By Ian Ortega
I have produced this as a quick note on the topic of Segmentation, Targeting and Positioning (STP) as commonly discussed in the marketing circles. Put simply, segmentation is nothing but the act of dividing the market/universe into divisions or parts (segments) based on certain shared features.
There are four common ways of segmentation. You have the demographic, geographic, psychographic and behavioural. In Demographic segmentation, the market is divided according to features such as gender (male or female), age, income levels, ethnicity or education level.
In the Geographic segmentation, we look at things such as location, whether for example rural or urban, regions maybe western Uganda, Eastern, Northern and central. In Psychographic, we divide the market according to interests, attitudes, values, basically the personalities. Finally in behaviour, we look at actualities or demonstrated actions by the consumers. For example, people who go to Church every Sunday or frequent Friday bar revellers.
Usually, the segmentation exercise will utilize a combination of these; geo-demographic or psycho-demographic. Why are we segmenting? Because resources and capabilities are limited. We can’t be everything for everyone. The goal here is to arrive at a target market that matches our objectives, resources and capabilities. And we judge this target market based on its attractiveness, value and profitability.
There are three target marketing strategies. One is to be a mass-marketer, that’s for the undifferentiated marketing strategy, two is to be a differentiated marketer by taking on segments, and finally it’s to be a customizer or niched out by targeting specific sub-segments.
Once we are clear about the target market, it’s now time to position ourselves for that target market. Positioning is an act of first choosing a distinct place in the consumers’ minds based on a unique value proposition against the competitor products. Positioning is all the work we do in claiming, occupying and defending this distinct place in the mind of the consumer. A successful position is unique, it’s valuable to the consumer, it’s enduring, it’s believable and it’s consistent.
There are four major ways to position. We can position the product to own the category benefit. In the auto-industry, you have Volvo owning the Safety benefit, Benz owning the luxury benefit while BMW owns performance.
We can also position the product with the consumer. Basically, what the product does to the consumer. Take an example of Red Bull positioned to give customers ‘wings to fly’ or Nike saying, ‘just do it’.
We can also position based on how the company operates. For example, Fedex saying Next Day Delivery or Burger King saying, ‘Have it Your Way’. Finally, we can position against the competition. Apple said, ‘Think Different’. I find this fourth quadrant problematic because competition can always change, it’s hard to build an enduring position by placing oneself against competition.
However, when we look at it through the lens of benefits and costs to acquire those benefits. Then brands will usually take on the five positions as below:
- A More for More Brand
- A More for Same Brand
- A Same for Less Brand
- A Less for Much Less Brand
- A More for Less Brand
And as many have always argued, when it comes to successful marketing, Position and Positioning is everything. Always think about the place you occupy in the consumer’s mind. That’s the place that really matters. It’s not what you think you are, but what consumers think you are.
You can read below on the example of Bell Lager in Uganda. Despite positioning themselves as a young consumer’s lager, it would be more believable to position themselves as Uganda’s First beer.