3.3 segmentation, targeting + positioning (STP)

Question 1

what is segmentation?

Answer 1

Splitting the market (customers) and identifying their wants and needs.

Question 2

How could we split (segment) customers based on their characteristics?

Answer 2

1. Age
2. Gender
3. Income
4. Location
5. Job
6. Lifestyle
7. Hobbies

Question 3

Common ways of categorising based on segmentation:

Answer 3

1. Demographic: characteristics of people in the target population. e.g. age and gender.
2. Geographic: where customers are based.
3. Behavioural: when do customers buy, how much do they buy, do they have any brand loyalty etc.
4. Income: consumers will have different spending habits based on their disposable income.

Question 4

what is socioeconomic segmentation?

Answer 4

segmentation on income and professions

Question 5

Why is segmentation useful?

Answer 5

• > Understand what different groups want rather than treat all customers the same
• > More focussed and efficient marketing - more segments focussed on the more complexed this would get
• > Adapting products to meet the needs of different customers may mean that customers are more satisfied but could be making the potential market smaller

Managers need to balance customer wants and needs with what is practical, efficient and profitable.

Question 6

what is targeting?

Answer 6

when a business decides which segments it wants to operate in.

Question 7

where will businesses target segments?

Answer 7

where it thinks:
There is sufficient demand and profit to justify the investment
-> Some segments may be too small to make a profit
-> Example: many universities have dropped languages
It has the ability to be competitive and gain sales

Do the requirements of the target market match the businesses skills and strengths?
-> Can the business compete with the existing firms in the market

Question 8

what is a niche market?

Answer 8

a business focusing on a particular small segment in a market e.g tall people / pregnant people

Question 9

what is a mass market?

Answer 9

a business focusing on consumers across lots of different segments e.g age / gender / income all at once

Question 10

+ves + -ves of niche market

Answer 10

+ves:

• > Can compete in a bigger market, without directly challenging the bigger businesses and not be seen as a threat by them
• > Not perceived as such a threat by larger competitors
• > Gap in the market with limited competition
• ves:
• > Small market which may be vulnerable to losing a few customers
• > Profits may be relatively low,
• > If the business grows it will attract the attention of larger businesses

Question 11

+ves + -ves of mass market

Answer 11

+ves:
-> More customers and more potential revenue and returns

• ves:
• > Large amount of investment needed
• > Competition
• > Can lose demand to niche markets

Question 12

what is positioning?

Answer 12

How products are perceived relative to to their competitors

For example:
The Daily mail and the Daily telegraph - they are both newspapers but are perceived very differently by readers in terms of what they offer.

Question 13

What technique can be used to show the positioning of a product? (customer perceptions)

Answer 13

market mapping

Question 14

Which factors do you think influence a businesses positioning?

Answer 14

Price
Image
Product
Service

Question 15

Other influences on the positioning of a product

Answer 15

• > The strengths of the business (internal)
• > Competitors (external)
• > Market conditions (external environment)