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2.2.1 Understanding STP

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1. Segmentation

  • Definition: The process of dividing a market into distinct, homogeneous groups based on common characteristics.
  • Purpose: Helps identify and categorize consumers into manageable and meaningful segments for targeted marketing efforts.
  • Bases for Segmentation:
  • Demographics:
    • Age: (e.g., 20–30, 31–45, >50 years).
    • Income: (e.g., 25K, 50K, 100K, 200K, 500K per month).
    • Occupation: (e.g., IT, banking, government, consulting, entrepreneurship).
  • Psychographics:
    • Personality: (e.g., extrovert, introvert, flamboyant).
  • Geography:
    • Location: Specific regions (e.g., North India, Western India, mountainous regions).
  • Behavior:
    • Loyalty, usage frequency, and product preference.

Example:

In a geographic area with 100,000 people, segmentation may yield: - Segment 1: Young individuals (20–30 years, income: 25K, IT professionals, extroverts) - 10,000 people. - Segment 2: Slightly older group (22–30 years, income: 50K, banking, introverts) - 25,000 people. - Segment 3: Mature group (31–45 years, income: 100K, government employees, introverts) - 30,000 people. - Segment 4: Similar age but higher income (31–45 years, income: 200K, consulting, extroverts) - 10,000 people. - Segment 5: Older, high-income entrepreneurs (>50 years, income: 500K, extroverts) - 25,000 people.

Outcome:

Segmentation allows marketers to clearly define the population characteristics and their geographic and behavioral specifics.

2. Targeting

  • Definition: The process of selecting specific segments from the segmented market to focus marketing efforts.
  • Purpose: Helps allocate resources efficiently and tailor strategies to specific consumer needs.
  • Selection Criteria:
  • Market size.
  • Growth rate.
  • Attractiveness of the segment.
  • Alignment with organizational goals and resources.

Example:

  • Luxury Watch: Focus on Segment 5 (high-income entrepreneurs) due to their spending power and preference for prestige.
  • Health Drink: Focus on Segment 1 and 2 (young individuals with health-conscious tendencies).

3. Differentiation

  • Definition: The process of distinguishing a product or service from competitors to make it more appealing to the target audience.
  • Purpose: Establishes a unique identity for the product in the market.
  • Ways to Differentiate:
  • Price: Competitive or premium pricing.
  • Quality: Superior product standards.
  • Features: Additional benefits or exclusive attributes.
  • Promotion: Memorable advertising campaigns.
  • Durability: Long-lasting products.
  • Service: After-sales support and warranties.
  • Brand Ambassador: Use of influential spokespersons.

Example:

  • On a perceptual map with axes for price and quality, existing competitors are positioned as follows:
  • Competitor A: High price, high quality.
  • Competitor B: Medium price, medium quality.
  • Competitor C: Low price, low quality.
  • Your Strategy: Position your product as high price and premium quality, occupying a unique space.

4. Positioning

  • Definition: The process of creating a distinct and desirable perception of a product in the minds of the target audience.
  • Purpose: Ensures that consumers associate specific attributes or benefits with the product.
  • Tools for Positioning:
  • Marketing Mix (4P/7P):
    • Product: Features, branding, packaging.
    • Price: Cost strategy.
    • Place: Distribution channels.
    • Promotion: Advertising and messaging.
    • People: Customer service.
    • Process: Service delivery mechanisms.
    • Physical Evidence: Tangible aspects that reinforce the brand.

Example:

  • Coca-Cola positions itself as:
  • A refreshing drink ("Thanda Matlab Coca-Cola").
  • A symbol of social bonding and happiness.
  • A product that tastes great and creates memorable experiences.

Application in Campaigns

Steps Involved:

  1. Data Collection:
  2. Conduct surveys and market research to gather consumer data.
  3. Market Analysis:
  4. Use statistical methods to identify and define segments.
  5. Target Selection:
  6. Choose segments based on attractiveness and alignment with goals.
  7. Competitive Analysis:
  8. Compare your offering with competitors to identify gaps.
  9. Differentiation Development:
  10. Create unique product features or benefits.
  11. Positioning Execution:
  12. Use ad campaigns and marketing tools to communicate the desired perception to the target audience.

Key Takeaways

  • Segmentation: Divides the market into homogeneous groups.
  • Targeting: Focuses efforts on specific segments.
  • Differentiation: Identifies how to stand out from competitors.
  • Positioning: Establishes a unique perception in the consumer's mind.

This process forms the foundation of all marketing strategies, ensuring that businesses effectively reach and influence their desired audience. By implementing segmentation, targeting, differentiation, and positioning (STDP), companies can craft campaigns that resonate with consumers and align with organizational goals.

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