MARKETING MANAGEMENT

STP MODEL FOR

 Segmentation, Targeting, Positioning
Concept and Process of STP
The STP process demonstrates the links between an overall market and how a company chooses to
compete in the 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.

Segmentation is defined as the process of splitting a market into smaller groups with similar product
needs or identifiable characteristics, for the purpose of selecting appropriate target markets.
Targeting refers to an organizations proactive selection of a suitable market segment with the intention
of heavily focusing the firms marketing offers and activities towards his group of related consumers.
Positioning is the target markets perception of the products key benefits and features, relative to the
offerings of competitive products.

Methods of Segmentation
Market Segmentation is a process of dividing the market of potential customers into different groups
and segments on the basis of certain characteristics. There are many reasons as to why market
segmentation is done. One of the major reasons marketers segment market is because they can create a
custom marketing mix for each segment and cater them accordingly. Segmenting is dividing a group
into subgroups according to some specific basis. These bases range from age, gender to psychographic
factors like attitude, interest, values.

Gender: Gender is one of the simplest yet important bases of market segmentation. The interests,
needs and wants of males and females differ at many levels. Thus, marketers focus on different
marketing and communication strategies for both. This type of segmentation is usually seen in the case
of cosmetics, clothing, and jewellery industry.

Age: Segmenting market according to the age group of the audience is a great strategy for
personalized marketing. Most of the products in the market are not universal to be used by all the age
groups. Hence, by segmenting the market according to the target age group, marketers create better
marketing and communication strategies and get better conversion rates.

Income: Income decides the purchasing power of the target audience. It is also one of the key factors
to decide whether to market the product as a need, want or a luxury. It can be divided as high, mid and
low income group.

Place: It is where the target audience lives affect the buying decision the most.

Types of market segmentation

Geographic segmentation
Geographic segmentation divides the market on the basis of geography. This type of market
segmentation is important for marketers as people belonging to different regions may have different
requirements.

Demographic segmentation
Demographic segmentation divides the market on the basis of demographic variables like age, gender,
marital status, family size, income, religion, race, occupation, nationality.

Behavioural Segmentation
The market is also segmented based on audience’s behaviour, usage, preference, choices and decision
making. The segments are usually divided based on their knowledge of the product and usage of the
product.

Psychographic Segmentation
Psychographic Segmentation divides the audience on the basis of their personality, lifestyle and
attitude. This segmentation process works on a premise that consumer buying behaviour can be
influenced by his personality and lifestyle.

About the Company- Kellogg’s

Kellogg’s is a public American multinational food-manufacturing company headquartered in

Battle Creek, Michigan, United States. It was founded by Will Keith Kellogg on February 19th
1906. The companies chairman and CEO is Steven Cahillane. Their products are cereals,
cookies, chips, crackers, toaster pasteries. Kellogg’s mission statement is “Nourishing families
so they can flourish and thrive”. Kellogg's products are manufactured in 18 countries and
marketed in over 180 countries. Brothers Dr John Harvey and Will Keith Kellogg founded a
health food company, the Battle Creek Sanitarium Health Food Company in 1898. They merged
with Sanitas Nut Food Company , and became The Kellogg Food Company. Kellogg’s largest
factory is at Trafford Park in Trafford, Greater Manchester, United Kingdom, which is also the
location of its European headquarters. The company holds a Royal Warrant from Queen
Elizabeth II and the Prince of Wales. Kellogg's has used some merchandising for their products.
Kellogg's once released Mission Nutrition, a PC game that came free with special packs of
cereal. It played in a similar fashion as Donkey Kong Country; users could play as Tony the
Tiger, Coco the Monkey, or Snap, Crackle, and Pop. Kellogg's has also released "Talking"
games. The two current versions are Talking Tony and Talking Sam. In these games, a
microphone is used to play games and create voice commands for their computers. In Talking
Tony, Tony the Tiger, one of Kellogg's most famous mascots, would be the main and only
character in the game. In Talking Sam, Toucan Sam, another famous mascot, would be in the
game, instead. Some toy cars have the Kellogg's logo on them, and occasionally their mascots.
There was also a Talking Snap Crackle and Pop software. Kellogg's frequently partners with
the Olympic Games to feature American athletes from the Olympic Games on the packages of
their cereal brands. In 2017, the company announced its marketing campaign for the 2018
Winter Olympic Games featuring American athletes Nathan Chen, Kelly Clark, Meghan
Duggan and Mike Schultz.

