Chapter 3 The STP Marketing Model Handouts

Segmentation
Targeting
Positioning
(S-T-P)
Chapter 3: The STP Marketing Model

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL
TOPIC OUTLINE
• Consumer Behavior
• Market Segmentation and Targeting
• Positioning Strategies

Consumer Behavior Chapter 3.1
The way that we perceive, react or are affected by products and

services is a function of a host of factors. The following are factors
that tend to have an effect on consumer behavior.
• Culture
• Social factors
• Personal factors
• Psychological factors

Income vs. Socio-economic Class
Income is a personal
demographic factor while socio-
economic class (SEC) is a social
factor. While these two may seem
to refer to the same thing, they are
quite different. Income is a factual
number that may answer the
question, “How much do you
earn?”
On the other hand, socio-economic
class is an indicator of the kind of
group that a consumer feels he or
she belongs to. It is a social factor
in a sense that it reflects the
consumption reality that the
individual strongly believes in.

Researchers refer to SECs as expenditure-based
clusters because people belonging to the same SEC
group tend to spend on the same things. This is why
SEC then proves to be a better indicator of what a
consumer may tend to buy. These classes can be
typically defined as follows:
• A Prime - the wealthiest class

• AB - upper income class
• Upper C - upper middle class
• Broad C - broad middle class
• Lower C - lower middle class
• DE - lower classes

Age vs. Lifecycle
• Age is just a number,
whereas where consumers
currently are in the
lifecycles pretty much
determine what products
and services they will
likely spend on.

The following are the generally accepted lifecycle stages:
• Bachelor Stage - young, single and independent

• New Married Couples - young, no children, also known as DINKS
(double income, no kids)
• Full Nest I - families with children, with youngest child below 6
years
• Full Nest II - families with children, youngest child 6 years or older
• Full Nest III- families with dependent children
• Empty Nest I- older married couple, no children living with them
• Empty Nest II - older married couples, retired, and no children
living with them
• Solitary Survivor I - older, no family and supporting self
• Solitary Survivor II - older, no family, and retired

Buying Roles
You buy products for
yourself. But you
also buy products for
other people, in
which case you are
merely functioning
as the buyer while
someone else ends
up using it. In fact,
there are five
generally identified
roles in the buying
process. These are:

Initiator – the person who first suggests the
idea of buying s particular product or service.
Influencers – these people’s views or advices
can influence the eventual selection of what to
buy
Decider – the person who ultimately has the
final say on what to buy
Buyer – the person who makes the actual
purchase
Users – the person who end up actually using
the product

Types of Buying Behavior
• Complex buying Behavior arises for important purchases where
there are so many different features and attributes with each brand
having different manifestations of each feature.
• Dissonance reducing behavior occurs when a consumer wants to
keep life simple, and yet risks faced with the buying decision for an
important purchase are perceived to be high.
• Variety-seeking behavior occurs when the product involves
minimal risk, but there are so many choices, each with its own
features and attributes. The consumer may opt to try each product at
least once, leading to the trying of a wide variety of the products.
• Habitual buying behavior happens when consumer feel that
learning about the different competing products is not worth it, so
they would rather select the product that they are most comfortable
with.

Emotional vs. Logical Decisions
We have two brains. One is

an emotion-driven brain and
the other is our logical brain
which is rational. We might
think that all our purchases
are the result of rational and
logical decisions on our part,
but this is not necessarily
true.

Emotional vs. Logical Decisions
We have two brains. One is

an emotion-driven brain and
the other is our logical brain
which is rational. We might
think that all our purchases
are the result of rational and
logical decisions on our part,
but this is not necessarily
true.
When you see a new gadget in a beautifully laid out display counter,
glistening under proper halogen spotlights, this triggers a positive
emotional affinity for the product. Your emotional brain is stimulated
by the attractive display. It may have already decided that you should
buy the product regardless of your need for it as a consumer.

Chapter 3.2
Market Segmentation

Video
San Miguel beer ad playing. . .

