STP Flashcards
What is STP?
1) Segmentation
-The process of dividing a broad market into distinct groups based on shared characteristics.
-Identify different bases for segmentation(e.g. demographic, geographic, psychographic, behavioural)
2) Targeting
-Evaluating the attractiveness of each segment and selecting the most proitable ones to focus on.
-This involves measuring segment attractiveness (size, growth potential, competition, and profitability).
3) Positioning
-Involves creating a distinct image or identity for the brand in the minds of target consumers.
-This involves developing a clear brand positioning statement to guide you, and developing a marketing mix (product, price, place, promotion) tailored to each segment.
What is segmentation?
-Segmentation is the process of dividing markets into distinct groups such that similarities is high within groups. And differences are high between groups.
What are the four key segmentation variables and examples?
1) Geographic: country, city size, population density, climate, zip code
2) Demographic: age, gender, marital status, income, education, occupation, religion, race
3) Psychographic: values, activities and lifestyles, personality
4) Behavioural: occasion, user status, usage rate, usage occasion, brand loyalty, benefits sought, readiness stage(to buy)
How might politicians use geographic segmentation?
-Politicians may use geographic segmentation by identifying which states are captured by which political parties.
-Then they will identify how many votes are in each state.
-And they will look at which states are “swing states” meaning which states shifted who they belonged to over time.
How have companies in the past used demographic segmentation well?
-Coco Cola marketed Diet Coke as being very feminine, having Taylor Swift on.
-On the other hand Coco Cola Zero is marketed as being a more masculine option with their James Bond style advertisements.
-Diet Coke and Coke Zero are similar products so segmenting the market was intelligent this way.
What would be some examples of failed demographic segmentation?
1) Gillette making the “best a man can be” ad failed to understand their key audience(men), and made them less likely to buy their products. They also put a pink tax on female Gillette products, which undermined their message.
2) Bic for Her pens. Made with the pink tax.
What is an example of successful demographic and psychographic marketing?
-There was a successful campaign from diamond trading company.
-Many marketers believed that diamond rings are something that a man buys for a woman(which she then wears on her left hand).
-However, they identified that there was a growing market of women who were buying diamond rings for themselves.
-So they made a marketing campaign where women wear rings on their right hand to symbolize their independence and strength.
What is a strong example of psychographic and behavioural segmentation?
-Dutch supermarket chain Jumbo fights loneliness by adding “slow lanes” for the elderly to chat with the staff in the lane.
-They segmented the two demographics of shoppers: one who wants a fast experience, and the other who likes to chat(usually elderly people).
-They ensure chatty staff for the elderly, and nobody tells them to hurry up.
-But it also helps those who would otherwise have been held up
Walk me through the VALS segmentation from top to bottom? Note: You don’t need to know about each person type, you just need to know where it fits.
1) Innovators are successful, sophisticated, take-charge people with high self-esteem. They are change leaders and are the most receptive to new ideas and technologies. Their purchases reflect cultivated tastes for upscale, niche products and services.
2) Thinkers are mature, satisfied, comfortable, and reflective. They tend to be well educated and actively seek out information in the decision-making process. They favor durability, functionality, and value in products.
3) Believers are strongly traditional and respect rules and authority. Because they are fundamentally conservative, they are slow to change and technology averse. They choose familiar products and established brands.
4) Achievers have goal-oriented lifestyles that center on family and career. They avoid situations that encourage a high degree of stimulation or change. They prefer premium products that demonstrate success to their peers.
5) Strivers are trendy and fun loving. They have little discretionary income and tend to have narrow interests. They favor stylish products that emulate the purchases of people with greater material wealth. Many Strivers believe that life isn’t fair.
6) Experiencers appreciate the unconventional. They are active and impulsive, seeking stimulation from the new, offbeat, and risky. They spend a comparatively high proportion of their income on fashion, socializing, and entertainment.
7) Makersvalue practicality and self-sufficiency. They chose hands-on constructive activities and spend leisure time with family and close friends. Because they prefer value to luxury, they buy basic products. Makers prefer to “buy American.”
8) Survivors lead narrowly focused lives. Because they have the fewest resources, they do not exhibit a primary motivation and often feel powerless. They are primarily concerned about safety and security, so they tend to be brand loyal and buy discounted merchandise.
What does PRIZM5 do?
PRIZM5 classifies all Canadians into one of 68 lifestyle types—with names like Cosmopolitan Elite, Boomerang City, Rustic Roads and Lunch at Tim’s—based on their demographics, marketplace preferences and psychographic Social Values.
What are the five criteria for effectively defined segments?
1) Measurable
-Can you measure this segment and identify it?
2) Accessible
-It’s important that you as a company be able to reach them.
-This includes distribution and being where they are.
-Talking to them is also critical. You should know if they commute a lot and listen to podcasts. Are they going to movie theatres. Which social media platforms are they on. These are the questions you should try to answer.
3) Substantial and Stable
-The segment must be large enough and financially attractive to justify targeting efforts.
-It should be sustainable over time, meaning demand should not fluctuate unpredictably.
-If the segment is too small or too volatile, investing in it may not be profitable in the long run.
4) Differentiable
-A good segment should be homogenous within, meaning customers in the same segment share similar needs and behaviours.
-It should be heterogeneous between, meaning that segments should be distinct from one another and respond differently to marketing strategies.
5) Actionable
-Businesses should be able to develop and implement effective marketing strategies tailored to the segment.
-If a segment is well-defined but cannot be served due to lack of resources, expertise, or feasible marketing actions, it may not be useful.
E.g. selling snow to an eskimo
Can you list 6 key benefits of market segmentation?