Product Mix Details

Kellogg’s has mulitple business segments which are based on product category or geography.
Segments based on product catergory are US morning foods, US snacks. The products in the
marketing mix of Kellogg’s covers breakfast cereals, as well as other foods items. The US
morning foods segment consists of products like cereal, toaster pastries, nutritional bars and
beverages with prominent brands like Kellogg’s Cornflakes, Kellogg’s Chocos, Kellogg’s
Frosties, Kellogg’s Coco-pops, Special-K, Kellogg’s Froot Loops etc. the US snacks segment
consists of cookies, crackers, savory snacks, cereal bars and fruit flavored snacks. Breakfast
cereal generates a revenue of more than $400 billion in sales globally each year and comprises
majority of global sales. Snacks generate $230 billion globally in total sales each year and
represent significant share of worldwide sales. Pringles is the largest brand in this category.
Kellogg’s is adapting is products according to consumer preference for healthier snacks with
visible ingredients such as granola, fruits and nuts gluten-free Special K and Kashi sprouted
grains and organic cereal.
  Product width:
It refers to different categories the company caters to Kellogg’s India offers products in Food
category only which are restricted to cereals.
 Product length:
It refers to the total number of product lines present in the mix.
 Product depth:
It is the total number of variants offered by the company for the particular period.
Kellogg’s Special K does not have a variant in India, only available in original flavour, but is
available in 4 different sizes. So its depth is 4.
However, cornflakes have 6 variants, Chocos 4 and muesli 4 variants.
 Product consistency:
It describes the relationship between various product lines in terms of use, production
requirements, distribution channels, etc. Kellogg’s product line is consistent because they have
a similar end use as breakfast cereals, production and distribution channels.

Segmentation tool for Pringles

Pringles is segmented only on the basis of different flavours. Geographically it has some flavours
only available in the US, Europe etc. Those flavours are slowly being made available in India
also. It is segmented based on the taste and preference of different people. It is segmented into
original, Cheddar, sour cream and onion, sea salt and vinegar. The original is for people who like
jazzercise or would like to try it. Sour cream and onion is made to target people who like chip dip
and would like a chip without the dip. Sea salt and vinegar targets men that want to think of
themselves as manly, because “only a manly man can handle this chip”
Advantages of segmentation
The biggest advantage that kellogg’s as a whole and Pringle’s has is that there is a growing
demand for convenience food products. The entire products of kellogg’s is growing in demand for
in the international market. When it comes to Pringle’s there is an increase in demand for chip
accompaniments. They still have room for innovation. They have a lot of social media-
advertising which has increased awareness on products. They have although established a place in
the market. Wide mouthed jars make dipping chips risky to germs from doubledippers and
contamination from other external environmental factors. The positioning statement for teenage
high school students who want a delicious, mess-free alternative to traditional dipping sauces,
Pringles Savory Sauce is a premium-priced chip dip that offers a mess-free, great-tasting
experience.

Disadvantages of segmentation
Pringles being recognized has chances of loosing focus or have conflicting problems. It is
basically focused on teenagers only so it doesn’t increase its size in the market othertha when a
new variety is brought in. Since they don’t much place to expand and have high performance
already the market is saturated. There are few competitors and if they match the quality and taste
it is an easy market entry for competitors. Although the already existing completion is very strong
competition. With technology coming up it is making current products old news.

