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Marketing segmentation, Targeting and Positionning

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					  Business Plan II
                        Marketing
                          Section
                   The Lao American College
                                    Litthidet SANAVONGSAY



Litthidet SANAVONGSAY
   Market
Segmentation,
Targeting, and
 Positioning
                          Outline
  1. Identify the essential components of a market.
  2. Outline the role of market segmentation in
     developing a marketing strategy.
  3. Describe the criteria necessary for effective
     segmentation.
  4. Explain each of the four bases for segmenting
     consumer markets.
  5. Identify the steps in the market segmentation
     process.
  6. Discuss four basic strategies for reaching target
     markets.
  7. Summarize the types of positioning strategies.
  8. Explain the reasons for positioning and repositioning
     products.
Litthidet SANAVONGSAY
              Selecting a Target Market
   Before any marketing strategy can be
    implemented, the marketer must identify,
    evaluate, and select a target market.
     Market: people or institutions with
      sufficient purchasing power, authority,
      and willingness to buy
     Target market: specific segment of
      consumers most likely to purchase a
      particular product



Litthidet SANAVONGSAY
                        Types of Markets
   Consumer products: goods or
    services purchased by an
    ultimate consumer for personal
    use
   Business products: goods or
    services purchased for use either
    directly or indirectly in the
    production of other goods and
    services for resale
   The key to classification is to
    identify the purchaser and the
    reasons for buying the goods.

Litthidet SANAVONGSAY
      The Role of Market Segmentation
 Market Segmentation: division of the total market
   into smaller, relatively homogeneous groups

 No single marketing mix can satisfy everyone.
   Therefore, separate marketing mixes should be
   used for different market segments.




Litthidet SANAVONGSAY
                 Benefits of Market Segmentation



  1. More effective use of marketing dollars.

  2. Clearer understanding of the needs and wants
     of selected customer groups.

  3. More effective positioning.

  4. Greater precision in selecting promotional
     vehicles and techniques.


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    Limitations of Market Segmentation


  1. More expensive than using a non-segmented
     approach.
  2. Difficult to select the best base for segmenting a
    market.
  3. Difficult to know how finely or broadly to segment.
  4. Tendency to appeal to markets that are not
    viable.

Litthidet SANAVONGSAY
     Criteria for Effective Segmentation
   Market segmentation cannot be used in all
    cases. To be effective, segmentation must
    meet the following basic requirements.
     The market segments must be measurable
      in terms of both purchasing power and
      size.
     Marketers must be able to effectively
      promote to and serve a market segment.
     Market segments must be sufficiently large
      to be potentially profitable.
     The number of segments must match the
      firm’s capabilities.

Litthidet SANAVONGSAY
                 Market Segmentation


      1. Market                           2
                                          2

   No Market
                                               Fully Market

                           3.
   Segmentation
                                               Segmentation



                        Male Female
                                      Market
                                      Segmentation

Litthidet SANAVONGSAY
        Segmenting Consumer Markets




Litthidet SANAVONGSAY
      Fundamental-
      Fundamental-Buyer Related
             Questions
                  Who are they?
                  What do they want to buy?
                  How do they want to buy?
                  When do they want to buy?
                  Where do they want to buy?
                  Why do they want to buy?


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        Segmenting Consumer Markets
   Geographic Segmentation: Dividing an
    overall market into homogeneous groups on
    the basis of their locations
     Does not ensure that all consumers in a
       location will make the same buying
       decision.
     Help in identifying some general patterns.




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       Using Geographic Segmentation

   Demand for some goods and services can
     vary according to the geographic region

   Most major brands get 40-80 percent of their
     sales from what are called core regions

   Climate is another important segmentation
     factor


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           Geographic Segmentation




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Litthidet SANAVONGSAY
   Pampers
      This ad is an
       example of
       geographic
       segmentation.
      When visiting the
       web site look for
       the different
       countries Pampers
       markets to.




