segmentation, targeting, and positioning (stp)

Question 1

mass marketing vs. target marketing

Answer 1

mass marketing tries to reach as many people as possible
targeted marketing attempts to reach a specifically defined and profiled audience

Question 2

when is mass marketing best? (4)

Answer 2

1. consumers have (virtually) the same needs
2. goods are scarce or a commodity
3. goods can sell themselves
4. little to no competition

Question 3

when is target marketing best? (5)

Answer 3

1. valuable customer segments identified
2. more efficient communication
3. customized/personalized products and services
4. efficient/personalized interactions with the firm
5. relevant promotions

Question 4

the 3 steps of targeted marketing

Answer 4

1. segmentation
2. targeting
3. positioning

Question 5

segmentation

Answer 5

dividing a broad target market into subsets of consumers who have common needs and are alike in the way they perceive, value, use, and buy a product

Question 6

basis for segmentation (5)

Answer 6

• demographic ← age, gender, income, family life stage, race, education, occupation, social class
• psychographic ← lifestyle, personality, values, opinions, politics, habits, hobbies
• behavioral ← usage rate, purchase pattern & history, responses to marketing mix, retail format, brand loyalty vs. switching
• geographic ← region, urban/rural, country, climate
• benefits ← needs, preferences, decision processes

Question 7

targeting

Answer 7

choosing (one or multiple) customer segments to communicate our offering to

Question 8

target segment characteristics (4)

Answer 8

1. size
2. growth rate
3. profitability
4. loyalty

Question 9

customer lifetime value

Answer 9

value of all future streams of profits that a customer generates over the life of her/his business with the firm

equation: CLV = (P ✕ Q - TC) ✕ t - AC

Question 10

positioning

Answer 10

company strategically defining how product should be perceived

Question 11

example of positioning from class

Answer 11

the perceptual map of beer market

Question 12

abc’s of positioning

Answer 12

• audience → understand the appropriate audience
• benefits → what your product or service offers the consumer
• compelling reason → why should your audience be buying your product as opposed to competitors’?

Question 13

example of abc’s of positioning

Answer 13

“for [target segment], the [product] [most important claim] because [single most important support].”