Targeting
A target market is a group of customers within a business's serviceable available market at which
a business aims its marketing efforts and resources. A target market is a subset of the total
market for a product or service.
The target market typically consists of consumers who exhibit similar characteristics (such as
age, location, income or lifestyle) and are considered most likely to buy a business's market
offerings or are likely to be the most profitable segments for the business to service.
Once the target markets have been identified, the business will normally tailor the marketing mix
(4Ps) with the needs and expectations of the target in mind. This may involve carrying out
additional consumer research in order to gain deep insights into the typical consumer's
motivations, purchasing habits and media usage patterns.
The choice of a suitable target market is one of the final steps in the market
segmentation process. The choice of a target market relies heavily on the marketer's judgement,
after carrying out basic research to identify those segments with the greatest potential for the
business.
Occasionally a business may select more than one segment as the focus of its activities, in which
case, it would normally identify a primary target and a secondary target. Primary target markets
are those market segments to which marketing efforts are primarily directed and where more of
the business's resources are allocated, while secondary markets are often smaller segments or less
vital to a product's success.
Selecting the "right" target market is a complex and difficult decision. However, a number of
heuristics have been developed to assist with making this decision.

Kellogg’s Targeting
Kellogg’s Corn Flakes
The target market for Kellogg’s Corn Flakes includes the rich, urbanized, Westernized part of the
population. Kellogg’s Corn Flakes distinguishing as “fast, opportune breakfast” targeted at the
growing number of middle class families who value time and practicality. Age is a significant
demographic variable for Kellogg’s Corn Flakes as the product will target fixed segments that
are more likely to consume healthy food products. The healthy breakfast cereal product such as
Kellogg’s Corn Flakes focuses more on children – 3 to 12 years old and senior adults – above 65
years old. Kellogg’s has to deal with the issue that buyers of “Corn Flakes”, generally adults and
often women, are not always the consumers. “Corn Flakes” are intended towards the whole
family, healthy minded customers. It provided a fast meal before the early morning rush to
school, and some kids and adults ate it as a snack at other times of the day. Kellogg’s also evades
differences that based on the age, sex or gender.

Kellogg’s uses a mix of demographic, geographic and psychographic segmentation to market its
1600 products in around 180 countries around the world.

Differentiating targeting strategy is used by Kellogg to make its products available across
different channels.

The world’s largest cereal company uses product/ benefit based positioning strategies to
highlight the benefits of their products to the customers.

Special K cereals’ belong to the category of breakfast cereals and are part of Kellogg’s product
line ‘Special K’. Besides cereals, muesli- and muffin-bars and waffles are available.

Cereals are available in different flavours: Original, Red Berries, Vanilla Almond, Low Carb,
Peach & Apricot. All are low-calorie, low-fat, offering more vitamins and minerals than other
breakfast cereals. Thus, ‘Special K cereals’ are a qualitative, healthy, balanced way to start the
day. Additionaly, these cereals have a great taste. Thus with ‘Special K’ eating healthy needn’t
be boring but is tasteful, varied and satisfying.

‘Special K’ is easy and fast to prepare. Consumers just have to add milk. The package also
accounts for fast and easy use: In the primary cardboard container is a secondary plastic bag,
ensuring that it stays crisp and flavoured.
‘Special K’ comes in 360g and 630g packs. All items in the product line are labeled according to
Kellogg’s and ‘Special K’s corporate designs. Hence it is easy to recognize in-store and by this
the shopping process is eased. By offering a large pack, consumers do not have to repurchase
that often and more free time is left, e.g. for exercising.

These product characteristics point to busy consumers paying attention to shape and fitness but
also wanting enjoyment of tasteful food.

First, prices are compared with competitor’s products in the category. Most of the competitors do
not offer special dietary products, thus only Uncle Toby’s Plus products will be taken into
consideration here.

Kellogg’s ‘Special K’ cereals are priced higher than competing products. These premium prizes
indicate a high-quality, high-price strategy.