Litthidet SANAVONGSAY
 Litthidet SANAVONGSAY
1-
   Crunch Fitness
    Centers
      Using
       Geographic
       Segmentation




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        Segmenting Consumer Markets
   Demographic segmentation:
    dividing consumer groups
    according to characteristics
    such as sex, age, income,
    occupation, education,
    household size, and stage in
    the family life cycle
   A primary source for
    demographic data and
    United States is the
    Bureau of Census



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 Segmenting by gender
  Marketers must ensure that traditional
    assumptions are not false
  Other firms start by targeting one gender
    and then switch to both
  To some companies market successfully to
    both genders




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  Segmenting by age
   Many firms identify
     market segments
     on the basis of age
   Products are often
     designed to meet
     the specific needs
     of certain age
     groups
   Examples: baby
     food and denture
     cream. Dole:
     Developing a
     Product Specifically
     for Children
Litthidet SANAVONGSAY
   Segmenting by age
    Sociologists attribute different
      consumer needs and wants among
      various age groups to the cohort effect
    Cohort effect is a tendency among
      members of a generation to be
      influenced and drawn together by
      significant events occurring during their
      key formative years, roughly 17 to 22
      years of age




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 Boomers
  Boomers—People born
  from 1946 until 1965.
  Nearly 42 percent of
  U.S. adults were born in
  this period. Values of
  this age group were
  influenced both by the
  Vietnam War and the
  career-driven era. Baby
  boomers over the age of
  50 will have a total
  disposable income of $1
  trillion.




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 Ethnic Group
  Segmentation
    Census Bureau
     projects that by
     2050, nearly half of
     the population of the
     US will belong to
     nonwhite minority
     groups.
    The three largest
     and fastest-growing
     racial/ethnic groups
     in the US are African
     Americans,
     Hispanics, and Asian
     Americans.


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 Family Life Cycle
  Stages Segmentation
    The process of family
     formation and
     dissolution.
    The underlying theme
     is that life stage, not
     age per se, is the
     primary determinant
     of many consumer
     purchases.
    Today, the average
     woman gives birth to
     two children .
    She usually has her
     children at a later
     age—about 35.

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  Jaguar
     Segmentation
      based on income




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Demographic segmentation
Demographic Data

 Age
Age           6, 6-11, 12-19, 20-34, 35-49, 50-64, 65+

 Gender
Sex           Male, female

Family size   1-2, 3-4, 5+

Family life   Young, single; young, married, no children;
cycle         young, married, youngest child under 6;
              young, married, youngest child 6 or over;
              young, unmarried, with children; older,
              married, with children; older, unmarried, with
              children; older, married, no children under
              18; older, single; other.

Income        Under $ 10,000; $ 10,000-20,000;
              $20,000-30,000; $30,000-40,000;
              $40,000-60,000; $60,000-100,000;
              $100,000-150,000; $150,000 and over
Occupation    Professional and technical; managers,
              officials, and proprietors; clerical, sales;
              craftspeople, supervisors; operatives; farmers;
              retired; students; homemakers; unemployed
              graduates

Education     Grade school or less; some high school; high
              school graduates; some college; college
Religion      Catholic, Protestant, Jewish, other

Race          White, Black, Asian

Nationality   American, British, French, German,
              Scandinavian, Italian, Latin American,
              Middle Eastern, Japanese
   Psychographic Segmentation
    Divides a population into groups that have
      similar psychological characteristics,
      values, and lifestyles
    Lifestyle: people’s decisions about how to
      live their daily lives, including family, job,
      social, and consumer activities
    The most common method for developing
      psychographic profiles of a population is to
      conduct a large-scale survey:
      VALS and VALS 2.
      “Values and Lifestyles”




Litthidet SANAVONGSAY
   Product-related segmentation: dividing a
    Product-
    consumer population into homogeneous
    groups based on characteristics of their
    relationships to the product
   Can take the form of segmenting based on:
     Benefits that people seek when they buy
     Usage rates for a product
     Consumers’ brand loyalty toward a product




Litthidet SANAVONGSAY
   Benefits
    Focuses on the
      attributes that
      people seek in a
      good or service
      and the benefits
      that they expect
      to receive from
      that good or
      service
    Groups
      consumers into
      segments based
      on what they
      want a product to
      do for them

