L ES S ON 5

MARKETING SEGMENTATION,
TARGETING, AND POSITIONING (STP)
 OBJECTIVES

• Identify and segment market for a product or service.

• Select the appropriate target market segment and its positioning.
 MARKET SEGMENTATION

• Market is composed of individuals or organizations which the ability and willingness to make
purchases to fulfill their needs or wants.

• Market segment is a subdivision or part of an over all market with specific and distinctive
characteristics.

• Market segmentation involves grouping various customers into segments that have common
needs or will respond similarity to a marketing action.
 MARKET SEGMENTATION

Segmentation, Targeting and Positioning

SEGMENTATION
Identifying meaningfully
different groups of
TARGETING PRODUCT PRICE
customers
selecting which segment is
to serve

POSITIONING
Implementing chosen
DISTRIBUTION image and appeal to
chosen segment

PROMOTION
 MARKET SEGMENTATION

For the segmentation to be useful, the following criteria must be met:

1. Substantiality - The target segment needs to be large enough to justify creating and maintaining a
customized marketing mix.
2. Measurability - The company must be able to identify this specific segment and its size measurable.
Market segments are usually measured in terms of sales value or the number of customers within the
segment.
3. Accesibility - The company must have access to its targeted segment with its specific marketing mix.
4. Differentiable - The best market segment should be internally homogeneous. Internal homogeneity
means all customers within the segment have similar preferences and characteristics but externally
heterogeneous.
5. Actionable - The market segment must have practical value. Its characteristics must give supporting
data fora marketing position or sales approach.
Bases for Segmenting Consumer Market

Marketers used bases or variables to divide a total market into segments. It is significant that the bases
for segmentation to be used should be thought of wisely because an unsuitable segmentation strategy
could lead to lost sales overlooked profit opportunities. It is best to pinpoint the base that will give
substantial, measurable and accessible segments that display different response patterns to marketing
mixes.

The major variables that might be used in segmenting are geographic, demographic, psychographic and
behavioral variables.
 Geographic Segmentation

• Geographic segmentation means segregating markets by region of the country or the

world, market size, market density or climate.

• Market density is the number of people within a unit of land like census track.

• Climate is normally used for geographic segmentation because of its tremendous effect
on residents' needs and purchasing behavior.
 Geographic Segmentation

There are four reasons why consumer goods companies used regional approach to
marketing.
1. Many firms have to find new ways to make sales because of slow and strong
competition.
2. Retailers using their computerized checkout stations with scanners can get precise
assessment of which brands sell most in the region.
3. New-regional brand intended for local tastes and preferences are introduced by many
package-goods manufacturers.
4. More regional approach lets consumer goods companies to respond more swiftly to
competitors.
 Demographic Segmentation

Demographic segmentation is market segmentation according to age, race, religion, gender, family, size, ethnicity,
income, and education.
The following are the variables of demographic factors used in market segmentation:
1. Age - Age segmentation is the use of marketers of a variety of terms to refer to different age groups.
a. School-age-children - This exert substantial influence over family purchases specifically in food. As young
as two years old, children pick their choices on what they want to eat, play with and wear.
b. Generation Y/Millenials (Tweens/ Teens) - Members of this generation were born between 1982 and 2003.
Tweens are also called preteens. They desire to be kids but also wanted the fun of being teenagers.
c. Generation X - Members of this generation were born between 1981 and 1965. This group is very
family-oriented, well-educated and optimistic.
d. Baby boomers - Members of this generation were born between 1946 and 1964, a popular target marketers
because ot their numbers and income levels. Bommers tend to value health and quality of life.
e. Seniors - Members of this generation were born beyond 1946. Mostly tey are composed of retirees living
on modest incomes (pensions).
 Demographic Segmentation

2. Gender - Gender segmentation is dividing a market into different segments based on

gender. It has long been used in clothing, cosmetics, toiletries, and magazines.

3. Income - Income segmentation is dividing a market into different income segments.

Income influences consumers' wants and determines their their buying power.

4. Family life cycle - The family life cycle is a series of stages established through a
combination of age, marital status and the presence or absence of children.
 Psychographic Segmentation
Psychographic segmentation divides buyer into different segments based on personality characteristics,
motivates, lifestyles, and geodemographics.

1. Personality - Personality mirrors a person's traits, attitudes and habits. An ultimate personality
descriptor is clothing.
2. Motives - A motive is a need that is sufficiently pressing to direct the person to seek satisfaction.
Products and services have varying appeals.
3. Lifestyle - Lifestyle is a person's way of living and describes how an individual spends his time, the
importance of things around him, his beliefs and socioeconomic characteristics like income and
education.
4. Geodemographic - Geodemographic divides the potential market into neighborhood lifestyles. This
manner of segmentation combines geographic, demographic and lifestyle segmentations.
 Behavioral Segmentation

Behavioral segmentation divides buyer into segments based on their knowledge, attitudes, uses or response to a
product. Many marketers believe that behavior variables arr the best starting point for building market segments.

