Ch 6 Flashcards
The STP Process
Segmentation
Step 1: strategy/objectives
Step 2: Segmentation bases
Targeting
Step 3: Evaluate segment attractiveness
Step 4: Select Target market
Positioning
Step 5: Identify and Develop Positioning Strategy
Step 1: establish overall strategy or objective
Articulate the mission and the objectives of the company’s marketing strategy clearly
Segmentation strategy must be consistent with and derived from firm’s mission and objectives as well as strengths, weaknesses, opportunities and threats (SWOT)
Step 2: segmentation bases
Geographic, demographic, psychographic, behavioural
Geographic
organizes customers into groups on the basis of where they live
Demographic
groups consumers according to who they are using easily measured, objective characteristics such as age, gender, income, education, race, occupation, religion, marital status, family size, home ownership, family life cycle
Psychographic
how consumers actually describe themselves or how they live (personality, lifestyle, motives)
Innovators/Thinkers/Believers/Achievers/Strivers/Experiencers/Makers/Survivors
Behavioural
groups consumers on the basis of why they buy, how often and how they plan to use the products
occasional/benefit/loyalty
Occasion segmentation
based on when a product is purchased or consumed
Benefit segmentation
considers benefits customers are looking for from products
Loyalty segmentation
customers that feel so strongly that the firm can meet their relevant needs so well that competitors are virtually excluded from their consideration
Geodemographic segmentation
combination of geographic, demographic and lifestyle characteristics
Better to use multiple segmentation methods
Step 3: evaluate segment attractiveness
identifiable, reachable, responsive, substantial, profitable
Identifiable
Determine who is within their market to be able to design products to meet their needs
Need to ensure that segments are distinct from one another
Who is their market, are the segments unique, does each segment require a unique marketing mix
Reachable
Consumers must know the product exists, understand what it can do for them and recognize how to buy it
Responsive
For segmentation strategy to be successful, customers in the segment must react similarly and positively to the firm’s offering
Customers must:
Reach positively to firm’s offering
Move toward the firm’s products/services
Accept the firm’s value proposition
Substantial and profitable
Once the potential target market is identified, it needs to be measured to determine size and growth potential
Segment profitability
Segment profitability = (segment size * segment adoption percentage * purchasebehaviour * profit margin percentage) - Fixed Costs
(PUT ON CHEAT SHEET)
Step 4: select target market
Undifferentiated, differentiated, concentrated, micromarketing
Undifferentiated targeting strategy (mass marketing)
Used when product is perceived to provide the same benefits to everyone or smaller firms
Ex. toilet paper, toothpaste
Differentiated targeting strategy
Targets several market segments with a different offering to each
Help obtain bigger share of the market and increases the market for their products overall
Helps diversify business and lowers company’s overall risk
Must develop, manufacture, transport, store and promote accessories separately for each of its store concepts
Concentrated (niche) targeting strategy
When selecting a single primary target market and focuses all its energies on providing a product to fit the market’s needs
Often used by entrepreneurs
Micromarketing
When firms tailors a product to suit an individual customer’s wants or needs
Mass customization: firms that interact on a one-to-one basis with many people to create custom-made products
Step 5: identify and develop positioning strategy
Positioning is how consumers view a company’s products & services based on important attributes. It places a company in mind relative to competing products
Positioning Methods
Value
Product attributes
Benefits & symbolism
Competition
Market leadership
Value
relationship of price to quality is most important consideration for consumers
Different consumers = different value
Product attributes
focuses on those attributes most important to the target market and can vary from target market to target market
Benefits and symbolism
emphasizes benefits of the brand as well as the psychological meaning of the brand to consumers
Competition
Head to head; positioning products head to head against specific competitor
Position against a specific competitor
Position against an entire product classification
Market leadership
emphasizing their leadership position within their industry
Positioning by using perceptual mapping
- Determine consumers’ perceptions and evaluations of the firm’s product or service in relation to competitors
- Identify the market’s ideal points and size
-> Use different sized ovals - Identify competitors’ positions
- Determine consumer preferences
-> Find out what customers value most in each segment - Select position
- Monitor the positioning strategy
Repositioning
strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences -> Expensive and risky