Why spilt up the market in the first place?
Many optimistic entrepreneurs assume that if they make their product good
enough, it can attract anybody and everybody – regardless of age, gender,
income, and a whole lot of other factors. Sometimes, it does work. But
universally successful products are few and far between. More often, the typical
new product launches into a market that is already saturated with competition
and with each businesses fighting to get a share of the available market.

Close-Up succeeded because
instead of going head-on with
Colgate, which appealed to the
family market, Close-Up instead
decided to focus just on the youth.
In doing so, it effectively broke-up
to the toothpaste market: Colgate
was bought by parents for their
families, while Close-Up was
bought by teenagers for
themselves.
Colgate has been a strong market leader in the Philippines for decades.
A lot of competitors emerged, promising to offer the same benefits and
quality at a lower price. None however managed to get as far,
competition wise, as Unilever’s Close-Up did.

Apple succeeded phenomenally by focusing on satisfying the
needs of more upscale buyers who had enough disposable
income to spare for well-engineered and well-designed products.
The company does not sell low-

priced devices and it does not
seek to appeal to a broad market.
In doing so, it is able to
command high profit margins
while still affording to build
products at premium quality.

Kinds of Variables in Segmenting the Market
• Geographic variable – involves dividing the market per

region, country, density of area or climate.
• Demographic variable – includes gender, age, family
size, income, occupation, education, religion and
language.
• Psychographic variable – includes personality, character,
lifestyle, values and attitudes of customers.
• Behavioral variables – this considers customer’s product
usage rate, brand loyalty, readiness to buy and decision-
making.

Market Segmentation
• Geographic. The physical location
of market, including the general
characteristics of the location. This
includes factors such as climate,
traffic conditions, livelihood,
opportunities and population
density.
• Jaz Cola for instance, began by
focusing primarily in the Visayas,
building up popularity there among
teenagers in the 1990s. They were
effectively competing with Coca-
Cola through low price and a
localized strategy.

Market Segmentation
• Demographic. This refers to
quantifiable and factual
statistics of the population such
as age, sex, income, occupation
and basically any piece of
information that is gathered by
NSO.
• Happee Toothpaste began
appealing to kids using bright
toothpastes with fruity flavors
and cartoon imagery.

Market Segmentation
Psychographic. This refers to how

consumers see and feel about
themselves – hence psycho or “of the
mind” It includes elements such as
social class, lifestyle and personality.
These data can be acquired through
surveys.
Nike has used psychographics in

designing its communications,
appealing primarily to people
with competitive identities.

Video
Dove shampoo ad playing. . .

Market Segmentation
Behavioral. This variable refer to how we
behave when buying a product, what we
look for when buying a product, how
loyal we tend to be to a brand, how often
and how much do we buy, what price
point we are comfortable with, how ready
we are to buy the product and to whom
we typically buy the product for.
Jollibee originally differentiated its

burgers by proclaiming them to be
“langhap sarap” appealing to a typical
Filipino behavior of smelling food to
fully appreciate it before eating it.

Market Targeting
Targeting refers to the selection of
potential customers to whom a
business wishes to sell products or
services. The targeting strategy
involves segmenting the market,
choosing which segments of the
market are appropriate, and
determining the products that will be
offered in each segment.
A business offering multiple products can determine if the various

segments should receive one generic product (such as in mass
marketing), or if each segment should receive a customized product
(multi-segment), based upon the market's diversity, maturity, the level of
competition and the volume of sales expected.

Market Profiling
A market profile is a detailed description
of your target audience. It's similar to a
buyer persona, however, it's not a fiction
representation of your customers. It has
factual information about their
demographics, buying behaviors,
customer service interactions, and more
It is a way to create a portrait of your customers to help you make

design decisions concerning your service. Your customers are
broken down into groups of customers sharing similar goals and
characteristics and each group is given a representative with a
photo, a name, and a description.

