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Segmenting, Targeting & Positioning (STP) By Dr.Vidya Hattangadi What is segmentation? Segmentation is simply the process of dividing a particular market into sections, which display similar characteristics or behavior. There are a number of segmentation variables that allow an organization to divide their market into homogenous groups. Major bases for segmenting the market Geographic segmentation: Geographic factors such as climate, region, state, urban/rural, geographic zones etc are the factors considered in this segment. Demographic segmentation: factors such as age, marital status, sex, family size, religion, caste/creed, income, education, purchasing capacity are considered in this segment. Psychographic segmentation: Elements such as personality traits, attitude, lifestyle, value system are considered in this segment. Volume of purchase: This segmentation is purely based upon volume of the purchase. Why segment the market? It facilitates proper choice of the market. It helps the marketer to distinguish one customer group from another. Facilitates adapting the offer to the target market: It helps the marketer to crystallize the needs of the target buyers. It also helps the marketer to generate accurate sales targets and revenue targets. Makes the marketing effort more economical: The resources of a firm are limited. The segmentation exercise ensures that the marketing effort is concentrated on well defined strategies for chosen segments. Segmentation benefits the customers as well: Segmentation brings benefits not only to the marketer, but the customers as well. When segmentation attains higher level of sophistication and perfection, customers and companies can conveniently settle down with each other. Characteristics/Attributes of effective segmentation For effective segmentation markets must be: Distinguishable from each other Measurable Accessible Sizable Markets with Growth Potential Obviously profitable Compatible with firm’s resource capability Targeting Targeting strategy or targeting is the selection of the customers you wish to service. The decisions involved in targeting strategy include: Which segments to target How many products to offer Which products to offer in which segments Positioning Positioning is a platform for the brand. It facilitates the brand to get through to the target consumer. The significance of product positioning can be understood in David Ogilvy’s word “ The result of your campaign depends on less how we write your advertising but on how your product is positioned” Main concerns in product positioning Consumers mind is like a black box By positioning the firm has to reckon competitors positioning Positioning is not one time effort Positioning is not an afterthought Planning effective marketing strategy Formulating effective marketing strategy is the main concern of marketing planning. Marketing planning shapes future of a particular business unit. Fighting competition, protecting market share and achieving profits are the main concerns of marketing planning. Formulating the Marketing Strategy Selecting the target market Positioning Assembling the marketing mix