It can be concluded that the targeted consumers are willing and able to pay the higher price. Thus
working middle or upper-class people are rather targeted than students, unemployed or members
of the lower-class.

To enter any segment, a company has to gauge potential success each market segment has to
offer. This is called Targeting. Kellogg’s uses Differentiated Targeting strategy.

Basic target market of Chocos is kids teens and their moms. Basically it is targeting tier 1,2,3
cities where moms watch tv and understand where they are working and still wants their child to
stay healthy

Target market in simple words is a fairly homogenous group of costumers to whom a company
wishes to appeal. In case of All Bran, Kellogg’s is sailing a fibre rich cereal product thus should
target every individual that wants to leave a fit and healthy life.

it also targets Adults and elders which are health conscious usually tend to visit gym to stay fit.
So Kellogg’s can try getting into partnership with gym instructors so that they capture major
junk of health conscious group

The chance of target marketing strategy becoming successful is totally dependent upon the
marketers’ expertise of recognising and choosing a befitting market segment.

Kellogg’s has been successful with this strategy globally. W.K.Kellogg UK and Ireland brand
manager Emma Birks said: “We’re committed to creating foods which suit changing consumer
diets and with people increasingly seeking more plant-based foods, the W.K.Kellogg range is
crucial to our portfolio.

“The brand will satisfy consumers searching the aisles for organic, vegan-friendly foods with
natural flavourings and the no added sugar label.
Positioning
Positioning refers to the place that a brand occupies in the minds of the customers and how it is
distinguished from the products of the competitors. In order to position products or brands,
companies may emphasize the distinguishing features of their brand (what it is, what it does and
how, etc.) or they may try to create a suitable image (inexpensive or premium, utilitarian or
luxurious, entry-level or high-end, etc.) through the marketing mix. Once a brand has achieved a
strong position, it can become difficult to reposition it.
Positioning is one of the most powerful marketing concepts. Originally, positioning focused on
the product and with Ries and Trout grew to include building a product's reputation and ranking
among competitor's products. Schaefer and Kuehlwein extend the concept beyond material and
rational aspects to include 'meaning' carried by a brand's mission or myth. Primarily, positioning
is about "the place a brand occupies in the mind of its target audience".Positioning is now a
regular marketing activity or strategy. A national positioning strategy can often be used, or
modified slightly, as a tool to accommodate entering into foreign markets.
The origins of the positioning concept are unclear. Scholars suggest that it may have emerged
from the burgeoning advertising industry in the period following World War I, only to be
codified and popularised in the 1950s and 60s. The positioning concept became very influential
and continues to evolve in ways that ensure it remains current and relevant to practising
marketers.
Positioning of Kellogg’s

The INR 7 billion breakfast cereal market in India had attracted several fast moving consumer goods
giants like GlaxoSmithKline Consumer Healthcare, PepsiCo and Britannia with their respective brands
like oats cereal under the brand names, 'Horlicks', 'Quaker Oats' and 'Britannia Healthy Start'. In
addition, many other private players like Dr Oetkar and Marico had also penetrated into the breakfast
cereal market. Yet, Kellogg’s was the market leader with around 60% market share in the breakfast
cereal market. In the muesli segment, it had a market share of around 49% and in the oats segment a
market share of 9%. Kellogg’s always had the first mover advantage over its rivals. Kellogg’s was
present in the Indian market since 1995 with its Kellogg’s corn flakes brand. Initially, Kellogg’s had to
compete with traditional Indian Nastha (breakfast). Kellogg’s positioned itself as family brand and
promoted and customised different ways to eat cereal to the Indian customers. Kellogg’s came up with
different flavors like honey and almond to add variety to its products. Although Kellogg’s was quick
to learn from its mistakes, it faced various challenges with the strong cultural values of Indian
consumers and low price factor. Based on the above scenario, it remained to be seen, whether,
Kellogg’s would be able to survive in the competitive scenario with the help of its positioning strategy.

