What do you understand form Segmentation, Targeting and Positioning (STP) strategies?

What do you understand form Segmentation, Targeting and Positioning (STP) strategies? What are its merits and demerits for the marketing?

Market segmentation - Market segmentation may be defined, as the division of a market into groups of segments having similar wants. But wants must be interpreted very broadly, in terms far broader than product characteristics only. Segments may differ also in their needs for information, reassurance, technical support, promotion, and a host of other 'non-product' benefits that are part of their purchase. They may also differ in their capacity to pay for these differences.
Economists view a product as differentiated if some buyers to similarly pieced rival brands prefer it on the ground of differences in the following:
• Physical aspects of product
• Services offered
• Convenience in using or buying the product
• Image projected
If you analyse the above view put forward by economists you will reach the conclusion that all segmentation except segmentation involving price alone entails differentiation. But it does not mean that the two are same. For segmentation involves more than that what is achieved through product differentiation. In market segmentation the aim is not merely to divide the market into sub-classes based on product differentiation but to distinguish want categories that correspond to the distinct demands of various groups in the market.
So we can say that in product differentiation the marketer produces two or more products that are different in terms of features, styles, quality, size and so on. The objective here is to offer variety to buyers rather than to appeal to different market segments.
Merits and Demerits for the Marketers First, we will highlight the benefits from segmentation and these are:
• Segmentation helps a company to exploit its market better by selecting market niches (suitable segments) that are compatible with its resources
• Segmentation helps in focusing strategies more sharply on target groups
• Segmentation is more likely to result in instilling customer 'loyalty' since the firm's offering is better matched to those in the segment.
Doubts about effectiveness of segmentation
The discussion that follows concentrates on the doubts, which have been expressed on the effectiveness of segmentation
Are segments mutually exclusive groups?
Remember, segments are not mutually exclusive customer groups. What we are exactly grouping is 'anticipated order' from buyers, not buyers themselves. To assume that he or she is in one segment and one segment only, is to assume that the circumstances are so constant that use-functions and generated functions remain fixed. What we are really

trying to emphasise is that the same consumer may appear under different descriptions for different segments.
/ To illustrate: Forhans and Colgate toothpastes differ and seem aimed at different
segments, but the same people may buy both of these. The fact that the same people buy
both of these products does not in itself imply the absence of meaningful segments.
Products in different segments of the market may be bought by the same buyer for
different family members or for different occasions, or just for variety etc.
Is segmentation merely on the basis of different product forms?
It is not right to say that segmentation is merely done on the basis of different product forms. Although this is what usually happens. But segmentation can be on other bases as well like distribution, price, promoted image, etc. When insignificant differences exist between brands
What happens in situation where markets are not heavily segmented or where the differences between products are marginal
Benefit segmentation
In benefit segmentation you segment the market on the basis of what people say or the
benefits they seek from the product.
Yankelovich applied benefits segmentation to the purchase of watches. He found that
buyers bought for lowest price (23%), durability and general product quality (46%),
and as symbols of some important occasion (31 %).
One of the most successful benefit segmentation was reported by Russell Haley who
coined the phrase benefit segmentation. According to him the oral hygiene (toothpaste)
market can be divided into four distinct benefit segments depending on which of the
following in sought:
• Flavour and product appearance
• Brightness of teeth
• Decay prevention
• Low price.
Once we have categorized those in the market on the basis of the benefits they seek, they can be identified by what they are (demographic characteristics) and what they do (behaviorist and psychographics characteristics). For example, in the Russell Haley study the brightness of teeth seekers were young people in their teens with a personality disposed towards high sociability and an active life style. Similarly, decay prevention seekers had large families, were heavy toothpaste users, and were conservative. Each segment also favoured certain brands. Thus, benefit segmentation requires:
• Determining the major benefits that people look for in the product class, like intrinsic preference, for example, taste, level of performance, snob appeal, price, reputation etc.
• The kinds of people who look for each benefit, and
• The major brands that deliver each benefit.