Segmentation, Targeting, and Positioning (STP)

Comprehensive vocabulary flashcards covering the concepts, bases, and strategies of Market Segmentation, Targeting, and Positioning (STP).

Market Segmentation

The process of dividing a heterogeneous (aggregated) market into homogeneous (segregated) sub-units that share a similar set of needs.

STP

A major marketing framework representing the three pillars of modern marketing strategy: Segmenting the market, Targeting the user, and Positioning the products.

W. Smith (1956)

The individual considered to be the father of market segmentation, who introduced it as an alternative to differentiation.

Improved Customer Relations

An importance of segmentation that enables buyers to find products fitting their physical or psychological needs, leading to increased customer loyalty.

Competitor Analysis

A benefit of segmentation where knowledge of competitors and the segments they serve allows an organization to identify specialized segments and avoid head-on collisions with large competitors.

Geographic Segmentation

Dividing a market based on variables such as country of birth, location, regions, states, topography, and climate.

Demographic Segmentation

Dividing a market on the basis of readily observable personal characteristics such as age, gender, ethnicity, education, income, and occupation.

Grey Market

A segment also known as the "third age group" referring to people aged $50$ and above, targeted by personal care, pharmacy, and nursing industries.

Generation Y (Millennials)

The generation of people born after $1980$ who are technology-oriented and slated to represent $76\%$ of the global workforce by $2020$.

Family Life Cycle

A segmentation concept charting family development from birth to death, including stages like bachelor, newly married, Full Nest I, Full Nest II, Empty Nest, and solitary survivor.

Segacity

A refinement of the family life cycle grouping system that classifies life stages into Dependent, Pre-family, Family, and Late, further subdivided by income and occupation.

ACORN

An acronym for "A Classification of Residential Neighbourhoods," a segmentation basis that uses the house or locality instead of the individual.

Ernst Engel's Observations

Statistical rules stating that as household income increases, the percentage of expenditure for food decreases, while the percentage spent on recreation and education increases.

Behavioural Segmentation

Also called product-related segmentation, it uses purchasing behaviour, usage status, brand loyalty levels, and benefits sought as the starting point.

Usage Status

A behavioral segmentation method categorizing consumers as 'light', 'medium', or 'heavy' users, or as non-users and first-time users.

Benefit Segmentation

Grouping consumers based on the specific benefits they seek from a product, such as baking soda used for bakery products versus as a fridge deodorant.

Psychographic Segmentation

A method that examines mental characteristics and predispositions, including interests, activities, opinions (AIO), and lifestyles.

Priori Variables

Also known as identifier variables, these include characteristics like age, sex, and education used to define who the customers are.

Post-hoc Variables

Also known as response variables, these segment customers based on behavioral responses such as price sensitivity or product attitude.

Market Targeting

The stage of STP concerned with balancing segment attractiveness against available resources to decide which specific segments the organization will serve.

Mass Marketing Strategy

Also known as undifferentiated marketing, it involves offering a single product and marketing mix to all customers across different segments.

Large Segment Strategy

A concentrated targeting strategy that focuses marketing efforts on a single segment representing $50\%$ or more of the market.

Adjacent Segment Strategy

A strategy where a company moves into a closely related segment after achieving full penetration in an initial target segment.

Niche Segment Strategy

A strategy targeting a limited number of consumers seeking specialized benefits, often used to avoid direct competition with larger firms.

Sub-Segment Strategy (Micromarketing)

Identifying meaningful differences in customer needs within an existing segment that are not being met by current segmentation.

Market Positioning

The process of arranging for a brand to occupy a clear, distinctive, and desirable place in the minds of targeted consumers relative to competitors.

Al Ries and Jack Trout

The researchers who articulated the concept of positioning in $1972$ as creating a perception in a consumer's mind.

Unique Selling Proposition (USP)

The identification of a particular appeal or benefit that a firm presents to customers to differentiate itself within a target segment.

Physical Positioning

Differentiation based strictly on physical product characteristics.

Perceptual Positioning

Differentiation based on non-physical factors like presentation, past experiences, and celebrity endorsements.

Waku Waku Doki Doki

A Japanese term for the adrenaline rush and pleasure stemming from anticipation and thrill, used as a positioning base by Toyota.