STP Marketing

Marketing is everywhere and everybody is being targeted for one product/service or another. One important thing to consider is how marketers select their target market. How do they identify a market and how do they find the right customers? This can be achieved using segmentation, targeting and postioning.

Segmentation
Targeting
Positioning

=STP

Segmentation is when marketers identify a need that a group of people have. A market can be subdivided into smaller branches; for example John Freida is a leading hair care brand and creates products for all hair types. They have noticed a customer demand for products for coloured hair and have created distinct, individual ranges for blondes, brunettes and redheads. Jacamo, a clothing website for larger sized men, has recognised the growing trend in the male population's interest in fashion but realised that most fashionable clothing was aimed at young, thin men. Jacamo segmented a larger market (men's fashion) and targeted men who need larger clothing sizes but still want to look good.

An example of John Freida's Brilliant Brunette range

Click to see a Jacamo Advert - notice the profiling!!

Segmenting is often done by 'profiling'. A brand can create the ideal customer and base their advertising campaigns around what this fictional character wants and does. Say Dior has produced a new perfume for ladies, targeting sophiscated, fashion conscious businesswomen. Their profile could be called Alexa, she's the Vice President of a large production company. Her Dior suits are always perfectly tailored and she frequents only the most exclusive bars and clubs in London. She has a close circle of female friends who are equally as self confident and successful. The perfume advertisements will be placed in high end fashion magazines, like Tatler and Vogue. Television commercials will air during programmes Alexa would like, perhaps Lipstick Jungle and The Apprentice. She will be offered a test of the perfume as she walks into Harrods or Selfridges on the weekend. These are magazines, shows and stores that Alexa likes, therefore the target market will like them too.

"Alexa"

So what is the point in segmenting? A company can better match the needs of their customer to the product, this will create brand loyalty and the customer will continue to use this product as the company has focussed on what their market needs, ideally more so than competition. This means that marketing messages can be more specific, because the target market is so distinct. In return, this can enhance profits, particularly with premium brands, because a loyal customer will be happier to pay for the product they feel is almost tailored to their needs. From a marketer's point of view, they can increase their market share if they have created a more likeable product or brand image than their competitors. Segmentation doesn't necessarily increase market size, but market share can strengthen by targeting a subcategory of a larger market.

For example:

By segmenting a market, you are targeting the 'high end' of this image. In relation to food retailers, Tesco would the be 'mass' section, Waitrose could be considered 'mainstream' and a family butcher would be 'high end'. The butcher has a small, distinct market- those who will pay for fresh, quality beef as opposed to those who will buy frozen, low-grade meat from Asda.

Certain criteria should be followed for segmentation to be successful. It should be...

• Effective - Is there a genuine need for this product or service?
• Identifiable - How will you find the customers?
• Profitable - Is the segment large enough to create a decent profit?
• Accessible - Is this segment easily reached?
• Actionable - Is the segmentation possible?

Segmenting may be broken down into four main markets...

• Geographic - This option divides a market by country, region, county, town, postcodes et cetera.
• Demographic - This uses age, gender, race, occupation, religion et cetera to divide a market.
• Psychographic - This relates to division by social class, life style and personality.
• Behavioural - This divides people by their knowledge, values and attitudes towards a product or service.

... which can be mutually exclusive.

This website defines market segmentation well - Net MBA

Further information on the reasons why segmenting is done - Tutor 2 U

Secondly, targeting is the point at which each segment is analysed to conclude whether or not it is a worthwile, profitable market. The one with the greatest prospects will be chosen as the one to promote. 

i.e. A company wants to launch a new style of shoes, which will be most profitable? Luxury, high fashion inspired shoes? Casual, daywear shoes? Integrated fitness/posture shoes?  Kids' shoes? All will be analysed and researched and the style with the most potential will be marketed.

 

Doyle's Five Factors in Assessing Segment Attractiveness:

1. Segment size - number of potential customers
2. Segment growth - growing or declining
3. Segment profitability - Porter's 5 Forces
4. Current and potential competitors
5. Core capabilities - strengths and weaknesses of segment

Lastly, we come to positioning. How will the customers within the segment rate the product/service compared to the competition? This is based on customer perception and it is easy to find out how a product compares to another using perceptual maps. The map below is an example of a perceptual map, rating brands on practicality, classiness, sportiness and how conservative they are. This brand is clearly very practical yet still classy, whereas Brand F is seen to be slightly conservative and not so practical. This is obviously a very vague depiction but for this purpose it works- simply to show how one brand relates to another on a perceptual map.

Going back to 'Alexa' and her Dior perfume. Using the above map, replacing practical with high quality and classy with luxurious, the yellow brand is where Dior would aim to be. If sporty was replaced with low quality and conservative with basic, and Dior was Brand C, they would need to reevaluate their image and products.

Other examples of perceptual maps:

To identify where one brand's particular focus should be.

They can also be very detailed.

Coming back to postioning- there are ways a marketer can make their brand stand out against the competition...

• Strengthen the current position - improve a product so that it is preceived as better quality or cooler than the rest (MP3 players... iPods are without question the 'coolest')
• Find an unoccupied position - create a product that does things it competitors do not (Arial washing detergent, working best at a lower temperature)

• Reposition the competition - convincing customers to view your competitor in a different way (Pringles took up a large percentage of the crisps market share until Wise listed Pringles' contents as harsh sounding chemicals while Wise products were simply 'potatoes, vegetable oil and salt'. Pringles went down in market share.)

• Head to Head - competing directly with brands and products offering similar attributes (Compare the Market vs. Go Compare)

Compare the Market  or  Go Compare ?

This whole process of STP leads to the 4 Ps, product, price, place and promotion. From here a product will start being sold to its target market and, if the STP has been well executed, the product should sell well!