Litthidet SANAVONGSAY
   Eclipse
      Segmenting by
       Benefits Sought




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   Usage Rates
    Segmenting by grouping people according
      to the amounts of a product that they buy
      and use
    Markets often divided into heavy-user,
      moderate-user, and light-user segments
    The 80/20 principle (“Praedo’s Law”) holds
      that a big percentage of a product’s
      revenues (roughly 80%) comes from a
      relative small, loyal percentage (around
      20%) of total customers



Litthidet SANAVONGSAY
   Brand Loyalty
    Segmenting consumers grouped according
      to the strength of brand loyalty felt toward a
      product
    A practical example of this would be the
      frequent flyer programs of airlines and
      many hotels




Litthidet SANAVONGSAY
                        Business Market
         Customer in the Business Market
      Manufacturer
      Wholesaler and Retailer
      Agricultural Producer
      Services Industries
      Contract Construction
      Government Units
      Others


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      Characteristic of Business Market


      Continuous Demand
      Big Quantity of Changes
      Small number of Customers
      Sophisticated Customers
      Time Consume/Procurement procedure
       or decision making


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     The Market Segmentation Process

      Stage I: Identify Segmentation Process

      Stage II: Develop Relevant Profile

      Stage III: Forecast Market Potential

      Stage IV: Forecast Market Share

      Stage V: Select Specific Segment


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   Stage I: Identify Segmentation Process
    Marketers follow two methods to determine
      the bases on which to identify markets:
       Segments are predefined by managers
         based on their observation of the
         behavioral and demographic
         characteristics of likely users
       Segments are defined by asking
         customers which attributes
         are important and then
         clustering the responses


Litthidet SANAVONGSAY
   Stage II: Develop Relevant Profile
    Next, marketers seek further
      understanding of the consumer in each
      promising segment
    Must develop a profile of the typical
      consumer and each segment
    Helps to accurately match consumer needs
      with the firm’s marketing offers




Litthidet SANAVONGSAY
   Stage III: Forecast Market Potential
    Market segmentation and market
      opportunity analysis combine to produce a
      forecast of market potential within each
      segment
    Defines a preliminary “go or no-go”
      decision since the sales potential in each
      segment must justify resources devoted to
      further analysis




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     Stage IV: Forecast Market Share
      The next step is to forecast the
        firm’s probable market share
      Competitors’ positions in targeted
        segments must be analyzed
      A specific marketing strategy must
        be designed to serve the targeted
        segments
      The firm determines the expected
        level of resources it must commit to
        tap the potential demand in each
        segment

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  Stage V: Select Specific Segment
   The preceding information, analysis, and
     forecasts allow management to assess the
     potential for achieving company goals and
     to justify committing resources in
     developing one or more segments
   Marketers also weigh more than
     monetary costs and benefits
     at this stage




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                Strategies for Reaching
                    Target Markets

            Undifferentiated   Differentiated
              Marketing          Marketing

              Concentrated     Micromarketing
               Marketing




Litthidet SANAVONGSAY
 Undifferentiated marketing: when a firm
  produces only one product or product line
  and promotes it to all customers with a single
  marketing mix
   Sometimes called mass marketing
   Much more common in the past

Undifferentiated
  Marketing                                Segment 1
                        Marketing Mix
                                           Segment 2
                           (4Ps)
                                           Segment 3


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 Differentiated marketing: when a firm
  produces numerous products and promotes
  them with a different marketing mix designed
  to satisfy smaller segments
   Tends to raise costs
   Firms may be forced to practice
     differentiated marketing to remain
     competitive


                        Marketing Mix 1   Segment 1
Differentiated
  Marketing             Marketing Mix 2   Segment 2

                        Marketing Mix 3   Segment 3

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   Differentiated
    Marketing
      Procter and Gamble
       Practicing
       Differentiated
       Marketing




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   Lunchables
      Using a
       Differentiated
       Marketing Strategy




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 Concentrated marketing (niche
  marketing): when a firm commits all of its
  marketing resources to serve a single market
  segment
   Attractive to small firms with limited
    resources and to firms offering highly
    specialized goods and services

   Concentrated
    Marketing
                                         Segment 1
                        Marketing Mix
                                         Segment 2
                           (4Ps)
                                         Segment 3
Litthidet SANAVONGSAY
   Micromarketing:
    involves targeting
    potential customers at
    a very basic level,
    such as by ZIP code,
    specific occupation,
    lifestyle, or individual
    household
       The Internet may allow
        marketers to make
        micromarketing even
        more effective

       GeneSolutions
        targeting a specific
        occupation

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     Selecting and Executing a Strategy
      No single, best choice strategy suits all
        firms
      Determinants of a market-specific strategy:
          Company resources
          Product homogeneity
          Stage in the product life-cycle
          Competitors’ strategy




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    Where are we now?

