STP – What Is It?
Decision Making Process
• Segmenting
Strategic level- STP
STP Procedure
Market
segmenting
Targeting
– Dividing market according to some set of criteria into relatively
homogeneous groups of customers
• Targeting
Positioning
– Involves determining the attractiveness and profitability of created
segments and then choosing the strategy
• Positioning
– Creating value and image of company’s offer, which should lead to
obtaining a distinguished and important place in consumers’ minds
through differentiation and developing competitive advantage
Tactical level– marketing-mix
Product
Place
Price
Promotion
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Advantages of Customer Segmentation
Phases in STP Procedure
Segmenting
1. Identification of segmentation criteria
2. Dividing the market
3. Defining a profile of each segment
Targeting
1. Segment attractiveness assessment
2. Segment profitability assessment
3. Choosing market strategy
Positioning
1. Differentiation tools
2. Positioning process
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Weaknesses and Limitations
• You know your customer better - adjusting product to
consumer’s needs
• Make fact-based decisions rather than assumptions
• Better allocation of financial resources = effectiveness
• Keeps us aware of market changes
• Helps us discover new opportunities
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• If you don’t identify all the areas to investigate, you
might omit an important one; then your results will be
inaccurate.
• Due to increasing complexity of today’s markets and
the proliferation of customer segments, segmentation
becomes more difficult.
• It is rather expensive.
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Segmentation Procedure
Criteria and Descriptors
Segmentation: Conditions
1. Identification of segmentation criteria
2. Dividing the market
3. Defining a profile of each segment
Do customers have similar
needs and wants?
distinct
Can we collect information
about the segment?
measurable
Are the segments profitable?
• Segmentation criteria (basis)
– Characteristics used for describing customers,
which allow distinguishing different market
segments
sizeable/profitable
• Descriptors
Can the segments
be reached?
accesible/real
– Additional consumer characteristics used for
profiling
Internally homogeneous, externally heterogeneous
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Segmentation Criteria 4 B2C
Demographics
Geographic
Demographic Criteria
Based on secondary
data
Descriptors
• Gender, age, family size, family life cycle
• Typical segmentation criteria: region, state,
district, municipality, town
• Also: climate, population density
• Size of town, administative, climate
Socio
Socio--economical
• Education, job, social class, religion, race,
nationality, income
Psychographic
• Personality, lifestyle, innovativeness, risk
taking
Behavioral
• Status, consumption level, brand loyalty,
attitude, purchase readiness
Preferencial
Geographical Criteria
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• Typical segmentation criteria:
– age,
– generation,
– gender,
– family size,
– family lifecycle,
– lifestage, etc.
• Advantages: easy access to info
• Disadvantages: too general, ignores other
important characteristics
Based on secondary
data
• Other criteria should be used as well Descriptors
• type of preferred benefits, place of
purchase, reason of purchase
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2
Geodemographics
MOSAIC
Socio-Economic Criteria
•
•
•
•
•
•
•
• ACORN
– A Classification of Residential Neighborhoods
– Postcode areas are broken down into 5 lifestyle
categories, 17 groups, and 56 types
– tool used to identify and understand the UK
population and the demand for products and services
• MOSAIC
– based on the premise of assigning lifestyle groups to
differing geographic catchment areas
– segmentation system consists of sixty segments which
are presented as twelve separate groups
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VW
VW Polo
up!
Passat
32-51.000
46-65.000
PLN
PLN
76-195.000
PLN
Education level
Occupation / job
Social class/group
Religion
Race
Nationality
Income/expenses level
Based on secondary
data
Descriptors
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Example – Behavioral Criteria
Behavioral Criteria
• Typical segmentation basis:
Occasions – ordinary vs special
User status – non-user, ex-user, potential, regular
Usage intensiveness – occasional, average, intensive
Loyalty – none, average, strong
Purchase readiness – unaware, aware, informed, interested, ready
to buy
Attitudes toward the product – enthusiastic, positive, neutral,
negative, hostile
Media usage – frequency, variety, breadth of use, depth of use,
duration, usage time
Skoda Octavia
Fabia
citygo
33-60.000
30-46.000
58-120.000
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95%
Bourbon (20%)
5%
81%
Dog food(30%)
19%
87%
Beer (41%
13%
83%
CocaCola (67%)
17%
83%
Instant powdered cake (74%)
17%
high intensity
75%
Paper towels (90%)
25%
79%
Shampoo (94%)
21%
71%
Toilet paper (95%)
29%
low intensity
75%
Soaps and detergents (94%)
0%
17
10%
20%
30%
40%
25%
50%
60%
70%
80%
90%
100%
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3
Psychographic Criteria
Preferences
• Type of preferred benefits
CONSUMER PYRAMID
CREATORS
OF CULTURE
Segmentation basis include: life style,
personality, interests, etc.
Basic areas of marketer’s interest include:
– Low price, economy, convenience, durability, reliability,
etc.
