STP: Segmentation, Targeting, and Positioning

STP and Marketing Research 

  • We know that consumers come in all different shapes and sizes. 

  • STP ( segmentation, Targeting and Positioning ) is the process of looking for and finding these “ groups “ or segments of consumers and designing marketing strategies to take advantage of this grouping 

Segmentation 

  • Different customers want different things ( products), are able to pay different prices, have different information sources ( promotion ) and buy at different places ( geographic, demographic ). More importantly the four Ps, marketers must try and understand these consumers. 

  • Developing a different marketing program for each customer is extremely expensive 

  • Segmentation allows a marketer to identify and group people that behave similarly

    • For instance, the internet. Dertain online companies have tailored or personalized their website to individual users 

    • Allowing marketers can then position their products to fit their target market segment 

  • definition : segmentation 

    • The process of dividing the total heterogeneous market for a product or service into several segments, each of which tends to be homogenous in some significant aspects. 

    • For instance

      • Air travel: one company serving many segments 

      • business/executive: inflexible; price insensitive. Small number of people but travel often 

      • Leisure traveler/ student: flexible, very price sensitive ( other methods of travel e.g. bus, car, train- are feasible, travel may not be essential ), very large segments. 

  • Requirements for effective segmentation 

    • Making profit must be made over time 

    • Often times measurable with accessible data and is very important

    • The segment must be accessible through existing distribution, advertising, and more 

    • In ODI case analysis there should have been a section in the report on the different ways to communicate ( trade magazines ) with the selected target market. 

  • More important factors for effective segmentation 

    • Good segments are also homogenous ( similar needs and desires within segments )

    • Mutually ( different needs and desires among segments ) 

    • The essence of segmentation is that there are differences across but similarities within different groups of consumers . 


Targeting 

  • Identified groups of consumers with similar needs, we need to choose- which of these we will target 

  • Factors of considers when selecting Target Markets ( the bigger picture ) 

    • Target segments should be compatible with the organization’s goals and image 

    • The market opportunity represents by the segment must match the company’s resources 

    • The segment must represent an opportunity to generate enough sales to generate a profit 

    • The company should select target segment where it can enjoy a competitive advantage 

Positioning 

  • Relates to the use of various marketing techniques and marketing mix variables to create the image or perception that will best fit with what the company wishes to be known for 

  • According to lilien and rangaswamy ( marketing engineering ) 

  • Often the process of positioning involves and is a combination of designing an offering so that the target segment members perceive it in a distinct and valued way relative to competitions 

  • Three main ways to position a product  

    • Unique ( only product/services with…. ) 

    • Difference ( more than twice the ( feature) vs. ( competitors )) 

    • Similarities ( same functionality as ( competitor) ; lower price ) 

  • Closely related to establishing a brand 

  • Positioning may be done on attributes ( low price, safer car, bigger screen etc. )

  • Benefit ( better for your sin, saves money etc. ) 

  • Usage situations or product class 

Tools 

  • There are four main tools we use for STP 

    • Factor analysis 

    • Cluster analysis 

    • Discriminant analysis 

    • Perceptual maps 

  • Now in the realm of marketing research. 

  • An activity that involves, collecting, analysing or interpreting market information 

  • Most common methods of collecting importation is to ask 

    • Feel

    • Think

    • Believe about something 

    • And what and when they will do something about it ( the main way to collecting information is to observe what people actually want to do about it ) 

    • Often the amount of information that is collected or available may be huge 

  • example : digital cameras 

    • On a scale of 1-7 

    • For instance 1 not important and 7 being very important 

    • Rating the factors of each brand, and concept will generate results that you’re looking for

      • Size 

      • Mega pixels 

      • Optical zoom 

      • Digital zoom 

      • Movie clip capability 

      • LCD size 

      • Weight ( including  batteries ) 

      • Bundled software 

      • Image stabilisation 

      • White balance override 

      • Manual focus 

      • Storage media type 

      • Price 

    • Breaking this down, a potential consumers how they rate the following brands : canon, nikon, and minolta 


Attribute

Attribute importance 

Rating

Canon

Nikon

Minolta 

size

4

6

5

4

Mega pixels

6

6

6

4

Optical zoom

4

4

5

6

Digital zoom 

3

5

5

5

Movie clip capability 

7

6

3

4

LCD size

5

2

4

5

Weight ( including batteries )

5

6

5

4

Bundled software

2

6

2

3

Image stabilisation

1

3

2

5

White balance 

1

4

2

1

Manual focus 

3

7

4

5

Storage media type

4

6

3

2

Price

7

4

5

3


  • Surmise, there is a table like the one above for every respondent 

  • Different respondents will have different responses to both the attribute importance question, but also the brand rating questions 

Factoring analysis 

  • The method above is mathematical technique that looks at all the responses from all the respondents who think that ( for example ) white balance is an important attribute also think that image stabilisation is important 

  • We can use fewer attributes to describe digital cameras 

  • The purpose of factor analysis may reveal that manual focus and storage media type can also be merged into the professional features attribute 

  • They focus on data reduction 

  • A very useful tool to reduce the attributes to a more manageable number without losing important information 

Cluster Analysis 

  • The responses of different group of consumers 

  • Cluster analysis is the mathematical tool that looks for and finds these groups of respondents 

  • Often used for segmentation 

  • Segmenting consumers based on needs variables, these variables are called bases variables 

  • We are not segmenting consumers 

Discriminant Analysis 

  • Identifying these groups, we want to link these groupings to something observable( like age, income, magazines read, etc ) 

  • Descriptor variables and are used to identify and target different segments of consumers 

  • The mathematical techniques that lets us link groupings of consumers with descriptor variables is called discriminant analysis 

  • This would help us a great deal in terms of being able to target ads for the first group during news shows 

  • For the second group during reality 

  • You may have guessed, if we used a survey to collect data on our respondents earlier, we would also have needed to ask them the correct questions regarding different factors such as gender, income, magazine preference, age and address 

Perceptual Maps 

  • This is the position we occult in the consumer’s mind 

  • May not necessarily be what we want it to be, or even what we think it should be 

  • Perceptual maps represent the information we have gathered in a visual manner to make it easier to manage and interpret 

  • A snake plot is the simple, traditional way to see the difference ( in the average consumer’s mind) 

  • Among the three brands of digital cameras