Segmentation, targeting and positioning (STP) is a marketing model that assists classifying population segments according to their needs and common characteristics, selecting specific segments and developing products and services for this particular segment.

The basic premise behind STP is that you cannot sell everything to everyone. Therefore, you need to limit your product and service offerings and target limited population segment that have higher chance to purchase them. Today, Amazon is trying to be everything for everyone, but even Amazon started only as an online bookseller to gradually increase its offering to increasing numbers of customer segments.

STP is effective because it allows personalisation of products and services to the needs and wants of selected consumers. STP approach shifts the focus from product to consumers and helps in satisfying customer needs and wants profitably.

 

Application of Segmentation, Targeting and Positioning

Segmentation targeting and positioning initiatives include the following stages:

1. Segmenting the market. Segmentation is dividing population on the basis of their common traits and characteristics. Segmentation helps identifying niches with specific previously untapped needs. There are many types and bases of segmentation. The table below the most popular types of segmentation.

Type of segmentation	Segmentation criteria	Example
Geographic	Region	North America, Asia, Europe
	Density	Urban/rural
	Climate	Hot, cold, wet, dry
Demographic	Age	Teenagers, middle aged, elderly.
	Gender	Males & Females
	Life-cycle stage	Bachelor Stage young, single people not living at home Newly Married Couples young, no children Full Nest I youngest child under six Full Nest II youngest child six or over Full Nest III older married couples with dependent children Empty Nest I older married couples, no children living with them Empty Nest II older married couples, retired, no children living at home Solitary Survivor I in labour force Solitary Survivor II retired
	Occupation	Students, employees, professionals, senior manager, executives
Behavioral	Degree of loyalty	‘Hard core loyals’ always purchase the product / brand in question. ‘Soft core loyals’ will sometimes purchase another brand ‘Switchers’ will not specifically seek out a particular brand, but rather purchase the brand available to them at time of need, or that which was on sale
	Benefits sought	Cost saving, efficiency, status
	Personality	Easygoing, determined, ambitious
	User status	non-users, potential users, first-time users, regular users, or ex-users of a product
Psychographic	Social class	Lower class, working class, middle class, upper class
	Lifestyle[1]	Resigned, Struggler, Mainstreamer, Aspirer, Succeeder, Explorer, Reformer
	Risk aversion	Risk avoiding, Risk neutral Risk loving
Beliefs & values	Religion	Religions, non-religions
	Politics	Politically active, not interested in politics
	Nationalistic	Pride in one’s own nationality, not interested in nationality

 

Businesses do not need to consider all types of segmentation listed above and they can choose only the ones most relevant to their business. For example, Apple does not have to consider geographic segmentation with climate criteria because weather conditions do not largely effect the usage of consumer electronic products. However, the same cannot be said regarding Canada Goose, a producer of premium jackets, sweatshirts and footwear. For Canada Goose geographic segmentation with climate criteria is important because only consumers living in cold places might be interested to purchase their products.

2. Targeting the selected segment(s). In this stage businesses evaluate potential long-term value of each segment and choose one or more segments. Target customer segment are those members of population that are the most interested in your products and services. In other words, you aim to target individuals and entities among the population that have aims and needs resonating with your respective products and services.

The ideal segments to be targeted are the ones that will grow in the future.

3. Positioning products and services. At the last stage companies develop marketing mix for each chosen segment. It is about identifying proposition for chosen customer segments. Positioning is about competitive advantage and what sets apart the company from the competiton in the mind of the target customer segments

There are many types of positioning:

– Mono-segment positioning. Positioning appeal is made towards a single customer segment.

– Multi-segment positioning. More than one segments are exploited at the same time with different products or service packages.

– Standby positioning. Specific positioning of the product/service awaiting changes in the market to find demand.

– Anticipatory positioning. Positioning of products or services for a market segment that has low turnover with the anticipation that the turnover will increase in the future.

– Imitative positioning. Close imitation of positioning strategies of market leaders.

– Adaptive positioning. Periodical repositioning of products and services according to changes in the segment.

– Defensive positioning. This type of positioning is usually used by market leaders through introducing an additional brand in the same industry in order to deter other companies from entering the industry.

– Stop-gap positioning. Making investments in currently unprofitable brand due to profitability expectations on long-term perspective.

– Quality product positioning. A quality-based product positioning initiative emphasizes the quality of the product as its key selling point

– Aesthetic product positioning. Aesthetic-based product positioning primarily focuses on emphasizing how the look and appearance of a product fits a unique and distinctive image that appeals to a specific demographic of people.

– Sustainability product positioning. Sustainability-based product positioning primarily focuses on describing how their products are sustainable and reusable. Eco-friendly companies usually employ this type of product positioning strategy because it allows them to show how their services and products are safe for the environment and communities. This type of product positioning may sometimes use company comparisons, typically for companies that aren’t sustainable.

– Functional positioning. Solving specific problems customers are facing.

– Experiential positioning. Focusing on emotional connection customers have with product, service or brand.

In this portal you can find STP analysis of some major companies.

[1]According to Cross Cultural Consumer Characterization by Young & Rubican