               STP Marketing

Segmentation      Targeting        Positioning




       Product, Price, Place, Promotion
                        Positioning
                        Positioning



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 “Once a mind is made up, it’s almost
            impossible to change it.”
                             Ries,
          - Al Trout & Jack Ries, the
                            “fathers”
                       of positioning



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                  It’s all in your head…

 •Differentiation takes place in the mind.
 •Minds are limited and can’t cope with a lot of
 information
 •Minds hate confusion and love simplicity
 •Minds are insecure and buy what others buy
 •Minds can lose focus
 •MINDS DON’T CHANGE?? Do they???



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                  The Art of Positioning


   Process that influences potential customers’
    overall perception of a brand, product line or
    organization in general; the place in the mind
    relative to the competition
   Perceptual map – means of displaying or
    graphing, in two or more dimensions, the
    location of products, brands or groups of
    products in consumers’ minds.


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                        How to Do it…
   Make Sense in the Context
   Find the Differentiating Idea
   Have the Credentials
   Communicate your Difference
   It helps to be RICH!!
   Potential Errors:
       Underpositioning-Crystal Pepsi
       Overpositioning- Tiffany’s
       Confused Positioning – NeXT computer
       Doubtful Positioning- Cadillac Cimarron


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       What are the Possibilities?




 Attribute         Benefit         Application    User




  Product Class              Competition     Quality-price

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        The Process of Positioning
    Mkt Analysis        Segmentation       TM Selection
                                                                    Implications
                                                                     for
                Internal                                            Mktg Strat
               Corporate                      Position
               Analysis                                             * Product
                                                                    * Price
                                                                    * Channels
                                             Package of             * Promo
Competitive
                    Differentiation           Benefits
 Analysis
                                              Selection
              Quelch, John R. (1982) “Frank Homer LTD - Teaching Note,” in
              Cases in Advertising and Promotion Management, 2d ed.,
              Business Publications, Inc.
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                    “Positioning Audit,”
                       Trout & Ries
   What is our position?




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      Important Dimension




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                        Performance

                                 BMW




                                       Luxury




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                    “Positioning Audit”


   What is our position?
   What position do we want?




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                        BMW
                        Z3




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                    “Positioning Audit”


   What is our position?
   What position do we want?
   Where is our competition relative to our
    desired position?




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Exotic,       Porsche
Expensive
                                             BMW
& Italian

                                                             Mercedes
                                    Swedes
                         Japanese
                                             Jaguar

                                                        Lincoln



                                                   General
                                                   Motors
                        Subaru



            Yugo



 Litthidet SANAVONGSAY
                    “Positioning Audit”


   What is our position?
   What position do we want?
   Where is our competition relative to our
    desired position?
   Can we defend our position?




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Exotic,       Porsche
Expensive
                                             BMW
& Italian

                                                             Mercedes
                                    Swedes
                         Japanese
                                             Jaguar

                                                        Lincoln



                                                   General
                                                   Motors
                        Subaru



            Yugo



 Litthidet SANAVONGSAY
                    “Positioning Audit”


   What is our position?
   What position do we want?
   Where is our competition relative to our
    desired position?
   Can we defend our position?
   Is our position long-term?




Litthidet SANAVONGSAY
                    “Positioning Audit”


   What is our position?
   What position do we want?
   Where is our competition relative to our
    desired position?
   Can we defend our position?
   Is our position long-term?
   Does our promotion reflect our position?



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  Product Category and Brand Positioning

      Product category positions (breakfast foods market)

                                                              Expensive


                               Bacon and eggs                                       Cold cereal


            Time-
                                                                                                             Quick
          consuming
                                                 Pancakes

                                           Hot cereal                            Instant-
                                                                             breakfast drinks
                                                            Inexpensive
       Source: Adapted from P.S. Busch and M.J. Houston, Marketing Strategic Foundations (Burr Ridge, IL: Richard D. Irwin, 1985), p. 430.


