5. Segmentation, targeting and positioning Flashcards
What are the types of needs and their features?
Existing needs
- Short term
- Satisfactory solutions that already exist
- Opportunity for new products is limited
Latent Needs
- Unmet needs
- Needs that consumer don’t realise unless researched upon
- Opportunity for innovation + profitability
Incipient Needs
- Unmet needs
- Consumers cannot articulate the need or a solution
- Technological breakthrough can drive markets
- E.g completely radical product
What does STP Model stand for?
Segmentation
- Group market units using relevant variables
- Profile segments
Targeting
- Evaluate segment attractiveness and select target segments
- Develop personas
Positioning
- Identify sources of differential advantage
- Create desired positioning strategy
Why is it important to STP?
- Address specific customer needs
- Optimise resources so they don’t over or under serve customers
- Gain competitive advantage
What is the definition of market segmentation?
It is to divide the current market into smaller target markets that have similar needs and want who will respond in a similar way towards the market offerings
What are the benefits of market segmentation?
- Optimise resource allocation
- Identify opportunities for repositioning
- Creating a product that satisfies customer needs
Describe the types of segmentations
Geographic Segmentation
- Answers “where” question by grouping people via location
- e.g: Seasonal clothing in different places
Demographic Segmentation
- Answers “who” question by grouping people via categorical descriptive characteristics
- e.g Boomers, Gen Z
Psychographic Segmentation
- Answers “why” question by grouping people using psychological. sociological, and anthropological variables
- E.g Personality, attitudes, values
Behavioural Segmentation
- Answers “how” question by grouping based on people’s past experience, tendency and predicted behaviour.
- E.g buyer-readiness, early adopter or no
What are the principles of effective segmentation?
- Homogeneous (within segments)
- Heterogeneous (distinctive between segments)
- Identifiable: Can we identify prospects with the segment’s characteristics?
- Differentiable: Does it respond differently to marketing mix elements?
- Measurable: What is its size, purchasing power, and characteristics?
- Accessible: Can I reach and serve it?
- Substantial: Is it large and profitable enough?
- Durable: Will the segment be stable long enough?
- Actionable: Can I attract it and make it purchase?
What is the definition of persona?
Answers “which” question by selecting which segment of market will be focused and created as a form of a character.
Example:
Self-made lifestylers, Libertarians, Trend Hunters
What is the difference between personas and segments?
Segments focuses on the general case of “who” while personas are selected within the class of “who”
What are types of values in the VALS Framework?
- Innovators
- Successful, sophisticated, active people with high self-esteem
- Thinkers
- Mature, satisfied, and reflective people motivated by ideals.
- They seek durability, functionality, and value in products
- Achievers
- Successful, goal-oriented people who focus on career and family. They favour premium products
- Experiencers
- Young, enthusiastic, impulsive people who seek variety and excitement.
- They spend on fashion, entertainment, and socialising
- Believers
- Conservative, conventional, and traditional people with concrete beliefs
- They prefer familiar products and are loyal to established brands
- Strivers
- Trendy and fun-loving people who are resource-constrained. They favour stylish products.
- Makers
- Practical, down-to-earth, self-sufficient people who like to work with their hands
- Survivors
- Elderly, passive people concerned about change and loyal to their favourite brands
What to look out for when targeting?
- Size and growth
- Interrelationships and competitive response
- Fit with company capabilities
How to select target markets?
Small segments may be more profitable
Criteria
- Actual segment revenue
- Revenue potential
- Profitability and potential profit
- Fit with company’s business strategy
- Competitive concentration
Describe the considerations in targeting?
Size and growth
- segments evolve throughout the product life cycle so timing defines the size and growth
Interrelationships(compatibility) of segments
- Having success in one segment may be easier to enter the next segment
Competitive marketing strategies
- Consider markets not served by competitors
- Degree of fit
- The level of understanding of the segment
Describe the targeting types.
Undifferentiated Mass
- focuses on entire target market rather than segment
- Uses a single marketing mix plan
- E.g salt can be used for the whole market
Differentiated
- targets different market segments with each having their own specific marketing mix to meet the needs
- E.g multivitamins based on gender
Concentrated (niche)
- focuses all marketing efforts on a very specific market segment
- effective for small companies with limited resources
- High risk high reward
Micro (segment of ‘one’)
- Limit customers into very small segments or even as individuals
- targets their audience specifically to those finite number of customers
- Used to develop a product that satisfies the specific requirements of the customer
- Penetrates market niche to allow for increase market share and brand loyalty
What is the definition of positioning?
- The development of creating characteristics that help the product differentiate itself from its competitors
- Deliberately selling these features to the customers
