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PRINCIPLES OF MARKETING
QUARTER 3 – MODULE 7

Market Segment, Target, and

Positioning (STP)

Prepared by:

MONALYN C. DE VERA

Teacher II
Lesson Objectives:
At the end of this module you will be able to:

1. Determine each type of market segmentation

2. Describe the process of market segmentation.
3. Relate the process of market segmentation to each other.

MARKET SEGMENTATION
In marketing, segmenting, targeting and positioning (STP) is a broad
framework that summarizes and simplifies the process of market segmentation. It
is one of the most commonly applied marketing models in practice.
Market segmentation is a process, in which groups of buyers within a market are
divided and profiled according to a range of variables, which determine the market
characteristics and tendencies. The processes of segmentation, targeting and
positioning are parts of a chronological order for market segmentation.

• Segmentation comprises identifying the

market to be segmented; identification, selection,
and application of bases to be used in that
segmentation; and development of profiles.
• Targeting is the process of identifying the
most attractive segments from the segmentation
stage, usually the ones most profitable for the
business.
• Positioning is the final process, and is the
more business-orientated stage, where the business
must assess its competitive advantage and position
itself in the consumer's minds to be the more
attractive option in these categories.

The STP model is useful when creating marketing communications plans since
it helps marketers to prioritize propositions and then develop and deliver
personalized and relevant messages to engage with different audiences. This is
an audience-focused rather than product-focused approach to marketing
communications which help deliver more relevant message to commercially
appealing audiences.

In addition, STP marketing focuses on commercial effectiveness, selecting the

most valuable segments for a business and then developing a marketing mix and
product positioning strategy for each segment.
Segmenting
Segmenting a market is a process of organising the market into groups
that a business can gain a competitive advantage in. The marketers are looking for
several characteristics such as:

• Measurability – The understanding of size, purchasing characteristics and value

needs of a particular segment

• Accessibility – The ability to communicate with the segment in an effective

manner

• Sustainability – The segment is profitable enough to differentiate itself from other

segments in the market and maintains the value the business offers.

• Actionability – The capability of an organization to create a competitive advantage

with its offering in the specific segment of the market

Five Types of Market Segmentation

1. Behavioral Segmentation: A Customer’s Choice
Behavioral segmentation digs deeper into
customer habits than demographic segmentation.
This type of market segmentation is
comprised of behavior patterns, like customer
loyalty or engagement level. This is specific to
customer interactions with a brand or company.
Behavioral segmentation is used to gain
insights into customer experience, allowing for
improvements in customer success.
Behavioral segmentation is also used for
marketers to determine future customer leads. It’s
also used in determining which prospects in the
market are more likely to purchase your product.

2. Psychograhic Segmentation: A Customer’s

Lifestyle

Psychographics are a type of customer

segmentation that focus on inner or qualitative
traits. Psychographics require deeper analysis,
appeal to customer tastes.
 3. Demographic Segmentation: A Customer’s Profile

Demographics are the breakdown of your

customer personas in the market for cursory traits
like age or gender. These traits offer basic
information on your customers, and are often
considered one of the more broad segmentation
types. Examples of demographic segmentation
include age, income, family size, education, or
gender.

4. Geographic Segmentation. A Customer’s Home

Geographics are the study of your customer
based on their physical location, which can affect
more physical interactions in the market.
Consumers grouped together in similar locations
may share similar preferences.

However, geographic segmentation can also

include geographic regions that aren’t technically
defined, such as neighborhoods.

5. Firmographic Segmentation: The Customer’s Company

Firmographics are used to describe the attributes

of firms or businesses. Put simply, firmographics are to
firms and investors as demographics are to people.
Companies can use this type of segmentation to
determine whether or not a smaller firm is apt for an
investment.

Market targeting

Targeting is a follow on process from segmentation, and is the process of actually

determining the select markets and planning the advertising media used to make
the segment appealing.
The list below refers to what’s needed to evaluate the potential and commercial
attractiveness of each segment.

• Criteria size: The market must be large enough to justify segmenting. If the market
is small, it may make it smaller.
• Difference: Measurable differences must exist between segments.
• Money: Anticipated profits must exceed the costs of additional marketing plans and
other changes.
• Accessible: Each segment must be accessible to your team and the segment must
be able to receive your marketing messages
• Focus on different benefits: Different segments must need different benefits.

Product positioning

Positioning maps are the last element of the STP process. For this to work,
you need two variables to illustrate the market overview.

There are three positioning factors that can help you gain a competitive edge:

1. Symbolic positioning: Enhance the self-image, belongingness, or even ego

of your customers. The luxury car industry is a great example of this – they
serve the same purpose as any other car but they also boost their customer’s
self-esteem and image.
2. Functional positioning: Solve your customer’s problem and provide them
with genuine benefits.
3. Experiential positioning: Focus on the emotional connection that your
customers have with your product, service, or brand.

The most successful product positioning is a combination of all three factors.

One way to visualize this is by creating a perceptual map for your industry. Focus
on what is important for your customers and see where you and your competitors
land on the map.

In the example here, I’ve taken some cars available in the UK. This isn’t a
detailed product position map, more of an illustration. If there were no cars in one
segment it could indicate a market opportunity.

Example of Market Positioning

This chart is not meant to be any kind of accurate representation of the car
market, but rather just illustrate how you could use a product positioning map to
analyze your own businesses current position in the market, and identify
opportunities. For example, as you can see in the gap below, we've identified in a
possible opportunity in the market for low-priced family cars.
Benefits of STP marketing
Key benefits that STP marketing has over a traditional marketing approach.

