How do companies position and differentiate themselves among others? This blog posts provides the answer to that question. A company does not simply position its product without prior planning; marketers use the STP(D) process, a planning tool that incorporates the following 6Ps: Proper Prior Planning Prevents Poor Performance The mnemonic stands for segmenting, targeting, positioning, and differentiation.
It all starts with the proper segmentation variables. There are four variables which are widely used and all of them have different characteristics (Armstrong & Kotler, 2013). First the variable and then several corresponding characteristics are presented: 1. Geographic: Nation, region, states cities, neighborhoods, population density (urban, suburban, rural), climate 2. Demographic: Age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, generation 3. Psychographic: Social class, lifestyle, personality 4. Behavioral: Occasions, benefit, user status, usage rate, loyalty status.
For an example, segments for a high-end technological device will be constructed. It is not mandatory to use all four variables – it always depends on the product, company and finally on the marketer. The geographic variable is important to know in which language we have to present the device but also to know the population density. An urban citizen has to be targeted differently than a rural citizen. The demographic variable might appear with its characteristics of age, income and education. The high-end technological company might target for its new device young adults aged between 18 and 35 who own a bachelor degree and earn between 25 and 40 thousand Euros. The psychographic variable might appear with its characteristic of lifestyle. The AIO model (short for activities, interests and opinions) tells a marketer what activities the consumer likes, his interests and how he generally thinks about his world (Armstrong & Kotler, 2013). If a marketer wants to know more about the consumer’s usage rate or loyalty status then he will use the behavioral variable. One should use several criteria to decide whether a segment is useful or not. The following criteria are the most commonly used (Aaker & McLoughlin, 2014): 1. Measurable 2. Accessible 3. Substantial 4. Differentiable 5. Actionable.
This section introduces the art of targeting. After having constructed several segments that satisfy the above mentioned criteria, one has to choose which segment is the most attractive one for the fictional high-end technological company. Three factors play a role when deciding which segments to target (Aaker & McLoughlin, 2014): 1. Segment size and growth 2. Segment structural attractiveness 3. Company objectives and resources. As a result, the fictional segment consists of urban citizens, aged between 18 and 35 with an income between 25 and 40 thousand Euros who are interested in high-end technological devices and who already are current loyal customers.
Positioning and differentiation
After having decided that the segment satisfies the preceding three factors one arrives at the decision making of positioning and differentiation. There are seven different ways to position a product (Kenneth & Baack, 2014): 1. Product attributes 2. Competitors 3. Use or application 4. Price-quality relationship, 5. Product use 6. Product class 7. Cultural symbol. The fictional high-end technological company will use the following ways of positioning as they seem most appropriate: Product attributes, competitors, use or application. The fictional company has to have product traits that sets the brand apart from others, has to establish a position that can be used to contrast the company’s product against others and has to create a memorable set of uses for its product. A perceptual map assists in the process of finding a different position.
Lastly, after having found the perfect positioning and differentiation strategy for the company one has to develop the 4Ps of marketing. It is important that the positioning and differentiation strategy should emphasize the competitive advantage of the company in order to maintain a sustainable position in the consumer’s mind.
A company does not simply position its product or service without planning; the STP(D) process offers a comprehensive planning method. It is a creative and well structured process but requires a sound knowledge of various marketing theories.
Aaker, D. A., & McLoughlin, D. (2014). Strategic Market Management. Wiley.
Armstrong, G., & Kotler, P. (2013). Marketing: An introduction. Boston: Prentice Hall.
Clow, K. E., & Baack, D. E. (2014). Integrated Advertising, Promotion, and Marketing Communications. Pearson.