Kotler et al’s ideology of marketing entailing understanding consumers and their needs and designing
marketing initiatives to deliver those needs (2009, p. 5) emerges in the marketing endeavors
undertaken by the Kellogg’s Special K (SK) cereal brand. The marketing foresight inculcated by the
brand not only helped it contribute to the overall success of the Kellogg conglomerate but also helped
it evolve as a strong contender in the UK cereal industry. This assignment will unravel the marketing
practices followed by the SK brand by analyzing its positioning in the UK cereal market. The analyses
will encompass highlighting the customer segmentation adapted by this cereal brand followed by
evaluating the efficacy of its target market selection. Subsequently, it will assess the cereal’s
positioning as compared with its competitor’s positioning including its usage of the marketing mix
elements to sustain that positioning. Finally as an outcome of the above analysis, it will offer
recommendations to strengthen the brand’s market positioning.

Assumptions Made:
Barring considering the retailers as buyers for a five force analysis of the UK cereal industry, the
assignment considers the end users as the consumers of the SK cereal. Whilst for a perceptual map,
price has been used to draw inferences on the product quality of the various cereal brands, Kellogg’s
product life cycle stage in the UK market and SK’s brand share have been used to draw inferences on
SK’s product life cycle stage.

UK Cereal Market and Kellogg’s:

The UK cereal market grew by 15.7% in value between 2004 and 2008 because of the perceived
health benefits of and convenience in consuming cereals coupled with the declining popularity of the
traditional breakfast (Worth, 2009). This growth rate indicates the attractiveness of UK cereal
industry, which is also substantiated by a Porter’s five forces analysis of the .This oligopolistic market
is dominated by three big brands: Kellogg’s, Weetabix and Cereal Partners with Kellogg’s leading the
market.
Since giving the world its very first ready to eat cereal – cornflakes ,Kellogg’s has become practically
synonymous with breakfast cereals .With over 100 years of experience in the cereal business, it
appears that Kellogg’s has built its high brand value on consistent pioneering innovations and
incessant delivery of consumer’s nutritious food requirements. And keeping true to this tradition is
Special K, the leading cereal brand of the Kellogg’s family.

Special K and its marketing choices:

Launched in the UK in 1959 (Kellogg’s Special K, 2009), Special K is a nutritious low-fat, ready to
eat diet cereal that owes its eminent market position to the enhanced marketing choices made by the
Kellogg marketers (Kellogg Company, 2003,2004). Following section of the assignment will analyse
the components of the marketing choices made by the SK brand.

Market segmentation and Target Market:

SK is targeted at weight conscious women, employed/homemakers, between the ages of 25-49 who
desire to attain a slimmer shape either for a healthy lifestyle or for an occasion. And in pursuit of their
weight goals these women will prefer to consume nutritious food substitutes including paying an
above average price for the product.

Alike the cereal manufacturers who use a number of variables to segment their customers (deduced
from the data on consumption of cereals it appears that SK also segments its customers using
demographic variables such as gender, age and occupation and behavioral variables such as occasion
and benefits.

But unlike the other cereal manufacturers, SK utilized its customer segmentation to identify and serve
a distinct market group, which proved to be attractive and profitable over catering to the entire mass
market. Moreover factors that contribute to the continued success of serving this target market are:

Dieting trends: Results of a consumer research carried out in 2008 revealed that women are constantly
trying to lose weight, where 24.3% of the women dieted most of the time as compared to 13.9% of
men (Baxter, 2009). This consumer behaviour augments SK’s target market selection.

Popularity of Health food: The popularity of health food is increasing as confirmed by a consumer
research where 43.8% of the research pool displayed an affirmative interest in purchasing functional
food. This growing trend benefits SK as women (47.3%) accounted for the majority of the preference
over men (40.1%) (Taylor, 2008).

UK Obesity levels: The forecasted UK obesity levels for 2010 where women (29%) are more likely to
be obese then men (27%) (Gower, 2008) not only favors SK’s product proposition but also provides
the brand with an opportunity to expand its customer base.