• Brand messaging becomes more personal and empathetic because you have
your customer personas and know exactly whom you’re talking to;
• Marketing mix becomes more crystalized and yields higher return on
investment because you’re no longer wasting budget on channels that your
audience simply ignores;
• Market research and product innovation become more effective because
you know exactly whom to ask for advice and feedback in the development
phase.

The process of Segmenting, Targeting and Positioning

1. Define your market

2. Create audience segment
3. Construct Segment profiles
4. Evaluate the attractiveness of each segment
5. Select target audience
6. Develop a positioning strategy
7. Choose your marketing mix (Product, Price, Place, and Promotion)
Name: ______________________________________________________Date: _____________
Grade/Section: _________________________________________________________ Score:____________

Title of the Activity: Market Segment, Target and Positioning (STP)

Most Essential Learning Competency:
• Identify and segment market for a product or service.
K-12 BEC CG: (ABM_PM11-Ie-i-14)
• Select the appropriate target market segment and its
positioning. K-12 BEC CG: (ABM_PM11-Ie-i-15)

Directions: Complete the Market Segmentation (STP) model

below. Describe each of them, write your answer on the matrix
given.

Market Segmentation Model (STP)

Direction: Answer the question below, based on your learning through

this lesson.

1. Based on the above matrix, how is the step in the process of

segmentation connected to each other?
______________________________________________________________
______________________________________________________________
______________________________________________________________
__________________________________________________________.

2. Why market segmentation essential in making effective marketing

strategy?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
__________________________________.
Name: ______________________________________________________Date: _____________
Grade/Section: _________________________________________________________ Score:____________

Title of the Activity: Market Segment, Target and Positioning (STP)

Most Essential Learning Competency:
• Identify and segment market for a product or service.
K-12 BEC CG: (ABM_PM11-Ie-i-14)
• Select the appropriate target market segment and its
positioning. K-12 BEC CG: (ABM_PM11-Ie-i-15)

Direction: Multiple Choice. Choose the letter of the correct

answer. Put your answer on the space provided before the
number.
____1. Carefully arranging for a product or service to occupy a clear,
distinctive, and desirable place relative to competing products or
services in the minds of target consumers is called...

a. market segmentation c. mass marketing

b. target marketing d. positioning
____2. ________ involves dividing a market into smaller segments of buyers
with distinct needs, characteristics, or behaviors that might require
separate marketing strategies or mixes.
a. Market segmentation c. Mass customization
b. Market targeting d. Differentiation
____3. "Many companies today are localizing their products, advertising,
promotion, and sales efforts to fit the needs of individual regions,
cities, and neighborhoods." This is an example of ________.
a. Geographic segmentation c. Product diversification
b. Branding d. Psychographic segmentation
____4. Delta Motorworks markets its cars based on the age, gender, and
income of its customers. Which of the following types of market
segmentation is evident here?
a. Geographic segmentation c. Benefit segmentation
b. Occasion segmentation d. Demographic segmentation
____5. Define what is meant by 'target market'
a. Group of customers at which a product or services is aimed,
or targeted
b. Splitting the market for a product into different parts, or
segment.
____6. ___________is based on the way a customer use the product.
a. Mass Marketing c. Behavioral
b. Target Market d. Demographic

____7. The three step process within marketing segmentation includes:

a. Segmentation, differentiation and positioning
b. Segmentation, Targeting, and Positioning
c. Targeting, Segmentation, and Positioning
d. Positioning, Mass Marketing, and Segmentation
____8. The Thompson company decided it would be more successful if it
divided the total market for its products into smaller, more specific
groups of consumers. The business is engaged in ___________.

a. Mass Marketing c. Industrial marketing

b. Market domination d. Market segmentation
____9. A specific group of consumers that an organization selects as the focus
of its marketing plan.

a. Market c. Clients
b. Customers d. Target market

____10. When Campbell's makes nacho cheese soup for Texas and Cajun
gumbo soup for Louisiana, what kind of segmentation is it practicing?
a. Geographical c. Psychological
b. Behavioral d. Demographic
ANSWER KEY

Activity 1: Market Segmentation Model (STP)

Segmentation Targeting Positioning

(Answer may (Answer may

(Answer may vary) vary)
vary)

Activity 2: Question to ponder (Answer may vary)

Refer to rubric.
5- If the paragraph consists of 5 or more sentences with correct
and complete Information.
4- If the paragraph consists of 3 to 4 sentences with correct
information.
3- If the paragraph consists of 2 to 3 sentences with correct
information.
2- If the paragraph consists of 2 sentences with correct
information
1- If the paragraph consists of only one sentence with correct
information.

Worksheet 1: Multiple Choice

1. D 6. C
2. A 7. B
3. A 8. D
4. D 9. D
5. A 10. C
REFERENCE

AB Ilano. (1977). Principles of Marketing .Manila, Philippines: Rex Book Store

Keller (2017). Principles of Marketing. Larsen & amp;,

Annmarie Hanlon. (January 2021). The segmentation, targeting, positioning

(STP) marketing model. https://www.smartinsights.com/digital-
marketing-strategy/customer-segmentation-targeting/segmentation-
targeting-and-positioning/
Emily Smith. (January 2020). Five types of Market Segmentation & How to
Use Them. https://blog.remesh.ai/5-types-of-market-segmentation-
how-to-use-them
Evan Tarver. (July 2020). Market Segmentation.
https://www.investopedia.com/terms/m/marketsegmentation.asp