STP-Segmentation, Targeting and Positioning

Segmentation:

A segmentation process identifies variables that will maximise the differences between segments while simultaneously minimizing the differences within each segment. The ultimate segmentation scheme from the customer's perspective is mass customization, where each customer is a distinct segment.

Actionable segments share three characteristic:

1. Distinctiveness- different segments respond differently to the marketing mix.
2. Identity- the ability to reasonably profile which customer fall within which segment.
3. Adequate size- to develop tailored marketing programs for each segments to be economically vaible for the firm.

Segmentation variables can be broadly classified into two catagories:identifier and response.
Identifier: based on who the customer are. Here segmentation are based on sex, age, education, and income or size of firm, industry and geographical location in B2B markets.
Response: based on how customer behave. here segmentation are based on primary concern of the customer like in Telecom price or the quality of service.

Marketing person need to understand both to fine tune their understanding of marketing segments.

A company in car repair first devided customer by Age of car-they need more repair, Size of car-higher the value of sale and margin, and Sex of car owner-women more likely to buy additional services. They further devided the customer on the basis of car lover- (allowing them to see the repair to show tangible evidence and follow up with phone calls every six months to remind for another check-up) and utilitarians-( offer news paper to read during repair and guarantee the car for X number of miles without the problem recurring).

Targeting:

It is the process of selecting which market segment the company should actively pursue to generate sales. Now the selected segment can be targeted using
undifferentiated-(target with same marketing mix),
Differentiated(simultaneously targets several market segment each with unique marketing mix, like maruti with maruti, swift, SX4 for different segment), or
Concentrated (selects one segment and concentrates on serving it like over forty male, college graduate with Rs 5,00,000 income) targeting strategies.

Positioning:

Is about developing unique selling proposition (USP) for the target segment.USP should be capable of being briefly communicated by completing the sentence:" You should buy my product because...." here in completing the sentence the answer should be driven by customer benefits and not by product features.
Marketer need to communicate this USP to the customer in the most effective way through the most effective marketing channel so as to reach the right segment.Example: Volkswagen targeted a younger, more educated, more affluent demographic, and an adventurous, confident customer who enjoy driving and even disobey speed limits. It positioned itself rationally as " affodable and German engineered," and emotionally as a " different driving experience more connected to road and world."