Marketing decisions - STP

Question 1

What is STP an acronym for?

Answer 1

• Segment
• Target
• Position

Question 2

What does STP aim to do?

Answer 2

Aims to focus marketing where it is most effective

Question 3

What is the segment in STP mean?

Answer 3

Divide the market into different groups with similar characteristics such as age

Question 4

What does Target stand for in STP?

Answer 4

Decides which market segment to focus on and will alter product and and marketing mix to appeal to this group

Question 5

What does position mean in STP

Answer 5

Position the products in the targets segments’ minds so they see it as better than the competition.

Question 6

What are the different bases/ methods used to segment a market?

Answer 6

Question 7

How is geography used as a base to segment a market?

Answer 7

Customer location

region

used mainly by multinational corporations

Question 8

How is the demographic used as a base for market segmentation?

Answer 8

Age

Gender

Socioeconomic class

occupation

Question 9

How is behaviour used to segment markets?

Answer 9

Rte of usage of the product

Lifestyle - elderly and ready meals

Loyalty status

Readiness to purchase - impulsive buy

Benefits sought - value for moeny

Question 10

How is income used as a base for market segmentation?

Answer 10

Luxury goods aimed at high incomes

Lower quality goods aimed at lower incomes

Question 11

What are the advantages of segmentation?

Answer 11

• Better matching of customer needs – needs differ frequently so creating separate products for each segment makes sense
• Enhanced profits for business – customers have different disposable incomes and vary in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits
• Better opportunities for growth – market segmentation can build sales (e.g. customers can be encouraged to “trade-up” after being sold an introductory, lower-priced product)
• Retain more customers – by marketing products that appeal to customers at different stages of their life, a business can retain customers who might otherwise switch to competing products and brands
• Target marketing communications – firms need to deliver their marketing message to a relevant customer audience. By segmenting markets, the target customer can be reached more often and at lower cost

Question 12

What are the disadvantages of market segmentation?

Answer 12

• Companies may ignore the needs of potential customers
• Difficult to break the market into clear segments
• Difficult to market to a specific segment.
  *

Question 13

What are the three ways businesses market towards their identified segments?

Answer 13

• Concentrated marketing
• Differential marketing
• Undifferentiated marketing

Question 14

What is concentrated marketing?

Answer 14

Where firms target 1-2 segments

The segments should be big enough to make a return and have a need the business can meet

Useful for small business with limited resources

Question 15

What is Differentiated marketing?

Answer 15

several segments are targeted and the

product, as well as the marketing mix, is tailored to each segment

only feasible for large firms with lots of resources

Question 16

What is undifferentiated marketing?

Answer 16

The whole market is targeted by a single product and marketing mix

Used for widely used products

Its advantage is high sales volume and low marketing costs

Question 17

Why might a business target a nice market?

Answer 17

• Small specialised businesses don’t have to compete with larger ones allowing them to make a profit
• Small businesses can meet the demand of a nice market easier than in a mass-market
• Easier to market to a nice market
• Mass marketing often involves undifferentiated marketing or concentrated marketing
• Nice markets often use Concentrated marketing

Question 18

How do businesses position products into a target customer’s mind?

Answer 18

• Customers’ mental map of products will put new products with alternate ones,
• Businesses need to differentiate their product from others through price, quality, convenience or ethics
• The business also need to show their product is better than their competitor’s products

Question 19

What are the influences on positioning a product?

Answer 19

State of the market

Companys current products

Attributes of the company

Question 20

How does the state of the market influence the positioning of a product?

Answer 20

• In a recession, products will be positioned as good value for money
• In an economic upturn, they will be positioned as good quality and eco friendly

Question 21

How do a company’s current products influence positioning?

Answer 21

• If other products are seen as expensive as good quality the business will position the new product as the same.

Question 22

How might the attributes of a company affect the company’s need to position a new product?

Answer 22

• products should position products to their strengths such as if a business has a reputation for quality it should focus on high quality goods