STP in Marketing

That's where the beauty of marketing is. As said earlier it's all about creating need, desire and push customers to pay more for a product or service.

One basic tool to answer my earlier question is: Segmentation, Targeting and Positioning, also popularly known as STP marketing.

Segmentation: Dividing a market into distinct groups with distinct needs, characterstics or behaviour who might require seperate products or marketing mixes.

So why do we need to segment a market?

Simple: One size doesn't fit all. we need to have tailored offerings for each set of people.

But how do we identify segments? Is there any starting point to go about it?

Don't worry it is not as complicaed as it seems to be. We can segment criteria on following basis:

1. Demographics: Age, gender, education, income, ethinicty, religion, social class, etc..
2. Geographics: Continet, region, country, state, district, town, lane, rural, urban, etc...
3. Behavioral:Loyalty, frequency of purchase, readiness to purchase, value for money, brand conscious, etcc..
4. Psycographics: values and lifestyle(VALS), attitude, status.

Positioning: The place that company wants to occupy in minds of consumer. It is highly essential that company maintains a consistency in its positioning or else it will create confusion in mind of consumers.

Let me help you in answering my above question about huggies: So who use huggies, simple its a baby but is it the baby who decides which  diapers to buy? No, its the mother whose utmost priority is her kid and she is the one who takes care of all household requirements like grocery hence she is the one who is actively involved in shopping. Hence mothers are targeted in their advertisements even though kid is a consumer. Lastly, how is the diaper positioned. If you have observed closely most of the diaper advertisements show mother-child love, kids smiling when they are put on diapers of that particular brand(brand which is being advertised) and how skin friendly those diapers are but not based on price. Why?For your kid would you choose a diaper which is soft and skin friendly or diapers which are low priced? Obviously soft and skin friendly unless you don't like your kind.

Let me discuss a practical example for a better understanding.

Tomorrow I wish to open a high end restaurant in India, what should I do to optimize my resources( i.e. money, time, advertsing, revenue, etc..). Let me use STP tool to achieve my goal.

Firstly, my target audience will be people with high disposable income like working professionals, businessman, artists or celebrities.( Based on income level)

Secondly, I need to decide in which city should I open my restaurant. Since my restaurant is high end, I would aim for metropolitan cities like hyderabad, bangalore, pune, delhi, mumbai, chennai which has relatively high level of disposable income. (based on geography)

Suppose I narrow down this list to two cities: Say Mumbai and Hyderabad. Now I have to decide on a location which will reflect my restaurant image, i.e. high end and expensive. So in Mumbai I would like to set up in locations like bandra, juhu or vile parle and in Hyderabad high end locations would be banjara hills or jubilee hills.Now my target audience are people with high self esteem, self expression, love to indulge in luxry and are prestige sensitive. Now according to these characterstics I will channelize my operations and target people who share such characterstics.

Lastly, I need to occupy minds of consumer as high end restaurant. This can be achieved by maintaining good ambience(like lighting, smell, seating), good looking staff, wide range of menu and consistency in providing fine service. These are some of the characterstics of a good high end restaurant.

If I have a restaurant with ordinary ambience, ordinary staff and standard menu offered by other restaurants people will not perceive my restaurant as high end and ultimately it will be termed as over priced restaurant and thereby generating negative feedback about it.

Would you pay more at this restaurant or the one above