T = Targeting
P = Positioning
Marketers will use STP when considering their target market. They need to firstly identify a market and find the right potential customers this can be achieved by using Segmentation, Targeting and Positioning.
Segmentation is "the division of a market into different homogeneous groups of consumers," (quickmba 2010). This means marketers will identify a need that a certain group of customers have. Therefore marketers will not offer the same marketing mix to vastly different customers, but through segmentation they are able to tailor the marketing mix to a specific target marketing this leads to better matching of customer needs, enhanced profits for the business, better opportunities for growth, and retaining more customers. A market segment should be; measurable, accessible by communication and distribution channels, durable, substantial and different in its response to a marketing mix. There are four elements which may segment a consumer market:
- Geographic Segmentation - People will be grouped due to Region, Climate, Population Density and Population Growth.
- Demographic Segmentation - Many people are grouped by marketers due to their Age, Gender, Ethnicity, Education, Occupation and Income.
- Psycho graphic Segmentation - This groups peoples by Values, Attitudes and Lifestyles.
- Behavioural Segmentation - Finally people are grouped by Usage Rate and Patterns, Price Sensitivity, Brand Loyalty and Benefits Sought.
An example of demographic segmentation could be the marketing of toothpaste. Marketers design, package and promote the product different to attract different consumers. This is shown in both adults and children toothpaste. There is a complete contrast between the two.
On the right hand side it shows a toothpaste for adults, which is quite normal in shape and colour, it does not stand out and is not eye catching. Whilst the toothpaste on the left is aimed for children. They use bright colours, a funky package design and cartoon characters on the packaging. These two products are made by the same brand but appeal to a different audience. Children enjoy bright colours and cartoon characters, whilst adults are more brand loyal, therefore they will probably buy this brand of toothpaste as they know it is good and will be good for their teeth.
Another good example of demographic marketing based on income is Aldi. This will appeal directly to consumers will low incomes as it is a discount food retailer.
During this advert they compare the price of two different brands of beans, Heinz beans and their own Aldi beans. The children then say which one they prefer. This appeals to a low income person due to the fact that they can save money on beans which are shown as being a similar quality to a leading brand. The main tag line is "Aldi. Like brands. Only cheaper." which will also appeal to a consumer with low income.
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| "Jamie" |
After a marketer has segmented the market based on a customer need, marketers will use profilers which are the descriptive, measurable customers characteristics which is used to segment a group. Profiling means that a brand can create their ideal customer and base their advertising campaigns around what this fictional character wants and does. For example, if Calvin Klein produces a new underwear range for men, targeting young, successful and healthy men. Their profile could be called Jamie. He is a young businessman, working his way to the top of the business, he enjoys swimming, football and the gym in his free time. He wears expensive, tailored suits at work and enjoys sophisticated clubs and bars in London. He has many friends similar to himself, each wear tailored suits and are young businessmen. Therefore the Calvin Klein adverts will be placed in high end magazines, advertisements such as; Posters and Billboards will be seen near public transport located in London. Whilst the television adverts will be shown during Jamie's favourite programmes, such as; Dragon's Den and The apprentice. There will be a launch party for the underwear and Jamie will be invited to this. This fictional character has all the characteristics of the potential target audience of Calvin Klein.
The use of segmenting in marketing is important to a company due to many different factors. Firstly it better matches a customers need, this will help create brand loyalty as the customer will be continuously happy to purchase the product as it is specifically targeted for their needs more than maybe other competitors. This can help gain profits for the business as people are more willing to pay for a product which they believe are more tailored for their needs. It also helps retain customers. Marketers need to identify the fact that consumers are changing continuously, they grow older, form families and change employment. Therefore by marketing products that appeal to customers at specific stages of their life means a business can continue to retain their original customers, and they do not need to switch to a competitor. Finally bigger market shares can be gained through creating a more likable product than the competitors. Segmentation does not mean an increase in market size by the market share of a company can be strengthened by targeting a smaller company in a large market.
