Market Segmentation, Targeting and Positioning (STP) Strategy Questions

Question 1

Explain the requirements of a good market segment (MSADA).

Accepted Answer

A good market segment should be:

1) Measurable: size and purchasing power can be estimated.
2) Substantial: large/profitable enough to serve.
3) Accessible: can be effectively reached through channels and promotion.
4) Differentiable: responds differently to marketing mix.
5) Actionable: company can design and implement marketing programs for it.

These conditions ensure segmentation is practical and profitable.

Question 2

Define market segmentation.

Accepted Answer

Market segmentation is dividing a broad market into smaller groups of customers with similar needs/characteristics and buying behaviour.

Question 3

What is targeting?

Accepted Answer

Targeting is selecting one or more market segments that the firm will serve after evaluating them.

Question 4

Define positioning.

Accepted Answer

Positioning is creating a distinct image/value of a brand in the mind of target customers relative to competitors.

Question 5

State one base of demographic segmentation.

Accepted Answer

Income is a base of demographic segmentation.

Question 6

What is a target market?

Accepted Answer

A target market is the chosen segment(s) of customers to whom the company directs its marketing efforts.

Question 7

What is a perceptual map?

Accepted Answer

A perceptual map is a diagram that shows how consumers perceive competing brands on key attributes.

Question 8

Explain bases of consumer market segmentation with examples (any three).

Accepted Answer

Consumer markets can be segmented on different bases. Any three with examples:

1) Geographic: region/climate (e.g., winter wear in cold regions).
2) Demographic: age, income, gender (e.g., student plans vs premium plans).
3) Psychographic: lifestyle, personality (e.g., fitness lifestyle → health products).
4) Behavioural: benefits sought, loyalty, usage (e.g., heavy users vs light users).

Examples help show practical understanding.

Question 9

Explain targeting and mention the criteria used to evaluate segments.

Accepted Answer

Targeting means evaluating market segments and selecting the segment(s) to serve.

Evaluation criteria include:
1) Segment attractiveness: size, growth rate, profitability.
2) Competitive intensity: number and strength of competitors.
3) Company fit: resources, capabilities and objectives matching the segment.
4) Accessibility: ability to reach and serve through distribution and communication.

Thus, firms choose segments that are attractive and match their strengths.

Question 10

Differentiate between undifferentiated, differentiated and concentrated marketing strategies.

Accepted Answer

Targeting strategies differ as follows:

- Undifferentiated (mass) marketing: one offer for the whole market (focus on broad demand).
- Differentiated marketing: different offers/marketing mix for multiple segments (higher sales but higher cost).
- Concentrated (niche) marketing: focus on one segment only (specialisation and strong position).

Choice depends on resources, competition and market characteristics.

Question 11

Explain positioning and write a simple positioning statement format.

Accepted Answer

Positioning is designing the offering and image so that the brand occupies a distinct place in the mind of the target customer compared to competitors.

Positioning statement format:

"For (target customer), (brand) is the (frame of reference) that (key benefit) because (reason to believe)."

Example: For busy students, Brand X is the instant snack that is tasty and affordable because it is ready in 2 minutes.

Question 12

Explain common positioning errors (any three).

Accepted Answer

Common positioning errors (any three):
1) Under-positioning: customers have unclear idea about the brand.
2) Over-positioning: brand seen only for a very narrow group.
3) Confused positioning: frequent message changes create confusion.
4) Doubtful positioning: claims are not believable (no proof).

Good positioning is clear, consistent and credible.

Question 13

Explain the STP process in detail and show how it helps in designing the marketing mix.

Accepted Answer

STP is a strategic approach that helps a firm choose the right customers and create a strong brand position before deciding the marketing mix.

1) Segmentation
- Divide the market into groups with similar needs/behaviour (geographic, demographic, psychographic, behavioural).
- Purpose: understand different customer needs and avoid one-size-fits-all marketing.

2) Targeting
- Evaluate segments on size, growth, profitability, competition and company fit.
- Choose target segment(s) and decide strategy (mass/differentiated/niche).

3) Positioning
- Decide how the brand should be perceived by the target segment.
- Identify points of difference (POD) and points of parity (POP).
- Create a positioning statement and communicate consistently.

Link with marketing mix:
- After positioning is clear, the firm designs Product (features/quality), Price (value-based pricing), Place (channels), Promotion (message/media) to deliver the promised position.

Thus, STP ensures marketing mix is customer-focused and creates competitive advantage.

Question 14

Discuss target market selection strategies and their suitability (undifferentiated, differentiated, concentrated, micromarketing) with examples.

Accepted Answer

Target market selection strategies decide how many segments a firm will serve and with what approach:

1) Undifferentiated (mass) marketing
- One marketing mix for the whole market.
- Suitable when needs are similar and product is standard (e.g., basic salt/commodity).
- Advantage: low cost; Limitation: strong competition and weak customer fit.

2) Differentiated marketing
- Different marketing mixes for multiple segments.
- Example: shampoo variants for men, women, anti-dandruff, kids.
- Advantage: higher sales/coverage; Limitation: higher cost and complexity.

3) Concentrated (niche) marketing
- Focus on one segment only; deep specialisation.
- Example: premium organic skincare for niche buyers.
- Advantage: strong position and expertise; Limitation: higher risk if segment declines.

4) Micromarketing
- Customisation for local areas or individual customers.
- Example: personalised recommendations and offers in e-commerce apps.
- Advantage: high relevance; Limitation: data and operational cost.

Thus, choice depends on resources, competition, and market diversity.

Question 15

Explain perceptual (positioning) mapping. Draw a simple map using two attributes and explain how it helps marketing decisions.

Accepted Answer

Perceptual mapping is a technique used to visually show how customers perceive competing brands on key attributes. It helps understand brand position, competition intensity, and possible gaps in the market.

Steps:
1) Select two important attributes (e.g., Price and Quality).
2) Collect customer perception data (survey/ratings).
3) Plot brands on a 2D map.
4) Interpret closeness (competition) and gaps (opportunities).

Simple map (Price vs Quality):

```text
Quality (High)
   ^
   |        Brand C (High price, high quality)
   |   Brand B
   |
   |  Brand A (Low price, medium quality)
   +------------------------------> Price (High)
      Low
```

How it helps decisions:
- Brands close together compete strongly; firm may differentiate or reposition.
- Empty space indicates potential opportunity for a new positioning (new product/variant).
- Helps align marketing mix with desired position (premium pricing, quality claims, distribution).

Thus, perceptual mapping supports positioning and differentiation decisions in a clear, exam-friendly way.

Market Segmentation, Targeting and Positioning (STP) Strategy

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