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       Positioning of Different Bar Soaps
                                           High
                                        moisturizing
                          • Tone                                  • Zest

                                                              • Lever 2000
                                   • Dove

                                                                 • Safeguard
                                            • Lux
   Nondeodorant                                                       Deodorant




                                       • Lava                    • Dial
“Product Space”                                        • Lifebuoy
Representing Consumers’ Perception for
Different Brands of Bar Soap
                                      Low
                                 moisturizing
3-14
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Product Positioning using Perceptual Maps




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                                Beer Market
                          Perceptual Mapping


     Old Milwaukee
                                             •
                                           Budweiser
           •                                                       Beck’s   •
           Meister Brau                                                 • Heineken
                •                         Miller   •
                                                        •
                                  •                    Coors
                                Stroh’s

                                                                   • Michelob
                                             •                  Coors
                                           Miller
                                            Lite
                                                            •   Light
                            •
                          Old
                     Milwaukee Light

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                                 Beer Market
                            Perceptual Mapping

                                                                  Popular
                          Full Bodied            Heavy           with Men
     Old Milwaukee
                                                      •
                                                    Budweiser
              •                                                                Beck’s   •
           Meister Brau                                          Special           • Heineken
                  •                                Miller   •   Occasions
                      Blue Collar
 Good Value                                                       •         Dining Out Premium
                                    •                           Coors
                                 Stroh’s

                                                                               • Michelob
                                                      •                 Coors               Popular
                                    Pale Color
                                                    Miller
                                                     Lite
                                                                    •   Light                with

          On a
                             •                                                              Women
                           Old
         Budget       Milwaukee Light               Light       Less Filling
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                             Beer Market
                         Perceptual Mapping

                                       Regular            Popular
                        Full Bodied          Heavy       with Men



                                                         Special
                                                        Occasions
                  Blue Collar                                       Dining Out Premium
 Good Value

    Budget                                                          Premium

                                                                            Popular
                                Pale Color                                   with
                                                                            Women
          On a
         Budget                                 Light   Less Filling
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                                        Light
                                 Beer Market
                            Perceptual Mapping

                                           Regular                Popular
                          Full Bodied         Heavy              with Men
     Old Milwaukee
                                                   •
                                                  Budweiser
              •                                                                Beck’s   •
           Meister Brau                                          Special           • Heineken
                  •                              Miller     •   Occasions
                      Blue Collar
 Good Value                                                       •         Dining Out Premium
                                    •                           Coors
                                 Stroh’s
    Budget                                                                  Premium
                                                                             • Michelob
                                                      •                 Coors               Popular
                                    Pale Color
                                                    Miller
                                                     Lite
                                                                    •   Light                with

          On a
                             •                                                              Women
                           Old
         Budget       Milwaukee Light               Light       Less Filling
                                            Light
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                                Beer Market
                          Perceptual Mapping

                                          Regular
     Old Milwaukee
                                                 •
                                                Budweiser
           •                                                             Beck’s   •
           Meister Brau                                                       • Heineken
                •                               Miller   •
                                                              •
                                  •                          Coors
                                Stroh’s
    Budget                                                             Premium
                                                                        • Michelob
                                                   •                  Coors
                                                  Miller
                                                   Lite
                                                                  •   Light
                            •
                          Old
                     Milwaukee Light
                                          Light
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                        SUVs

                 What are the
             Differentiators in this
                  Category?




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          Sample Markstrat Process for
                  Positioning
   Step 1: Where are we?
   Step 2: Where do we want to be?
   Step 3: Where do we expect the market to be
    in X time period?
   Step 4: How much will our move cost us?
    (R&D costs, Push/Pull costs)
   Step 5: What attribute changes brings us to
    our desired position?



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DOCUMENT INFO
Description: Before any marketing strategy will be set up. The marketers need to understand the market. STP process play vital role for setting up any marketing strategy. STP process stand for Segmentation (S- classify customer into different group), Targeting (Select the target market) and Positioning (How are you going to position yourselves). Once STP process have been defined then you can set marketing strategy base on your selected target and your position.