• Preferred purchase place
– Modern-traditional trade
– Electronic-stationary trade (click vs brick)
• Reasons of purchase
– business, holidays, family (trip)
– For oneself, gift
Require empirical research
Creators of
culture
Modernists
Avangarda
Label lovers
Early
adopters
Typical
Urban and
tribal, often
belong to
niche
subcultures.
Against
social
norms, live
as they look.
Often do
extreme
sports
Sophisticated,
urban,
expressive –
want to
make an
impression.
Understand
brands and
fashion,
aware of
trends. Like
to be seen in
right places
with right
people
Seek things
with very
visible labels.
Labels serve
as
confidenceboosters,
want to
belong to a
group.
Daring,
urban pose
covers
uncertainty
and shyness
Funny,
sociable, like
flirting – live
the moment.
Impulsvie
shopaholics,
always seek
new things
(at attractive
price). Like
sharp,
colorful,
sexy look
Less selfconfident
and less
interested in
fashion, but
still
fashionable.
Adopt new
styles late.
More rational
and quality
oriented
discovery
Mission,
discovery
Social thing,
seeking,
discovery,
therapy
Social thing,
mission,
discovery
Social thing,
seeking,
discovery,
therapy
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EARLY
ADOPTERS
AVANGARDA
TYPICAL BOYS AND GIRLS
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Clothes
atelier
OPINION
LEADING
VINTAGE
Levi’s®
RED™
urban
underground
MAINSTREAM
1. Leading Edge Originators
designer
chic
2. Trend Diffusers
Levi’s®
TYPE 1
JEANS
Levi’s®
RED TAB®
Finish Concept
mission,
social thing
(boys)
Social thing,
seeking,
mission (girls)
LABEL
LOVERS
• Social behavior – free time activity, recreation, sport, holidays,
shopping habits
• Interests – music, books/magazines, science, history, fashion
• Opinions – social issues, aesthetics, economical, political,
cultural, religious, educational
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Creative,
artistic,
creating
opinion,
original, selfinspired,
borrow ideas
from various
cultures and
sources. Selfconfident,
don’t need
and don’t look
for new
brands
MODERNISTS
street &
board
Levi’s®
ENGINEERED
JEANS®
casual
basics
Levi’s®
RED TAB® jeans
jeanseria
diffusion street
jeans
specialist
sports/
leisure
diffusion
chic
street
fashion
Local independent
fashion & sport
smart
fashion
3. Mainstream
Local independent
smart casual
BASIC JEANSERIA & OTHER BASIC OUTLETS
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Segmentation Criteria 4 B2C
Demographics
Geographic
Matrix Segmentation - Sweetener
Segmentation Methods
• Gender, age, family size, family life cycle
Health issues
Depend on:
• Size of town, administrative, climate
– Number of criteria used
Age and
consumption
place
• one, multiple
Socio
Socio--economical
• Education, job, social class, religion, race,
nationality, income
– Way of using the criteria
Psychographic
• Personality, lifestyle, innovativeness, risk
taking
– Quality of data used
Behavioral
• Status, consumption level, brand loyalty,
attitude, purchase readiness
Preferencial
Demand Criteria
descriptors
Demand Criteria
Competition
Criteria
• Current size of the segment
– How big is the segment?
– Measures: number of customers, sales – quantity, sales - value
Accessability Criteria
• Growth rate
Current size
Number of
competitors
Brand
awareness
Growth
dynamics
Exit barriers
Access to
distribution
Potential
size
Offer
differentiation
– What is the growth rate of the segment?
– Measures: change in number of customers, change in quantity and
value of sales
Marketing-mix
Segment B
Criteria
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Segment Attractiveness Assessment
Segment size
Segment B
profile
descriptors
other
Kids HORECA
Segment Attractiveness
Criteria
innovators
Adults HORECA
• type of preferred benefits, place of
purchase, reason of purchase
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Segment A
dieting
Kids –
home
• Subjective approach, sindicative data (TGI, PRIZM),
primary research
Segment A
profile
overweight
Adults –
home
• Multiphase (nested), matrix (parallel)
Profiling Segments
diabetics
No health issues
• Last year, 3 years
• Potential size of the segment
– What is the potential size of the segment?
– Measures: potential number of customers (market penetration),
increase of amount of purchased goods, increase of price per unit
Compatibility
Substitutes
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Competition Criteria
Market Presence Criteria
Segment Assessment: Ranking
• Number of competitors
• Market position
– How man competitors are there in the segment?
• Entry barriers
– How easy is it to enter the segment?
• Costs
• The easier – the less attractive
– What are the costs of market presence?
– Measures: promotional expenses, intermediaries’ profit margin
• Offer differentiation
– How differentiated is the market offer?
• Compatibility
• The more differentiated – the more attractive
– Are customer preferences compatible with offer characteristics and
company’s strengths?
– Measures: customer satisfaction, customer loyalty
• Presence of substitutes
– How many substitutes are there?
