3.3.3 Flashcards
what is STP
the process a business will use to ensure it is able to succeed in a market without necessarily competing directly with other companies. Market segmentation also allows a business to specialise in order to better meet the needs of customers.
value of market segmentation
differentiate itself from its competitors
develop and build its brand
identify and satisfy the needs of a specific group of customers
reach its customers with relevant marketing activities such as advertising
focus the business activities
build loyalty towards its brand and products.
methods of segmentation
geographic - based on where people live
behavioural - considering factors such as when people buy, why people buy, loyalty towards a brand
demographic - based on characteristics such as age, gender, occupation
income - how much people earn
what is positioning
Businesses might use a market map to help them position their business within the market. Positioning involves a business considering the combination of benefits and price relative to competitors.
A business can be competitively positioned against rival businesses if what
if the combination of price and benefits is somewhere on the line.
Where businesses tend to focus on a specific segment of the market with particular needs this is known as
niche marketing
A business targeting a mass market will produce
generic product that meets the needs of most people. This will determine how a business markets its products and positions itself in the market.
scale of segmentation in a market
mass market
market segment
niche market
individual
individual segmentation
In some industries technology has allowed businesses to profile individuals and customise their products so that they can target customers as individuals, such as online bespoke greeting cards.
mass market segmentation
- targeting a large population of the market with a generic product
- requires production on a large scale and investment in capacity
- potential for high sales revenue
- may compete with many other businesses in the market
- promotion will involve mass market techniques such as TV and newspapers
- business will have to be competitive on price in order to succeed
niche market segmentation
- targeting a small population of the market with a specialised product
- production on a small scale (possibly bespoke)
- low volumes but high profit margins
- few competitors but limited number of potential customers
- promotion through specialist mediums
- direct marketing
- business will have to compete on quality and customisation in order to succeed
segmentation
Identify target market based on business strengths, potential for sales, profitability of segment and presence of competition.
targeting
Use a method/s for categorising
customers based on their characteristics and needs.
positioning
Position business relative to competitors in order to meet customer needs currently not satisfied (gap in the market) or alongside a business where they can do it better.
