Segmentation, targeting and positioning
STP means dividing a market into meaningful groups, choosing the segments worth serving and building a distinct place in their minds against rivals.
Bases for segmenting consumer markets
| Base | Variables | Indian example |
|---|---|---|
| Geographic | Region, state, city size, urban-rural, climate | Small sachets and low-price packs for rural markets |
| Demographic | Age, gender, income, occupation, education, family life cycle, religion, generation | Titan for adults, Fastrack for youth, Sonata for value buyers |
| Psychographic | Lifestyle, personality, values (VALS by SRI) | Health-conscious buyers of oats and millets |
| Behavioural | Occasion, benefits sought, user status, usage rate, loyalty, readiness, attitude | HUL's Lifebuoy (germ protection) vs Lux (beauty): benefit segmentation |
Targeting: five patterns (Abell)
| Pattern | Meaning |
|---|---|
| Single-segment concentration | One product for one segment |
| Selective specialisation | Several attractive but unrelated segments |
| Product specialisation | One product sold to several segments |
| Market specialisation | Many products for one customer group |
| Full market coverage | All customer groups with all the products they need |
Targeting strategies
Positioning
| Idea | Meaning |
|---|---|
| Positioning | Designing the offer and image to occupy a distinct place in the target's mind (Kotler) |
| Points of parity (POP) | Associations shared with rivals; needed to be accepted in the category |
| Points of difference (POD) | Strong, favourable and unique associations (Keller) |
| Perceptual map | Plots brands on attributes buyers use, to reveal gaps |
| Value propositions | More for more, more for the same, the same for less, less for much less, more for less |
| Positioning errors | Underpositioning, overpositioning, confused and doubtful positioning |
Exam points
- Wendell Smith (1956) contrasted product differentiation with market segmentation.
- Benefit segmentation was proposed by Russell Haley (1968).
- VALS was developed at SRI International (Arnold Mitchell, 1978).
- Business markets are segmented by demographics, operating variables, purchasing approach, situational factors and personal characteristics (Bonoma and Shapiro's nested approach).
- Underpositioning: buyers have only a vague idea of the brand. Overpositioning: too narrow an image. Confused: too many claims or changes. Doubtful: claims are hard to believe.
- Maruti built its position on fuel efficiency and a low cost of ownership.
NET asks you to classify a variable into its base (lifestyle is psychographic, usage rate is behavioural), name Abell's targeting patterns, spot the positioning error, and match Smith, Ries-Trout and Reeves.
Typical MCQ: “Segmenting by 'usage rate' uses which base?” Behavioural. Trap: it is not demographic; behavioural covers occasion, benefits, user status, usage rate and loyalty.
Typical MCQ: “A brand claims so many benefits that buyers are unsure what it stands for. Which error is this?” Confused positioning. Trap: underpositioning means a weak, vague image, not too many claims.
Good segments are MSADA: Measurable, Substantial, Accessible, Differentiable, Actionable. Positioning errors: Under, Over, Confused, Doubtful.