Marketing - STP :Segmentation, Targeting and Positioning

STP –a three stage process

• Segmenting - dividing up the market into

distinctive groups.
• Targeting – selecting a segment to target.
• Positioning – developing a marketing
strategy which positions the product in
relation to rivals in order to appeal to target
segments.

Marketing - STP :Segmentation, Targeting and Positioning

 To remain competitive a company must…

• Separate the market into appropriate

segments with a focus on those likely to
deliver the best return.
• Target appropriate segments.
• Position the product in the minds of
potential customers.
• Be prepared to reposition the product.

Marketing - STP :Segmentation, Targeting and Positioning

 Market segmentation

• Dividing a market into distinct groups of buyers on

the basis of needs,characteristics or behaviour
who might require separate products or marketing
mixes.
• Subdividing markets into smaller groups within
which are broadly homogeneous pattern of needs.
• A segment is a group of customers who share
certain relevant characteristics and respond in a
similar way to a given set of marketing efforts.

Marketing - STP :Segmentation, Targeting and Positioning

 The process of market segmentation

• Identify bases for segmenting the market.

• Choose variables for segmenting the market
– Demographic profile
– Geographic
– Behavioural
– Psychographic
• Develop a profile of resulting segments.

Marketing - STP :Segmentation, Targeting and Positioning

 Criteria for segmentation

• The segment must be:

• Relatively homogeneous group
• Distinctive and identifiable
• Accessible –capable of being reached
• Actionable
• Measurable
• Sufficiently large to be profitable.

Marketing - STP :Segmentation, Targeting and Positioning

 Firms engage in segmentation…

• To develop different strategies for different parts of

the market.
• To tailor marketing mix to meet the needs of
distinct groups.
• To increase sales and profits by serving particular
segments.
• To identify marketing opportunities.
• To dominate niche segments.
• To reflect differences in customer tastes.
• To prioritise on those segments most likely to
provide a higher return.

Marketing - STP :Segmentation, Targeting and Positioning

 Segmentation strategies

• Undifferentiated marketing - ignore

segments and treat all groups the same.
• Focussed strategy - target a particular
segment.
• Differentiated marketing - a different
marketing mix for each segment.

Marketing - STP :Segmentation, Targeting and Positioning

 Market targeting

• The process of evaluating each market

segment’s attractiveness and selecting one
or more segments to enter..
• Develop measures of segment
attractiveness.
• Identify which and how many segments
should be targeted.

Marketing - STP :Segmentation, Targeting and Positioning

 Factors in choice of target segment

• Size of market • Resources available

segment • Corporate objectives
• Growth potential and mission
• Degree and intensity of • Accessibility
the competition • Sustainability
• Potential competition • Is it defendable?
• Business capabilities • Ability of the firm to
of the firm establish itself in the
market

Marketing - STP :Segmentation, Targeting and Positioning

 Choosing segments to target

Unattractive Average Attractive

segment segment segment

Absence of Avoid Avoid A possibility

competitive
advantage

Average in Avoid A possibility A secondary

terms of C.A. target

Strong A possibility A secondary Prime target

competitive target
advantage

Marketing - STP :Segmentation, Targeting and Positioning

 Benefits of targeting

• Focus resources on the most profitable segments.

• Provides a focus for analysing competitors.
• It enables the organisation to find a strategic fit
between its market strategy and its long term
objectives.
• Provides better understanding of a limited market.
• Improved communication between buyer and
seller.
• It enables the business to focus attention on
segments it understands.

Marketing - STP :Segmentation, Targeting and Positioning

 Market positioning

• The development of an offer within each segment

that is most likely to appeal to the targeted group
• Arranging for a product to occupy a
clear,distinctive and desirable place relative to
competing products in the mind of target
consumers
• A product’s position is the place the product
occupies relative to competitors in consumer’s
minds.

Marketing - STP :Segmentation, Targeting and Positioning

 The process of positioning

• Understand consumer perceptions.

• Positioning products in the mind of
consumers.
• Develop positioning for each target
segment.
• Design appropriate mix to communicate
positioning.

Marketing - STP :Segmentation, Targeting and Positioning

 Sheila’s Wheels

• “For bonzer car insurance deals, Girls get on to Sheila’s

Wheels”
• Actually Sheila’s Wheels is not an Australian company-it is
a division of esure
• Here the car insurance market is being segmented by
gender
• They have chosen to target women ,especially younger
women
• The product is positioned to attract younger women
• It includes features seen as especially attractive to female
drivers and is promoted using Australian features.
• It tries to make motor insurance a fun product

Marketing - STP :Segmentation, Targeting and Positioning

 The Arcadia Group Brands

• Differentiated marketing
• A brand for different segments
• Burton- men’s clothing
• Dorothy Perkins- younger women
• Evans- for women 25-55 and sized 16+
• Miss Selfridge- for 18-24 year olds
• Top Man-young and young at heart men
• Outfit –out of town retail parks
• Wallis- distinctive and quality fashions

Marketing - STP :Segmentation, Targeting and Positioning

 The Miss Selfridge customer

• The Miss Selfridge customer is feminine and

stylish, individual and self assured.
• She is fashion aware and is confident
experimenting with her own styles but expects
value for money.
• She is predominantly 18-24 and makes reference
to celebrities and style leaders but has her own
opinions and unique style”
(source :[Link])

Marketing - STP :Segmentation, Targeting and Positioning

 Customers at Evans

• Our customer is a stylish and contemporary

woman aged 25-55 who demands the same
choice of flattering and wearable clothes at
affordable prices as the rest of the high
street.
([Link])

Marketing - STP :Segmentation, Targeting and Positioning

 Top Man’s typical customer

• “From a style perspective he is young at heart and wants

fashion which makes him comfortable and confident with
himself and acceptable to his mates.
• (He is not) afraid of shopping on his own but quite likes
hanging out with his mates.
• Top Man has developed a reputation for rapidly becoming
the leading fashion choice for students across the country.
• We are also catering for the more fashion savvy and
confident customer”
([Link])

Marketing - STP :Segmentation, Targeting and Positioning