Section Three - Marketing Decisions - STP Flashcards
What is STP?
Segmenting, Targeting and Positioning
Show the stages in which
What are the different ways to segment a market?
- Demographic
- Geographic
- Income
- Behaviour
How is the market demographically segmented?
Age, e.g. Saga Holidays are aimed specifically at the over-50s.
Gender, e.g. yoghurts are mainly marketed towards women.
Socio-economic class, e.g. businesses can segment their market based on the kind of jobs people have - e.g. modern one bedroom flats might be marketed at young professionals.
Family size, e.g. large “family packs” of breakfast cereal, loo roll, etc. are aimed at large families.
How is the market geographically segmented?
The market can be divided according to neighbourhood, city, county, country, or world region, e.g. Asia. It’s a method mostly used by multinational companies as their customers have a range of cultures, lifestyles and climates and are likely to need different marketing mixes.
An example closer to home is that the core market for Irn-Bru is Scotland.
How is the market income segmented?
E.g. CHANEL makeup is aimed at customers with high incomes, and Superdrug’s own-brand makeup is aimed at lower-income customers. Luxury products are usually aimed at high income groups.
How is the market behaviourally segmented?
Amount of use, e.g. mobile phone suppliers market differently to heavy users and light users.
Lifestyle, e.g. busy young workers might tend to buy lots of microwaveable ready-meals, so a company making ready-meals might target this market segment.
What are the three approaches that help a business which segments to target?
- Concentrated marketing
- Differentiated marketing
- Undifferentiated marketing
What is concentrated marketing?
Concentrated marketing involves targeting one or two segments. It’s a good approach for smaller businesses with limited resources. The segment must be big enough for a decent return, have growth potential (e.g. sports clothing for pensioners). It should also have a need that the business can meet (that isn’t already met by lots of competitors).
What is differentiated marketing
Where several segments are targeted, and the product and marketing mix is adapted to appeal to each segment. This is only really feasible for large companies with large budgets.
E.g. the same colouring book could be advertised to children as a fun activity, or to adults as a relaxation aid.
What is undifferentiated marketing?
Where the segments are ignored and the company tries to reach the entire market with a single product and marketing mix. It makes sense for widely used products, e.g. toothpaste.
It has the advantage of potentially high sales volumes and relatively low marketing costs.
What are advantages of niche markets?
- Small businesses dont compete directly with larger businesses
- They can meet the demand of a small niche more easily than that of a mass market.
What is positioning?
Positioning is creating an image of your brand or product in the mind of your target customer.
It’s getting them to develop the opinion of your product that you want them to.
Why do businesses have to focus on positioning the customer so much?
Customers have a mental map of the market and will position new products relative to the alternatives.
So a business needs to look at where would be the most effective place to position its brand or product in relation to its competitors. E.g. if it can’t compete with competitors on price or quality it might push the convenience or ethical nature of the product.
What are the influences on positioning?
- State of the market
- Company’s current products
- Attributes of the company
