Marketing Nathalie Dens
Market segmentation and positioning
STP process
= method by which whole markets are subdivided into different segments
- 3 activities
usually sequentially if segmentation is to be successful
o Segmentation
Market info:
identifying similar groups of customers
Market research:
e.x. (fe)male consumers of skincare products, aged 18 – 25 or etc
o Targeting
Market info:
identifying which groups of customers to aim for
Market research:
e.x. female consumers aged 18 – 25
o Positioning
Market info:
creating a concept to appeal to the target market => marketing decisions
Market research:
e.x. position skincare products as essential for self-respect => creative
- Benefits
o Enhances a company’s competitive position
providing direction/focus for marketing strategies, including targeted advertising, new
proposition development and brand differentiation
o Examines/identifies market growth opportunities
through identification of new customers, growth segments or proposition uses
o Effective/efficient matching of company resources
to targeted market segments promising better return on marketing investment (ROI)
1
, Marketing Nathalie Dens
Concept of market segmentation
= the division of a market into different groups of customers with distinctly similar needs and
product/service requirements
o Allows organizations to focus on specific customer’s needs, in most efficient and
effective way
o Often leads to increased costs in the short run but increased profitability in long run
Product differentiation strategy:
involves highlighting a product’s attributes/features to emphasize the differences between it, and so
distinguishing it from, those of competitors or other product offerings
o New offering => promotion/place/offering/price => new segment
Market segmentation strategy:
requires a focus on particular segments or groups of customers who share similar needs or
characteristics
o New segment => promotion/place/offering/price => new offering
- Process of market segmentation
o Aim
to identify segments where
Segment heterogeneity:
identifiable differences exist between segments
Members homogeneity:
similarities exist between members within each segment
o Methods
Build-up method:
approaches task from perspective of identifying markets that consist of
customers who are similar, seeks to move beyond individual level at which all
customers are different to a more general level of analysis based on identifying
similarities
Customer-orientated seeking to determine common customer needs
Breakdown method:
identifies those groups that share particular differences, most established
approach to segmenting consumer markets
Aim of both
segment heterogeneity but within member homogeneity
2
Market segmentation and positioning
STP process
= method by which whole markets are subdivided into different segments
- 3 activities
usually sequentially if segmentation is to be successful
o Segmentation
Market info:
identifying similar groups of customers
Market research:
e.x. (fe)male consumers of skincare products, aged 18 – 25 or etc
o Targeting
Market info:
identifying which groups of customers to aim for
Market research:
e.x. female consumers aged 18 – 25
o Positioning
Market info:
creating a concept to appeal to the target market => marketing decisions
Market research:
e.x. position skincare products as essential for self-respect => creative
- Benefits
o Enhances a company’s competitive position
providing direction/focus for marketing strategies, including targeted advertising, new
proposition development and brand differentiation
o Examines/identifies market growth opportunities
through identification of new customers, growth segments or proposition uses
o Effective/efficient matching of company resources
to targeted market segments promising better return on marketing investment (ROI)
1
, Marketing Nathalie Dens
Concept of market segmentation
= the division of a market into different groups of customers with distinctly similar needs and
product/service requirements
o Allows organizations to focus on specific customer’s needs, in most efficient and
effective way
o Often leads to increased costs in the short run but increased profitability in long run
Product differentiation strategy:
involves highlighting a product’s attributes/features to emphasize the differences between it, and so
distinguishing it from, those of competitors or other product offerings
o New offering => promotion/place/offering/price => new segment
Market segmentation strategy:
requires a focus on particular segments or groups of customers who share similar needs or
characteristics
o New segment => promotion/place/offering/price => new offering
- Process of market segmentation
o Aim
to identify segments where
Segment heterogeneity:
identifiable differences exist between segments
Members homogeneity:
similarities exist between members within each segment
o Methods
Build-up method:
approaches task from perspective of identifying markets that consist of
customers who are similar, seeks to move beyond individual level at which all
customers are different to a more general level of analysis based on identifying
similarities
Customer-orientated seeking to determine common customer needs
Breakdown method:
identifies those groups that share particular differences, most established
approach to segmenting consumer markets
Aim of both
segment heterogeneity but within member homogeneity
2
