Marketing Segmentation, Targeting & Positioning or STP Process

Wed, 03/12/2014 - 22:59 -- Gulzar Ahmed

What is STP Process

In every business either on small or large scale marketing forms a major platform of operations. Marketing is the base of successful business and it is due to marketing that a business venture flourishes touching the heights of glory. Marketing and other expert professional have needed an aggressive effort for promoting the product.

There are three steps that are required to promote a product successfully. These steps are segmentation, targeting and positioning also known as STP Process. I will discuss each step STP Process in detail.

  1. Market Segmentation
  2. Market Targeting
  3. Market Positioning

stp process mba marketing notes

Market Segmentation

'Market Segmentation' is one of the most important pillars of marketing strategy. Segmenting can be define as “dividing the whole market into different smaller groups of buyers with distinct needs, characteristics, or behavior that might require separate products, services, market mix and marketing strategies”. Suppose, Sony Ericson designs mobiles for boys and girls, airlines offer both business and economy classes. There are four common types of segmentation:

  • Geographic segmentation
  • Demographic segmentation
  • Psychographic segmentation
  • Behavioral segmentation

Market Targeting

After dividing the market into different segments next step is to choose one or more segment to enter in the market.  For this purpose marketer analyze the segment weather it is beneficial for long run or not, this evaluation and selecting of segment is called targeting. Simple definition of segmenting is “process of evaluating each market segment’s attractiveness and selecting on or more segments to enter”. We can also say that targeting is actually cutting up the market pie into different parts. Segmentation means that, instead of sending your message to a crowded hall, a company should pitch their product to a group of attentive listeners in a quiet room.

steps in market segmentation, targeting & positioningSteps of Segmenting

Evaluate Market Segments

  1. Segment size & growth
  2. Segment attractiveness
  3. Company’s objectives & resources

Selecting Target Market segment

  1. Undifferentiated or Mass marketing
  2. Differentiated marketing
  3. Niche marketing
  4. Micro marketing

Market Positioning

Once the market is divided into smaller and more manageable categories, in the next step companies carve out a position within each market segment. Positioning defines as “the process by which marketers try to create or build an image (identity) of their products or services in the mind of their targeted segment”. This mean determining the perception of company’s product or service in the target segment or this is the way to understand that why a customer should prefer your product or service instead of competitors. There are two type of market positioning.

  1. Re-positioning involves changing the identity of a company’s product or service relative to competitors. This is called changing own product image.
  2. De-positioning involves attempting to change the identity of competitor’s products or services. This is called changing competitors product image.

When a company fails to carve out its own position, then the company pushed into a restrictive corner by the rest of the competition, which can be hard to reverse once it has occurred. A company must consider these elements of market choices to develop market position of their product or service.

  1. Pricing
  2. Quality
  3. Service
  4. Packaging