Segmentation, Targeting, Positioning
In this blog post, let us understand the next step in launching the product or a service, which is segmentation, targeting, positioning (STP). We’ll also learn demand generation and demand fulfillment. We’ll learn what is the difference between the two and why is it important to understand?
Segmentation, Targeting, Positioning (STP) is the next step in launching a product or a service after completing a detailed market research study. In a detailed market research study, you should’ve analyzed the buyer’s need, the product or a service offering in the market, the competitiveness of your business firm vis-à-vis your competitors, the supply chain effectiveness and inefficiencies, and the environment in which you are competing.
Once you conduct a detailed market research study, you should then segment your market on these parameters viz:
- Demographics – age, gender, education levels, type of profession, the source of income, income levels, marital status etc.
- Geography, Lifestyle, Behaviour, Belief, and Values
Not everyone in the street is a buyer of your products or services. You should narrow-down your target audience from the segmented audience. While doing so, some of the competitors may become irrelevant and/or their products or services may not be targeted to your target audience.
Once you have completed segmentation and targeting, you would know who your actual competitors are and what their offerings to your target audience are. Now redesign or tweak your products or services so that you stand out from the competition yet you are able to convey the value proposition of your products or services to your target audience.
Once you have completed segmentation, targeting, positioning (STP), you must ask the following questions to ascertain business viability viz:
- How big is my target audience?
- Does demand exist in the market for my products or services?
- How are my products or services different from that of competitors?
- How easily will I be able to access the market?
- What advertising strategies should I need to adopt?
- How much time will it take to recover my investments?
- How much of profit will I be able to generate from the business?
- What I have to do to convert a buyer into a loyal customer?
Demand Generation vs Demand Fulfillment
Another important aspect you should analyze before launching your products or services is where your product or service is positioned in Maslow’s hierarchy of needs. Maslow categories one’s need into 5 types and puts them in a pyramid structure.
A good marketer needs to understand the psyche or mindset of a buyer. Not every product or service will have a demand in-place. It may so happen that a buyer hasn’t recognized your products or services as a need and hence, there was no demand in-place. In such cases, a marketer also should reason out why such products or services are a need for a buyer. So here comes a difference in demand types – demand generation and demand fulfillment.
Demand fulfillment is one where a demand for such products or services already exists in the market and buyers are actively looking such products or services in the market. We can broadly say physiological needs and safety & security needs fall under this demand category. Not much of effort is required by a marketer to convince a buyer of having such a product or a service.
Demand generation is one where a need for such products or services should be generated in the minds of a prospective buyer to create a demand. We can broadly say social needs and esteem needs fall under this demand category. A lot of effort is required by a marketer in not only identifying the target audience but also in creating a need and convincing the target audience to buy such products or services.