Making marketing decisions: segmentation, targeting, positioning

What is Segmentation, Targeting, and Positioning (STP)?

STP is a strategic marketing framework that involves three key processes: Segmentation (dividing a market into distinct groups based on shared characteristics), Targeting (selecting the most appealing segment(s) to market to), and Positioning (establishing a unique image of the product in the minds of consumers compared to competitors). This process optimizes marketing approaches to reach specific customers effectively.

Segmentation Methods

The techniques for categorizing potential customers into distinct groups:

1. Demographic Segmentation: Based on age, gender, income, etc. (e.g., marketing tech to millennials).

2. Geographic Segmentation: Based on location (e.g., selling winter gear in colder regions).

3. Income Segmentation: Based on income levels (e.g., luxury goods for high-income individuals).

4. Behavioral Segmentation: Based on customer behavior and usage patterns (e.g., loyalty rewards for frequent purchasers).

Influences on Choosing a Target Market and Positioning

Factors guiding businesses in targeting and positioning include:

• Market Size and Growth: Selecting segments with high potential for sales.

• Competition: Targeting niche markets to gain an advantage.

• Profitability: Focusing on segments with high profit margins.

• Company Resources: Aligning targets with available resources and strategic goals.

• Consumer Trends: Adapting to shifts in consumer preferences, like rising health consciousness.

Market Mapping and Positioning

Market Mapping (or perceptual mapping) is a visual tool used to compare a product against competitors based on attributes like price and quality. It helps identify market gaps for positioning and informs differentiation strategies to better meet consumer needs.

Targeting: Niche and Mass Marketing

Niche Marketing: Focuses on specialized consumer segments (e.g., organic products for sensitive skin), offering advantages like reduced competition but facing risks from limited market size. Mass Marketing: Aims at the broad market with a single approach (e.g., Coca-Cola), providing economies of scale but risking lower satisfaction of individual needs.

The Value of Segmentation, Targeting, and Positioning (STP)

STP enhances customer focus, allowing tailored marketing solutions; improves resource allocation by targeting promising segments; creates competitive advantages through differentiation; and increases customer satisfaction and loyalty by effective targeting.

Summary of Segmentation, Targeting, and Positioning

STP processes help businesses pinpoint promising market opportunities, focus on ideal customer segments, and effectively differentiate their products, driving growth and optimizing marketing resources.