An example:
When segmenting a market, it is targeting the 'High End' section of this image. In relation to Clothes Retailers, 'Primark' would be in the 'Mass' section. Whilst 'Dorothy Perkins' could be considered 'Main Stream' and a family clothes shop could be 'High End'. The Family clothes shop is small and has a distinct market, which is those who will pay for high quality, handmade garments, rather than mass produced cheap clothes from 'Primark.'
Targeting is the second stage within the STP process. According to marketingteacher (2011) once the marketer has segmented the market, they will then choose a segment or group of segment and try and 'Target' it or them. This is done by evaluating the segments, usually based on profitability and desirability (eurekafacts). This means each segment will be analysed to conclude if it is a profitable and worthwhile market. Targeting is completed to "select which ones we are best off trying to serve," (consumerpsychologist 2011) and will be good for both the consumer and business. The several factors which help decide which segment to target include:
- How are existing segments served by other manufacturers? - This is important as it helps discover which segments are currently be targeted. It is more difficult to appeal to a segment that is continuously being targeted, than one where consumers needs are not being served at all.
- Secondly, how large a segment is, and how will it grow? - Due to the fact that certain segments may gain competitors, such as a large, rapidly growing one.
- Finally, does a company have strengths which help appeal to a group of consumers? - This could include brand loyalty and also companies already with an established reputation. A good example of this is McDonald's. They are known for fast, convenient, mediocre quality food, therefore it would be more difficult for them to convince consumers that they now offer gourmet, high quality food.
Finally Positioning, after a marketer has segmented a market, targeted a consumer they would then proceed to position the product within a market. This is done to show how a consumer will rate that certain product/service compared to a competitor. Marketingteacher (2011) explains that positioning is all about perception and this differs from one person to another. To compare and contrast products and services in relation to each other a tool such as a 'Perceptual Map' also known as a 'Positioning Map' can be used. A marketer will use this to decide on a competitive position to distinguish their own products against the competitors. The map below is an example of a perceptual map. This is a simple version of a perceptual map and is based around price and quality on different chocolate bars.
This shows that Twix is labelled as being both Low Quality and Low Price, whilst Belgium Chocolates are shown as being High Price and High Quality. Even though this is very vague, but for the purpose of seeing how a brand compares to another, Perceptual Mapping works. If we used this Map for the "Jamie" Calvin Klein Product, it would be in High Quality and 3/4 of the way in High Price. Whereas compared to Asda 'George' brand, the underwear would be Low Price and Low Quality.
Other Perceptual Maps:
The different labels can be more specific such as; 'Classy,' 'Practical,' etc.
This is used to identify where a brand's particular focus should be on.
Positioning of a product should also involve making a brand stand out against any competitor. A marketer can do this by:
1) Finding an Unoccupied Position, this means creating a product that will provide things that competitors do not. An example of this was when the Dyson Ball came out. This was the first hoover to be able to bend, turn corners and rotate.
2) Reposition the competition, this is used to convince a customer to view their competition in a different way. Recently supermarkets have been using this by explaining that they are 'Cheaper than each other.' This makes people reevaluate the supermarkets that they shops at.
3) Strengthen the current position, this is used to improve a product so that it is shown as being better quality or 'cooler' than the rest. A good example of this is the iPhone, which has been created to be shown as the 'coolest' phone around, it is an improved mobile product. However it also strengthens the current position by re-releasing updated versions. There has been iPhone 3gs, iPhone 4 and a later release in 2011 of the iPhone 5.
4) Head to Head, this is competing directly with brands and products offering similar things. An example of this could be Go Compare and Compare the Market. They are both insurance agencies that compete with promotion for customers.
STP then leads to the 4Ps, Product, Price, Place and Promotion. From this point the product will be sold to the target market and if the STP is executed good, the product should sell efficiently.
STP... One Word... Wow!
Wow indeed! Another great piece of work
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