environment-In order to begin positioning a
product, two questions need to be answered:
1. What is our Marketing Environment?
The Marketing Environment is referring to the external
environment. Here are some things to consider:
•What are the positions of the competition?

•What are the alternative or switching cost for

potential buyers for your market?

•How does the market responds?

2. What is our Competitive Advantage?-The

competitive advantage is an internal question. It
answers

the question “what do you have that gives you

advantage over your competitors?”

Some things to consider are:

•Price and/or quality

•Product unique benefits

•Availability of the product in the marketplace