What Is Segmentation, Targeting and Positioning

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Text 6. “STP (What is segmentation, targeting and positioning)?”
Pre-reading discussion: 1. Why has segmentation become one of the leading concepts in marketing? 2. Can STP process be separated or is it a three-step inseparable process? 3. Can positioning be undertaken before targeting? 4. Do you know marketers well-known or even famous for their ideas about STP?

Smith (1957) provided an early definition of segmentation:

“Segmentation is based on the observation of evolution in demand and represents a more precise and rational adaptation of the product and the marketing effort to meet customer or user demands”.

Everyone is prepared to purchase products and services (depending on their financial status) as long as the
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Such an approach provides the |
| |opportunity to deliver a product or service with the matching marketing mix variables to an appropriate audience. |
|Niche (single |This can be described as a sub-segment. It is normally a small narrowly defined market where there are only a few |
|segment |suppliers. Niche markets are 'normally' only of interest to small or medium-sized organisations because of the level |
|specialization) |of returns and overall profitability. However, there are clear examples where strategic business units (SBU’s) of |
| |much larger organisations have operated in highly profitable niche or specialist markets. Examples of niche markets |
| |include specialist publishing (magazines for specific hobbies such as transporting), unusual vacation destinations |
| |(such as trekking across North African deserts or a polar expedition) and soft-top luxury sports cars such as the |
| |UK-built Morgan which are very much aimed at the connoisseur segment of the car-buying market. However not all niche |
| |markets are profitable, even if there is only one player in the market. |
|Multiple segments |An organisation seeks to supply several segments. However it

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