Marketing segmentation, also known as an STP analysis, involves segmenting the market, choosing target segments, and developing positioning strategies. There are 5 key steps: 1) establishing objectives, 2) using segmentation methods like geographic, demographic, psychographic, benefit, and behavioral segmentation, 3) evaluating segment attractiveness based on identifiability, sustainability, reachability, responsiveness, and profitability, 4) selecting target markets using strategies like undifferentiated, differentiated, concentrated, or micromarketing targeting, and 5) developing a positioning strategy by identifying a unique value proposition and choosing a positioning method like value, attributes, symbols, or competition.

1. Market Segmentation
By: Kenneth Rakes

2. What is Marketing Segmentation
Marketing segmentation or an STP Analysis is a marketing process involving
segmenting the market, choosing which segment to target, and developing a
positioning strategy.

3. Steps of the Marketing Segmentation process
1. Establishing overall strategy/objectives
2. Use the segmentation methods
3. Evaluate segment attractiveness
4. Select a target market
5. Develop a positioning strategy

4. 1. Establishing overall strategy/objectives
To effectively go through the STP process you must first identify the objectives of
your marketing strategy as a whole. Then you must make sure your segmentation
strategy is consistent with the overall marketing strategy and your current situation.

5. 2. Use the segmentation methods
Step two of the segmentation process is to choose which segmentation
method or combination of methods to use. This allows marketers to
differentiate between and create descriptions of customers in different
segments.
The different methods of segmentation are described in the following slide

6. The segmentation methods
Method: Description: Example:
Geographic Grouped based on where they live Countries and Continents
Demographic Grouped based on easily measured,
objective characteristics
Age, gender, income, etc.
Psychographic Grouped based on how customers
describe themselves
Lifestyle, Self-concept, Values
Benefit Grouped based on the benefits they
seek
Convenience, Prestige, etc.
Behavioral Grouped based on how they use the
product or service
Occasion and loyalty

7. 3. Evaluate segment attractiveness
The next step evaluates the attractiveness of the potential target segments
identified in the previous step. To evaluate the segments marketers ask 5
question:
1. Is it identifiable?
2. Is it sustainable?
3. Is it reachable?
4. Is it responsive?
5. Is it Profitable?

8. The 5 evaluation questions explained
Is it …? Description:
Identifiable marketers have to be able to identify who is in the segment and who is not.
Sustainable The segment has to be large enough to generate significant profit.
Reachable marketers must make sure they are able to reach consumers to persuade and tell them how to buy
their product.
Responsive Will the segment respond similarly and positively, and can the marketer provide the segment with
what they are looking for?
Profitable Marketers must make sure that the segment will be profitable now and in the future.

9. 4. Select a target market
After evaluating different segments attractiveness marketers must
decide which segments to target. To choose which segments to target
marketers must choose a targeting strategy. The four basic targeting
strategies are undifferentiated targeting, differentiated targeting,
concentrated targeting, and micromarketing targeting. Based on the
strategy of their choosing marketers will be able to identify how many
and which segments to target.

10. Targeting Strategies Explained
Strategy: Description:
undifferentiated Used when everyone can be considered a potential customer, and the
product or service provides similar benefits to everyone.
Differentiated Targets several segments using a different marketing strategy for each.
Concentrated Targets one primary segment focusing all its energy on fitting that markets
needs.
Micromarketing When Marketers tailor a product or service to fit an individual’s needs.

11. 5. Develop a positioning strategy
After a marketers decided on its target segment/segments and a targeting strategy
they begin working on market positioning. Marketing positioning is the process of
defining the marketing mix variables to to make sure that the target market has a
clear understanding of what the product/service does compared to competitors
helping to communicate the marketers unique value proposition. The first step in
the marketing positioning strategy is for marketers to identify their unique value
proposition. Once they have this identified they then choose one of the four
positioning methods (value, salient attributes, symbols, or competition) that will
most effectively convey their unique value proposition to their target segment.

12. Positioning Methods Explained
Positioning
Method:
Description:
Value Proposition Involves positioning the product/service directly based on the value it
provides to the target market.
Salient Attributes Positioning based on the attributes most important to the target market.
Symbols A symbol (or logo) is used to position and a brand and distinguish it from its
competitors.
Competition When marketers position their products against a certain competitor or the
entire product/service classification.