Segmenting, Targeting, Positioning and Differentiation (STPD), How it is done?

Market Segmentation is the process of dividing a market up into distinct groups of buyers who have different needs, characteristics or behaviors, and who might require separate products or marketing programs. A Segment is a group of consumers who respond in similar way to a given set of marketing efforts (demand is influenced by the same factors).
Bases of Segmentation

• Geographic – nations, states, regions, cities
• Demographic – age (glare, taste, touch), gender, family size, family life cycle, income, occupation, religion, race, nationality
• Psycho-graphic – social class, lifestyle, socio-economic, values - AIO or personality                           characteristics
• Behavioral – occasions (Valentine’s Day), types of benefits sought, user status (new, regular,               ex/non), usage rate, loyalty status, attitude & readiness stage

Marketers use multiple segmentation bases to get a smaller & better defined target group. E.g. Geo-Demographic Segmentation – GEO - City, DEMO - low income = low income city dwellers.
Business Markets are segmented by personal characteristics, demographics, operating variables, situational factors & purchasing approaches.
International Markets are segmented by Geographic’s, Economics (Developed), Political/Legal, Cultural (language). Inter-Market Segmentation is segments of consumers with similar needs/buying behaviours located in different countries.
Requirements For Effective Segmentation
1. Measurable – size, purchasing power & profile of the segment must be measurable
2. Accessible – can effectively reach & serve the segment
3. Substantial – large or profitable enough to serve
4. Differentiable – the segments are conceptually distinguishable & respond differently to marketing mix programs
5. Actionable – effective programs can be designed for attracting & serving the segments

Targeting is about evaluating each segment’s attractiveness & selecting 1 or more segments to enter. A target market is a group of customers for whom a seller designs a particular marketing mix.
Evaluating Market Segments

• Size & Growth – collect data on growth rates, sales & expected profitability. Right size & growth is a relative matter
• Structural Attractiveness – number & aggressiveness of competitors, substitute products & powerful buyers/suppliers
• Company Objectives & Resources – Mesh with the company’s long run objectives
•         Selecting Target Market Segments
• Undifferentiated/Mass Marketing
•         Ignore market segment differences & target the whole market with 1 offer (to appeal to the most         buyers)

• Focuses on the common needs of consumers rather than on what is different
• Differentiated/Segmented Marketing
• Firm decides to target several market segments & designs separate offers for each one
• Gain stronger market position & more sales in each targeted segment
• Attain higher total sales but usually at a higher costs (compared to mass marketing)
• E.g. Toyota Corporation - Corolla, Camry, Aurion + Lexus
• Concentrated/Niche Marketing
• Firm targets a large share in a few segments or niche’s
• Fine tune market mix effectively to its targeted niche
• usually less competition – may be overlooked by large competitors
• Many firms start up in niches & broaden markets served after establishment
• Micro & Local/Individual Marketing
• Tailoring products & marketing programs to the needs/wants of specific individuals & local                 customers
• Local Marketing – easier with communications technology, higher marketing costs, may dilute             brand image
• Individual Marketing – 1 to 1 marketing, custom made products, new technologies help e.g.               Nike+.

Differentiation and Positioning
A products position is the way the product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products - based on perceptions, impressions & feelings. E.g. Porsche positioned as a performance car.

Step 1 – Identify A Set Of Differentiating Competitive Advantages Upon Which To Build A Position (General To The Industry)
Perceptual Positioning Maps shows consumer perceptions of their brand against competing brands on important buying dimensions.

Step 2 – Identifying and Choosing the Right Competitive Advantages
Competitive advantage (gained by providing greater customer value - lower prices / more benefits) occurs from differentiation

• Product Differentiation – features, performance, style, consistency, reliability, durability & design
• Service Differentiation – speedy, convenient or careful delivery, installation or repair
• Channel Differentiation – channel coverage, expertise & performance. Amazon has smooth                 functioning direct channel
• People Differentiation – hiring & training employees better than competitors
• Image Differentiation – establish images to convey offerings distinctive benefits & positioning +             symbols & sponsorship

A company needs to avoid under positioning, over positioning & confused positioning. Differences that are important, distinctive, superior, communicable, pre-emptive (can’t copy), affordable & profitable are worth establishing
Possible positioning strategies can include product attributes, benefits offered usage occasions, users, against a competitor, away from competitors, product class.
Step 3 – Selecting An Overall Positioning Strategy
The full positioning of a brand is known as the value proposition – the full mix of benefits upon which a brand is differentiated & positioned. It is the answer to why should I buy your brand?.

• More For More – most upscale G/S, higher price, vulnerable to more for the same. E.g. iPhone
• More For The Same – Lexus Vs BMW
• Same For Less – Discount stores, Bunning’s
• Less For Much Less – 2$ Store
• More For Less – hard to sustain long term

Developing A Positioning Statement
This position must be communicated & delivered & monitored & adapted over time to meet consumer needs. E.g. more for more – high quality products, high price, distribute through high quality dealers & advertise in high quality media.