1. Occasions - Buyers can be grouped according to occasions when they the idea to buy, actually make their
purchase, or used the purchased item.
2. Benefits Sought - A power form of segmentation is grouping buyers according to the different benefits that they
seek from a product.
3. User Status - Markets can be segmented into nonusers, ex-users, potential users, first-time users, and regular
users of a product.
4. Usage Rate - Markets can also be segmented into light, medium, and heavy products users. Heavy users are often
a small percentage of the market but account for a higher percentage of total consumption.
5. Loyalty Status - A market can also be segmented by consumer loyalty. Consumers can be loyal to brands. Buyers
can ve divided into groups according to their degree of loyalty.
 MARKET TARGETING
Involves breaking a market into a segment and then concentrating marketing efforts on one or a few key
segments. Marketers select target markets using four different strategies which are undifferentiated
targeting, concentrated marketing, multisegment targeting and customized marketing.

• Undifferentiated Targeting - Is a strategy that assumes that all members of a market have similar needs
that can be met with a single marketing mix.
• Concentrated Targeting - Is a strategy that focuses all marketing efforts on a single market segment. A
company may target just one segment with a single marketing mix.
• Multisegment Targeting - Is a strategy that uses two or more marketing mixes to target two or more
market segments.
• Customized Marketing - Is tailoring a particular product to the specific needs of an individual customer.
 MARKET POSITIONING
• Is developing a product and brand image in the minds of customers. It can also include improving a customer's
perception about the experience they will have if they choose to purchase a company's product or service.
• A company discovers different needs in group in the market place, targets those needs and groups that it can satisfy
in a superior way, and then positions its offering so that the target market recognizes the company's distinctive
offering and image.
• Effective positioning involves a good understanding of competing products and the benefits that are sought by target
market.
• In positioning, the marketing department creates an image for the product based on its intended audience. This is
created through the use of promotion, price, place and product.
There are two approaches in product positioninh which are head-to-head positioning and differentiation positioning.
1. Head-to-head positioning - is competing directly with competitors on similar product attributes in the same target
market.
2. Differentiation positioning - seeks a less competitive smaller market niche in which to position the brand.
 PERCEPTUAL MAPPING
• Is a technique of attempting to determine through graphing how different product brands are
perceived by customers when mapped or compared against two or more products dimensions.
There are several bases for positioning which a company may use including the following:
1. Attribute - highlight a product feature or customer benefits; example Tide detergent powder is
positioned on bringing incomparable whiteness.
2. Price and quality - stress high price as an indication of quality or emphasize low price as a signal of
value; example premium automobile brands like BMW and Mercedes maintain their quality such that
their customers are ready to give the highest pricing for the cars.
3. Use or application - stress unique use/s; example are mobile phones and telecon companies with
their different offerings.
 PERCEPTUAL MAPPING

4. Product user - focuses on a personality or type of user; example L'Oriel position itself
targeting fashion-conscious women.
5. Product class - associate with a particular category of products; examples margarine
brand with butter
6. Competitor - an explicit or implicit frame of reference of one or more competitors;
example Philippine Daily Inquirer and Manila Bulletin in terms of circulation and
readership.
7. Emotion - focuses on how the product makes customer feels; example Nike's "Just Do
it" offers an emotional message of achievement and courage.
 START WITH THE POSITIONING STATEMENT
• It is a brief description of the target market as well as a convincing picture of how the company
wants that market to perceive the brand.
Here are six keys to keep in mind about a positioning statement:
1. It is simple, memorable, and tailored to the target market.
2. It provides an unmistakable and easily understood picture of the brand that differentiates it from
competitors.
3. It is credible, and the brand can deliver on its promise.
4. The brand can be the sole occupier of this particular position in the market. The brand can "own" it.
5. It helps evaluate whether or not not marketing decision are consistent with and supported of the
brand.
6. It leaves room for growth.
Here's a basic template for writing a positioning statement:
For [insert Target Market], the [insert Brand] is the [insert Point of Differentiation] among
all [insert Frame of Reference] because [insert Reason to Believe].
1. The point of differentiation (POD) describes how your brand or product benefits
customers in ways that set you apart from your competitors.
2. The frame of reference (FOR) is tge segment or category in which your company
completes.
3. The reason to believe is just what it says. This a statement providing compelling
evidence and reasons why customers in your target market can have confidence in your
differentiation claims.
Examples of Great Positioning Statement
The following positioning statement was used by Amazon.com in 2001, when it sold
books almost exclusively:

For World Wild Web user who enjoy books, Amazon.com is a retail book seller that
provides instant access to over 1.1 million books. Unlike traditional book retailers,
Amazon.com provides a combination of extra ordinary convenience, low prices, and
cinpressive selection.
 SEGMENTING BUSINESS MARKETS

• Business markets can be segmented in a variety of waste depending on the marketer's

overall objectives and product and service offerings.
1. Geographical location - Companies situated in same region most probably have similar
environment or culture as well as they speak similar languages.
2. Company size (small, medium, large) - There can be segments on the bases of the
company size as it can be prominently noticed that the companies that are larger in
size have different goals as compared to the companies that are small.
3. Usage Rate (non-user, light user, moderate user, and heavy user) - In business-to-
business market there can be segment based on the consumption of the product.
 SEGMENTING BUSINESS MARKETS

4. End User Application - The product that are used in the formation of another product
without undergoing any further processing.

5. Type of Buying Situation (straight re-buy, modified re-buy, and new task) - There can
be segments on the bases of buying situation as in straight re-buy it is a routine
purchase order, in modified re-buy there a need of some research when the buyer
wants some changes in size, color or price and in new task there is a lot of research
required to come up with a new product.
THANK YOU FOR
LISTENINGɿ

From: Group 1 Presentor