“NetChix Insomniac”
Segmentation Variables Specification
Geographic Region NCR
Demographic Age Teenager
Psychographic Character Tech-Savvy
Behavioral Usage rate 1-season marathoner

“Boy Hawkage”
Segmentation Variables Specification
Geographic Location Urban
Demographic Gender Male
Psychographic Personality Playboy
Behavioral Brand loyalty Variety-seeking

Performance Task
• Design a Market Profiling. Choose a certain brand,

• follow the steps in visualizing a particular market by
identifying relevant segmentation variables in a table
and characterize their specifications,
• create a unique name for the targeted market; and
• briefly discuss how the product suits the profile.

Performance Task
Layout an e-graphics for the market profile that you created

through MS Word converted to PDF format.
Creativity – 30%
Uniqueness – 30%
Relevance – 40 %

Chapter 3.3

Topic Outline
• Positioning, defined
• POD vs POP
• Category Membership
• Positioning by Focus
• Positioning Map
• How to Outline a Positioning Map

Positioning is the act of establishing a strong brand
image for a product. This includes telling the market
exactly what your product is, who it is for, what
product category it belongs to, what its most essential
attributes or benefits are and what it is not.
C2 was competing against carbonated sodas but it avoided direct competition by

building its own product category, namely bottled tea drinks. What did C2 do?

• C2 was clearly positioned not as a carbonated drink
• Came in large PET plastic bottles rather than smaller bottles often
associated with cola drinks
• Located in grocery aisles away from soft drink sections
• Hence, these details made it very clear to the market that this was not
a soft drink, which means that it will not have any of the negative
health inferences that soft drinks were becoming burdened with.
C2 was competing against carbonated sodas but it avoided direct competition by

building its own product category, namely bottled tea drinks. What did C2 do?

Sarsi as an on-again and off-again soda
beverage had its heyday in the 1980s with
the message “Magsarsi ka para maiba.”
The subtext of which as that, if you drink
the popular soda brand, then you are being
too much of a conformist.
Mang Inasal has always been associated with

crispy fried chicken. It is not the only fried
chicken restaurant (KFC is the leading) but it
occupies a distinct message especially
among more senior market segment of
Filipinos tradition, family bonding, and a
unique kind of fried chicken experience.

In the early days of
advertising, a product
positioning was
referred to as the
Unique Selling Point
(USP). Basically, it is
the answer to the
question, “What
makes your product
different?”
Volkswagen Beetle was one of the most successful car models in automotive
history. It managed to penetrate the US market through clever advertising that
promoted the Beetle as admitted ugly but very functional. Many people in fact
find the Beetle to be an ugly car. But by coming out in the open and admitting it
in its advertising, this “ugliness” was transformed from being a weakness into a
position of strength: it became an expression of identity.

Positioning has eventually
evolved to become more
than just clearly associating
brands with particular
product categories. Today,
creating product position
involves determining its
primary message; its target
market profile, price point,
brand personality, and a
host of other factors that
work together to provide an
integrated, coordinated and
brand experience.

POD VS POP
Points of Parity (POP)

are market expectations
about what products in a
particular product category
should be or should have.
Skin White – all skin lotions

must be fragrant

POD VS POP
Points of Difference (POD)

refer to attributes or benefits
that the market associates
primarily with a particular
brand, to the point that the
market believes that no other
brand offer these attributes of
benefits to the same degree
as that brand.
• Skin white SPF content

Which is more important?

The absence of POP that a
market expects from a category
can be a deal-breaker – that is
unless communications can
somehow manage to transform
this weakness into strength.
For toothpaste, mouthwash and

soap for instance, the market
would expect these categories to
be fragrant and strongly minty -
this is a Point of Parity.
Therefore, it is reasonable to
assume that has absolutely no
fragrance at all can become a
challenge to sell.

On the other hand,
communications can be
designed in order to claim
that the absence of a
fragrance actually proves
that the product has no
chemicals and therefore the
product can be positioned as
healthy, medical or natural.
In doing so, a negative view
in terms of point of parity
has transformed into a
positive point of difference.

Top-of-Mind Recall
The image, sound, name, brand or
attribute that comes to mind
immediately when asked about
products or brands in a category
enjoys the highest 'top of the mind
recall' with the consumer.
Such products or brands have every

possibility of lasting longer in the
market place, giving the company a
long revenue stream from it. A high
top of the mind recall also helps in
brand extensions.

