Friday, April 10, 2009

What is Segmentation, Targeting, and Positioning (STP) ?

STP often used before marketing programs are planned. STP is related with market research and marketing research. STP uses information about current market size, market shares, concentration of customer base for particular products, potential customers, customer's purchase decision process that gathered from market and marketing research to find out kinds of consumers with different needs, different characteristics, and etc (this is known as Segmentation). For example in the auto market there are consumers that need speed and performance, there are consumers that need safety and luxurious, there are consumers that need an economical auto, there are consumers that need the combination of some needs that have been described, there are consumers that want to have their own imagination car or modified car special for themselves, and etc. In the auto market there are consumers with high, medium, and low purchasing power too. There are some variables that often used to segment various consumers. Demographic segmentation is consumers segmentation based on: income, gender, marital status, education, etc while psychographic or behavioral segmentation is consumers segmentation based on lifestyles, opinions and attitudes, degree of loyalty, consumption occasions, usage consumption, and benefits sought. After finding out kinds of consumers the next thing to do is deciding to target a kind or some kinds of consumers (a segment or few segments of consumers) (this is known as Targeting). There are 3 considerations in choosing target segment(s): 1. how well existing segment(s) treated by competitors, 2. how large the market size of the segment is, how good it's potential, and how easy and how big it will grow in the future ?, 3. do the company has enough strengths to appeal one or more group of segment(s)?. The next step in STP is positioning the product or the company to appeal target segment(s). There are 3 strategy for it: undifferentiated, concentrated, and differentiated strategy. In the undifferentiated strategy all consumers is treated the same or a product for all customers, for example is a company supply same aluminium commodity to various household tools producers. In the concentrated strategy a product is positioned to serve customers' specific needs, for example Volvo is positioned as safety and luxurious car to serve a high-class target segment that has high consideration on safety, or Southwest Airlines is positioned as an airways that makes people fly to serve price sensitive passengers that needs to fly in a low price. In the differentiated strategy a product is positioned differently for each target segment, for example nowadays many airlines provide economy and business class for their customers.

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