• The more – the less attractive
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Market Service Strategy
Mass
marketing
Full-scope
marketing
Selective
marketing
Segment Criterion Criterion Criterion Sum total
1
2
3
A
1
2
2
5
B
2
3
4
11
C
3
1
3
7
D
4
4
1
9
– What is the company’s/brand’s position on the market?
– Measures: segment share, segment penetration, brand/company
awareness
• The more – the less attractive
Concentrated
marketing – big
segment
Concentrated
marketing –
small segment
Niche
marketing
Low costs
quality
Niche A
In our case:
Cost, income, competition and compatibility
Mass Marketing
Full-Scope Marketing
• Full-Scope Marketing
• Mass marketing
1-2-1
marketing
– A company targets all segments – each with a different
offer
– A producer practices mass
production, distribution and
promotion of the offer for all
customers (or most of them)
quality
No problems
No problems
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Homogeneous
customer needs
Early stages of
product life cycle
Very price sensitive
customers
One brand
Large financial
resources
Strong market
position
Many brands
High marketing skills
Low costs
Low costs
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Selective Marketing
Concentrated Marketing
• Selective Marketing
Concentrated Marketing – Large
segment
• A company chooses one, large and
highly attractive segment
– A company chooses at least 2 (but not all) segments which
are most attractive. Usually segments with high similarity
are chosen
Similar segments
Many brands
Concentrated Marketing
Avoidance of
competing with
market leader
Concentrated Marketing – Small
Segment
• A company chooses one, most
attractive segment
Biggest segment
Economy of scale
Most attractive
segment
Avoidance of
competing with
market leader
One brand
Low costs
One brand
High marketing skills
High marketing skills
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Niche Marketing
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Determinants of Market Service Strategy
1 to 1 Marketing
• Niche Marketing
• Marketing 1 to 1
– A company focuses on a niche – small
size and little or no competition
•
•
•
•
•
– All marketing activity is focused on particular
customers
Attractive niche
Avaidance of
competition with
other companies
Few customers
Individual offer
One brand
High marketing skills
Data base
High marketing skills
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Company’s resources
Homogeneity of product
Homogeneity of market (needs and wants)
Competitors’ marketing strategies
Product life cycle
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Procedure: Positioning and
Differentiation
1
POSITIONING
(AND DIFFERENTIATION)
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3
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Differentiation tools – offer attributes (product, service, price),
company’s characteristics and qualities relating to market
position of the company which allow to distinguish the offer
• Identify competitors
• Determine product characteristcs important for customers
• Compare your product with competitors’
Differentiation methods:
• Operational excellence
• Closeness to the customer
• Product innovativeness
• Choose differences
• Make perceptual map (competition context)
• Choose the spot on the map and position yourself!
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Product differentiation
•
•
•
•
•
•
Differentiation
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Service differentiation
•
•
•
•
•
•
characteristics/parameters
concordance with standards
durability
reliability
easy to fix
design
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Personnel differentiation
delivery
installation
customer training/instruction
advice
repair
other ;-)
•
•
•
•
•
•
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competences
politeness
credibility
reliability
speed of reaction
communication
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Image differentiation
Choosing Market Position – Positioning
• identity
• image:
– symbols
– audiovisual and printed
media
– atmosphere
– events
What
differences
• Important
• Out-standing
• Safe
• Connected
• Additional criteria
How many
differences
• 1 dimension
• 2 dimensions
• Multidimentional
How
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• Strengthening current position
• Seeking new position
• Competition repositiong
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What Differences?...
•
•
•
•
•
•
Positioning 1D
Creation of Unique Selling
Proposition – focus on one
quality/attribute and try to
become a leader in that
field
Important
Beneficial
Outstanding
Safe
Logically connected
Other: profitable, easy to communicate
safe
durable
comfy
family
Positioning 2D
– Positioning is based on two
attributes which distinguish the
offer on the market, there
should be logical connection
between those attributes
Ferrari
„Number 1 among sport cars”
Swedish
Walmart
Save money. Live better.
1D => 2D
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Multidimential Positioning
– Positioning based on 3+
attributes – risk of losing
credibility and
expressiveness
How to Position Your Offer
GlaxoSmithKline
AQUAFRESH
Communicating
Main issue:
1. Strengthening current position:
Continuation of current strategy
• Design the content of promotion
3 benefits:
•
•
•
Complementing elements:
2. Seeking new position
Protection against decay
Fresh breath
White teeth
3. Competition repositioning
„Stolichnaya is
different. It is
Russian”
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–
–
–
–
–
–
Forms and tools of promotion
Distribution channels
Points of sale and customer service
Product
Packaging
Price
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Positioning Mistakes
• Wrong positioning
– Product/brand do not have a desired place on the market (in consumers’
minds)
• Limited
– Do not manage to convey the real and full image of a product/brand
• Misleading
– Product/brand do not have an obvious and clear image (frequent changes)
• Doubtful
– Attributes used in positioning strategy are not convincing
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