Grocery shopping: SK can effectively access its target market using Kellogg’s existing distribution
channel of grocery chains, owing to the consumer behaviour where women undertake majority of the
shopping at supermarkets as compared to the men.
Growth of UK cereal market: In addition to its current growth rate ,the UK cereal market is also
forecasted to prosper in the future. This future growth rate, supported by an immense market potential
that exists in the form of people still skipping their breakfast, enables SK to attract new customers.

Whilst the above factors substantiate SK’s distinctive target market selection it is also imperative to
evaluate the brand’s positioning in this target market as compared to its competitors to gauge the
success of its marketing foresight.

Competitor’s versus Special K’s positioning:

Though Porter’s five force analysis of the UK cereal industry reveals that competitive rivalry in this
market is moderate, failure by cereal manufacturers in differentiating their products will result in
increased competition. SK endures industry competition based on the category points of the parity
from other health cereal brands, including the various Kellogg brands, and market competition from
other slimming aids such as diets, meal replacements and appetite suppressants .

Whilst the popularity of the cereals is on the rise (refer to prior discussion) the popularity of the
slimming aids is on the decline due to the augmented awareness of the healthy eating habits (Baxter,
2009). Hence though the slimming aids are positioned as weight management products for the
positioning of the various slimming aids in the market also targeted at women, it can be deduced that
SK has a superior market potential over these products.

A perceptual mapping of SK with its industry competitors divulges that the brand is perceived as high
quality premium priced product by its customers. However SK’s consumer perceived value is not
alone limited to its price and quality differentiation but rather is accentuated by its unique market
positioning in the cereal industry.

‘Special K is positioned as a premium shape management nutritious cereal for women’

The above positioning unveils that instead of imitating its competitors by using common variables
such as quality, energy, taste, natural ingredients and price, SK utilizes the popular variable of body
shape to differentiate its product .Though a number of consumer products and services use the variable
of shape to differentiate their product, SK was the first cereal brand to employ this positioning making
it unique in the cereal industry . Kellogg’s by using its extensive experience to develop and position
the SK cereal, appears to have understood and delivered its consumer needs; where women may want
to lose weight either post an occasion such pregnancy or holiday or to lead a healthy lifestyle or to
improve their physical experience.

The value proposition offered by SK that acts as its point of difference from the other cereal brands
has also helped it minimize the risk of cannibalization from the other Kellogg cereals.

Furthermore, SK’s market positioning has helped convert the consumer’s cereal purchase decision
from a low involvement to a moderate involvement activity by linking their purchase decision to the
psychological and physical benefits that can be derived from the product. Infact the SK 2 week
challenge, which is an important element of the brand’s positioning ,facilitates potential increases in
the product usage and brand loyalty as once consumers verify the benefits of the product they may
want to extend their association with the brand. It can be argued that by targeting only one distinct
consumer group, SK is limiting its profit potential but on the contrary the growth in its market share is
a testament of its successful market positioning in highly profitable target market.

However SK’s current and future market share could be threatened if it is no more the only cereal
adopting the shape positioning as revealed in a SWOT analysis displayed below. Hence the strength of
its positioning depends on effective management of the marketing mix elements.

Conclusion
This acknowledges that the marketing choices made by Special K or kellogg’s in general, quite like its
name, prove to be special for the brand. Perceptive of its consumer needs and behaviour, Special K
effectually segmented its customers and selected a profitable and sustainable target market in a
flourishing cereal industry. This target market selection has immensely contributed to the special
status acquired by this brand. However the true success of the brand lies in how it differentiated itself
from its competitors by relying on the SHAPE positioning that also acts as the value proposition for its
consumers. Though the brand astutely manages the product, place, promotion and price attributes of its
marketing mix to support its positioning, the reality of its product life cycle stage cannot be escaped.
Hence recommendations to improve SK’s advertising, promotional activities and brand line extensions
have been made to avoid the onset of the decline stage for the product.