Chapter 6
Market Segmentation,
Positioning, and the
Value Proposition
STP Marketing and the
Evolution of Marketing Strategy
1. Target Market: A sub-group of a larger
market chosen as the focal point for a
marketing or advertising campaign.
2. Positioning: Designing and representing a
brand in a way that is distinct in the
consumer’s mind.
3. Positioning Strategy: Selecting key
themes to communicate to a target market.
Ch 6: Segmenting Markets 2
The STP Marketing Process
(Segmenting, Targeting, Positioning)
1. Break the market into smaller,
more homogenous segments
2. Specifically target the discrete
market segments
3. Position the product or service to
appeal to the targeted segments
Ch 6: Segmenting Markets 3
How would you
describe the
demographic segment
targeted by this
advertising campaign?
How about this ad?
What is the target
demographic for this
ad campaign?
Identifying Target Segments:
Market Segmentation
Geography
Demographics Psychographics
Lifestyles Commitment
Levels
Benefits
Usage Patterns
Ch 6: Segmenting Markets 6
Segmenting by Usage and
Commitment
• Advertising targeted to:
– Heavy users
– Nonusers
– Brand-loyal users
– Switchers/Variety seekers
– Emergent Consumers
Ch 6: Segmenting Markets 7
Demographic Segmentation
1. Age
2. Gender
3. Race
4. Marital Status
5. Income
6. Education
7. Occupation
Ch 6: Segmenting Markets 8
Geographic Segmentation
Ch 6: Segmenting Markets 9
Psychographics and
Lifestyle Segmentation
Lifestyle
Opinions Activities
Lifestyle segmentation
Interests
provides insight into
consumer’s
motivations
Ch 6: Segmenting Markets 10
Benefit Segmentation
Prestige? Passenger
Safety?
Fuel Economy?
Ch 6: Segmenting Markets 11
Business to Business Markets
Markets segmented by:
• Usage rates
• Geographic location
• SIC (Standard Industrial
Classification) Code
• Stage in the purchase process: first
time vs. experienced buyers
• Benefits desired
Ch 6: Segmenting Markets 12
STP Marketing is used in
the business-to-business
market as well as the
consumer market
Prioritizing Target Segments
Examine your ability to deliver value to
the segments and costs of new
capabilities
Research segment size, growth
potential and usage frequency
Assay the competitive environment
Find a niche you can scratch
Ch 6: Segmenting Markets 14
Effective Positioning
• Is based on substance of the brand’s
values
• Reflects internal values and structure of
the firm’s market orientation
• Is consistent over time
• Is both memorable AND distinctive
Ch 6: Segmenting Markets 15
Fundamental Positioning
Themes
• Benefit Positioning
• User Positioning
• Competitive Positioning
Ch 6: Segmenting Markets 16
Do you think this ad for
Ryka shoes is
emphasizing benefit,
user or competitive
positioning?
Repositioning
• Used to revive an ailing brand or fix a
lackluster new market entry
• The challenge: Changing perceptions
of a brand forged over years of
advertising.
Ch 6: Segmenting Markets 18
Capturing the Value Proposition
Functional V
Emotional A
Self-expressive L Relative Price
Benefits U
E
Ch 6: Segmenting Markets 19