3.3 - market segmentation, targeting and positioning

• STP

  Segment, Target, Position
• STP marketing process


  1. Segment

  2. Target

  3. Position
• Segment

  Divide the market into groups with similar characteristics or needs
• Target

  Decide which market segment to focus on and adapt the product and the marketing mix to appeal to this group
• Position

  Position the product in the target customers' minds so they see it as better than the competition
• Segmentation divides a market into groups of buyers, each with different wants, needs, and requiring a different marketing mix
• Bases used to segment a market


  • Demographic (age, gender, socio-economic class, family size)
  • Geographic (neighbourhood, city, country, region)
  • Income
  • Behaviour (usage, lifestyle)
• Segmentation


  • Useful for identifying new customers, markets and products
  • Can help identify best way to market a product
• Segmentation

  • Can cause companies to ignore needs of potential customers
  • Difficult to break market into obvious segments
  • Difficult to find ways of marketing to specific demographics
• Concentrated marketing


  Targeting one or two segments, good for smaller businesses with limited resources
• Differentiated marketing


  Targeting several segments, adapting product and marketing mix for each
• Undifferentiated marketing


  Ignoring segments and trying to reach entire market with single product and marketing mix
• Niche market


  A small, specialized segment of the market
• Mass market


  A large, broad segment of the market
• Concentrated marketing


  Also known as niche marketing
• Focusing on niche markets


  • Small businesses don't have to compete directly with larger businesses (who don't normally target niche markets)
  • A small business selling microwave meals could establish a niche by specialising in meals for people with nut allergies - this allows the business to make a profit even though there are lots of large ready-meal businesses
• Targeting a niche market


  • A small manufacturer can meet the demand of a small niche more easily than it can meet the demand of a mass market
  • It can also be easier to market their product to a niche (e.g. a new type of fishing bait could be promoted in a fishing magazine)
• Mass market products


  • Often with undifferentiated marketing
  • Designed to appeal to lots of consumers (e.g. Coca-Cola®)
• Positioning a product in customers' minds


  1. Deciding which segments to target

  2. Creating an image of your brand or product in the mind of your target customer

  3. Getting them to develop the opinion of your product that you want them to
• Positioning


  • Customers have a mental map of the market and will position new products relative to the alternatives
  • A business needs to look at where would be the most effective place to position its brand or product in relation to its competitors (e.g. if it can't compete on price or quality it might push the convenience or ethical nature of the product)
• Effective product positioning


  • Convince the target customers that your product has benefits for them
  • Differentiate it from the competition in a way that is relevant to them
• Positioning outdoor clothing for young backpackers


  • Position the range as more ethical than rival products because market research highlighted ethical sourcing as a feature young backpackers care about
• State of the market


  In recession, companies will position to offer best value for money

  In booming market, they might emphasise great quality or environmental-friendliness
• Company's current products


  If seen as reliable and cheap, likely to position new products similarly
• Attributes of the company


  • Need to position products to match strengths and weaknesses (e.g. if really innovative, focus on cutting-edge and unique products)