Segmentation, Targeting and Positioning
The STP process
Marketers use the STP process in order to identify, who, out of all of their potential
customers, should they focus on. I.E. identify the most attractive and accessible groups of
customers or segments. FURTHERMORE, the also use STP to recognise new product/service
opportunities, in order to develop suitable positioning and communication strategies, whilst
allocating scarce resource materials to support key marketing goals.
Businesses may implement segmentation research to revise their marketing strategy,
investigate a declining brand, launch a new offering or restructure their pricing policies. – if
a business operates in a large and dynamic environment, research should be conducted
regularly. – The key benefits of the STP process are:
Enhances a company’s competitive position – as it provides direction and focus for
marketing strategies such as, targeted advertising, new proposition development
and brand differentiation. E.G. Coca Cola identified that diet coke was seen as
‘feminine’ by male consumers, therefore the company developed Coke Zero and
targeted the health-conscious male segment of the soft drinks market.
Examining & identifying market growth opportunities through the recognition of
new customers, growth segments or proposition uses. E.G Burberry used to be seen
as gangwear but now is a chic and in demand brand.
, Effective & efficient matching of company resources to targeted market segments,
promising greater ‘return on marketing investment’ (ROMI). E.G. using data
informed segmentation.
Marketing is a difficult process, in that no one has the right answer at any one time, and that
marketers must be willing to try new things, monitor what is going on and change and
control what you are doing if it is not working.
Market segmentation
Market segmentation is the division of a market into different groups of customers with
distinctly similar needs and products/service requirements. – It is about making a
‘heterogeneous’ (market with lots of different needs) into lots of ‘homogenous’ segments
(into small groups of people with similar wants).
According to Wind 1978, marketing segmentation forms an important foundation for
successful marketing strategies and activities.
THE PURPOSE OF MARKET SEGMENTATION IS…
To ensure that the elements of the marketing mix, namely price, distribution,
products and promotion (and people, process and physical environment/evidence
for service offerings), meet the needs of different customer groups.
Leverage scarce resources. This is because many companies have finite resources,
and thus it is not feasible or practical to produce all the required offerings for all
people all of the time I.E. you cannot be all things to all people.
it allows the organisation to focus on meeting specific customer needs, in the most
efficient and effective way,
Market segmentation was proposed as an alternative development strategy in markets with
w/ few competitors selling an identical product. Where there are many competitors selling
identical products, market segmentation and product differentiation can produce similar
results due to competitors imitating each other’s strategic approaches faster, and product
differentiation approaches meet market segment needs more closely.
Because consumers exhibit wide range of tastes and have greater disposable income,
marketers increasingly design offerings around consumer demand (market segments) rather
than their own production needs (product differentiation)