The Concept of Emotional Branding
Emotional branding is a term used within marketing

communication that refers to the practice of building
brands that appeal directly to a consumer's
emotional state, needs and aspirations.

Video
McDonalds ad playing. . .
Category Membership
Category membership involves

properly defining what category
your products belongs to. It helps
to appreciate how consumers
tend to mentally place products
into distinct categories.
Red Bull, Cobra and Sting are

energy drinks. This is a category
that is very different from fruit
drinks and Cola beverages.

Form. Coke for instance has
positioned its product through
the shape of its bottle. The Coca-
Cola shape.
Color. Green is often used to
communicate vegetation and
environment-friendliness while
blue may be considered as relaxing
hue due to its association with sea
and sky. On the other hand, red is a
bold strong color thus, selling an
earth-friendly natural product in an
old red package reduces a
conflicting message.

Positioning Focus
Once the competitive battlefield

has been decided upon, the next
step is to decide on what key
attributes the product would focus
on.
• Product-oriented positioning
is used where the emphasis shall
be placed in the feature, benefit,
or attribute that is inherent in the
product. Examples include
creaminess, performance,
durability, speed, convenience,
price and availability.

Positioning Focus
Once the competitive battlefield

has been decided upon, the next
step is to decide on what key
attributes the product would focus
on.
• Consumer-oriented positioning
is where the focus is on the type
of person expected to purchase
the product. In other words, the
objective is to closely associate
the product with a specific target
market.

Mini-Case: Nestle Vita

Outlining a Positioning Map

How do you visualize your
product’s place within a
highly competitive
environment?

Marketer practitioners make use
of something called a perception
map or positioning map, a
graphical tool that provides a
picture of how consumers
perceive the different products in
a given industry.

Survey Questionnaire
1. Please encircle the number that to you best represents the
price where Brand X falls under.
1 2 3 4 5 6 7
Low Moderate High
2. Please encircle the number that to you best represents the

quality where Brand X falls under.
1 2 3 4 5 6 7
Low Moderate High

Tally Sheet

Positioning Map
7
6
5
Quality
4
1 2 3 4 5 6 7
3
2
1
Price

Without relying on the large-scale
survey, management teams can
construct positioning maps of
their industries through
collaboration and consensus. In
other words, on a best-efforts
basis, teams can construct maps
directly that is based on their own
opinions and knowledge of the
industry. However, because this
method is not statistically
derived, great care must be
exercised in order to ensure that
personal biases are minimized.

For instance, a manager may strongly believe that their product is superior to that
of the competitor’s thereby propping it at a much higher quality point on a map
whereas in reality, consumers do not think so. Always remember that it is the
consumers’ perceptions that are being mapped and not the company’s.

What else can a
positioning tell you?
It can show market gaps empty

spaces on the map that can be
considered as opportunities for
new product propositions.
This is what UCARE Milk did.
CASE STUDY

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Segmentation

Chapter 3: The STP Marketing Model

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

The way that we perceive, react or are affected by products and

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

• A Prime - the wealthiest class

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

• Bachelor Stage - young, single and independent

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

We have two brains. One is

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

We have two brains. One is

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

San Miguel beer ad playing. . .

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

The company does not sell low-

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

• Geographic variable – involves dividing the market per

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

Psychographic. This refers to how

Nike has used psychographics in

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

Dove shampoo ad playing. . .

Jollibee originally differentiated its

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

A business offering multiple products can determine if the various

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

It is a way to create a portrait of your customers to help you make

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

• Design a Market Profiling. Choose a certain brand,

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

Layout an e-graphics for the market profile that you created

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

C2 was competing against carbonated sodas but it avoided direct competition by

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

C2 was competing against carbonated sodas but it avoided direct competition by

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

Mang Inasal has always been associated with

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

Points of Parity (POP)

Skin White – all skin lotions

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

Points of Difference (POD)

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL

For toothpaste, mouthwash and

*Juan Sumulong Memorial Schools System Inc. – SENIOR HIGH SCHOOL