This essay is firstly going to define what market segmentation is, it is then going to describe the stages of the segmentation, targeting and positioning model. To explain the STP model this essay will put it into context by applying it to the Arcadia group, and then going through the stages of the model in terms of how the Arcadia would use it. It will look at the way the Arcadia group creates a marketing mix for each of there segments, by going through each stage of the STP model, in terms of how the Arcadia group would use it when deciding on their marketing mix.
If a market is heterogeneous, then a firm has the option to segment it. Market segmentation is the process of dividing a market into smaller pieces based on one or more meaningfully shared characteristics. A firm segments due to the Pareto Principle, which states that 80% of a countries wealth and land are owned by 20% of its people. This is applied to market segmentation in terms of 80% of your profit can come from 20% of your customers if the correct marketing mix is applied.
The STP model is an important concept in the study and application of marketing. The letters STP stand for segmentation, targeting, and positioning. The STP process demonstrates the links between an overall market and how a company chooses to compete in that market. It is sometimes referred to as a process, with segmentation being conducted first, then the selection of one or more target markets and then finally the implementation of positioning. The goal of the STP process is to guide the organization to the development and implementation of an appropriate marketing mix.
There are three main consumer criteria which consumer markets can be segmented into. The three criteria are behavioral, psychological and profile. Each consumer criteria are applicable to different markets, for example behavioral which is segmenting on the basis of behavior methods is applicable for Tesco.
