K E Y C O N C E P T S

Segmentation-Targeting-Positioning (STP)
 Identify and profile distinct groups of buyers who differ in their needs and preferences (market
segmentation).
 Select one or more segments to enter (market
targeting).
 Establish and communicate the offering’s distinctive benefit(s) to each target segment (marketing
positioning).

Levels of Market Segmentation




Segment marketing
Niche marketing
Local marketing
Individual marketing

Segment Marketing

Market segment—a group of customers who share a
similar set of needs and wants.

Homogeneous preferences—exist when all consumers have roughly the same preferences.

Diffused preferences—consumers vary greatly in their preferences.

Niche Marketing
 Niche—a more narrowly defined customer group seeking a distinctive mix of benefits.

Attractive when:

Customers have a distinct set of needs

Fairly small but has size, profit, and growth potential

Customers will pay a premium

Nicher gains certain economies through specialization

Local Marketing
 Marketing programs tailored to the needs and
wants of local customer groups in particular trading areas, neighborhoods, even individual stores.
 Grassroots marketing—concentrating on getting as close and personally relevant to individual customers as possible.

Individual Marketing
 Leads to:


“Segments of one”
“Customized marketing”

“One-to-one marketing”
 Customerization—combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice.

Bases for Segmenting Consumer Markets
 Geographic
 Demographic
 Psychographic
 Behavioral

Geographic Segmentation
 Dividing the market into different geographical units such as:

Nations

States


Regions
Counties


Cities
Neighborhoods

Demographic Segmentation
 Divide the market into groups based on age and other variables:

Life-cycle stage

Life stage


Gender
Income


Generation
Social class

Psychographic Segmentation
 Psychographics—the science of using psychology and demographics to better understand consumers.

Buyers divided into groups on the basis of:


Psychological/personality traits
Lifestyle

Values

Behavioral Segmentation
 Divide consumers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product.
 Behavioral variables:

Occasions

Benefits

User status

Buyer-readiness stage

Loyalty status

Attitude

D E M O G R A P H I C
O P E R A T I N G V A R I A B L E S
P U R C H A S I N G A P P R O A C H E S
S I T U A T I O N A L F A C T O R S
P E R S O N A L C H A R A C T E R I S T I C S

Effective Segmentation Criteria
 Measurable

Substantial

Accessible

Differentiable
 Actionable

Evaluating and Selecting Market Segments
 Must look at two factors:

Segment’s overall attractiveness

Company’s objectives and resources

Patterns of Target Market Selections

Single-segment concentration

Focus on one segment
 Selective specialization

Select a number of segments
 Product specialization

Specialize in making a certain product for several segments.
 Market specialization

Serve many needs of a particular customer group.

Full market coverage

Serve all customer groups with all the products they might

Full Market Coverage
 Undifferentiated marketing—firm goes after the whole market with one market offering.

Differentiated marketing—operate in several market segments and design different programs for each segment.