1) Allows established companies to expand markets
-Example: McDonald’s tailoring it’s menu to local tastes (e.g., McAloo Tikki in India, Teriyaki Burgers in Japan), helping them expand into new markets effectively.
2) Allows new companies to find niches
-Startups or small businesses can identify underserved market segments and create specialized products.
-Example: A sustainable fashion brand focusing only on eco-conscious consumers can build a strong, loyal customer base in a niche market.
3) Identify specific wants and needs of consumer groups
-Helps businesses design products and services that align with specific customer expectations.
4) Reposition existing products
-Companies can rebrand or target new segments to stay relevant.
-Example: Diet Coke was originally marketed towards older consumers
5) Determining Appropriate Media Channels
-Segmentation allows businesses to optimize advertising spend by targeting the right platforms.
-Example: A brand targeting Gen Z may focus on TikTok and Instagram, while a B2B software company would prioritize LinkedIn and industry blogs.
6) Price Discrimination Strategy
-Businesses can adjust pricing based on different segment needs and willingness to pay.
-Example: Airlines ofer economy, business, and first-class seats at different price points based on customer preferences.
What are the three ways that you know as a company if you should target a particular segment or not?
1) Market
-Segment size: is the segment large enough to be profitable?
-Growth potential: will it expand in the future?
-Value: does it generate high revenue or profitability
-Stability: is demand consistent over time.
-Example: A tech startup may prioritize a segment that is growing quickly, rather than something large. Simply because they will grow with it.
2) Company Position with Segment
-Fit with objectives: Aligns the business goals with brand positioning
-Competencies and Resources: Can the company serve this segment effectively?
-Ease of entry: Are there barriers like regulations or costs?
-Ability to serve: Can the company deliver value and reach the audience?
-Example: A meal-kit delivery service targeting vegans must assess its supply chain for plant-based ingredients and expertise in vegan recipes.
3) Competitor Considerations
-Number and Strength: How many competitors exist? Are they dominant?
-Ease of entry: Can new entrants disrupt the market easily?
-Example: A budget airline entering short-haul routes must evaluate existing low-cost carriers and whether major airlines focus on premium customers.
What are the five market targeting strategies? Which two offer full market coverage?
1) Undifferentiated (Mass) Marketing
2) Differentiated (Segmented) Marketing
The first two are trying to cover as much of the market as possible. It essentially treats the whole market as one segment. There is no segmentation. It’s efficient, but in most cases it does not make sense.
3) Multiple Segment (Selective) Specialization
4) Single-Segment (Niche) Concentration
5) Micromarketing (local or individual)
What is undifferentiated (mass) marketing?
-Ignores market differences
-Targets the whole market with one offer
-Offers the same product and marketing mix for everyone. There is a focus on common needs.
-It is highly efficient.
-Example: Bounty paper towels or Tropicana Orange juice.
What is differentiated (segmented) marketing?
-You are still trying to target the whole market.
-But you put out different offerings for different segments.
-Example: Tylenol has Tylenol for infants, for children, for athritis patients, extra strength tylenol, cold and sinus tylenol.
What is multiple segment (selective) specialization?
-Targets a subset of the different market segments.
-May focus on product specialization or market specialization.
-Example: The Gap owns many companies. They have Old Navy which is family oriented. Gap themselves are kind of in the middle. Banana Republic is a bit older and higher end. Athleta only sells womens and girls athleisure. At the same time it’s all reasonably affordable. There are no super expensive luxury brands.
Example: Volkswagen owns a ton of higher end brands.
What is single-segment (niche) concentration?
-Targets a large share of one segment (or possibly a few smaller niche segments)
-Example: Whole Foods is located in wealthy neighbourhoods like Yorkville and Leaside, where people are willing to spend more.
-Example: Vegan delivery meals service.
What is micromarketing, otherwise known as individual marketing?
-It involves targeting individual customers.
-Common with pharmaceutical sales. One pharmaceutical sales rep often meets with the doctor one on one to promote a specific product. For complex IT systems, you may have an IT salesperson who helps you meet your specific needs. Similarly, Netflix and Amazon will help you to find products or movies specifically for you.
What is positioning?
-With positioning you use the marketing mix variables such as how you price, advertise, and how you communicate your brand.
-Those things are used to help your brand occupy a differentiated and desirable place in the target customer’s minds in relation to competitors.
-When we say this we mean that creativity is more associated with Apple as compared to other tech products.
-How is your brand different compared to other brands?
What are the four key things to understand with positioning analysis?
1) Who is our target consumer and what are their needs?
2) Who are our main competitors
-For instance someone shopping for a new car may consider Nissan, Toyota or Honda, but not Lamborghini.
3) How is the brand similar to competitors? (POP-point of parity)
-If people are on the market for a high value car, your car brand should pop up in their minds alongside other brands.
4) How is the brand different from competitors? (POD-point of difference).
-Once you are in the set, how are you set across.
What is a point of parity?
-These things are must haves to even be in consideration for the consumers.
-It communicates to the consumer that you are a relevant choice.
-It is needed to neutralize the competition. Consumers will think “there’s no reason not to buy this product.”
What is a point of differentiation?
-A point of differentiation is unique.
-It’s necessary to communicate differentiation.
-It’s something that is needed to stand out.
-While point of parity makes consumers say “well there’s no reason not to buy this”, point of differentiation makes consumers say “here is precisely why I want to buy this product, and choose it over the competition.”
How does Miller Lite show a Point of Parity and Point of Differentiation?
-POP=great taste
-It tastes great, but so do many other brands. That is a requirement to even be considered.
-POD=less filling
-A lot of beers are filling and calorie filled, so that is a differentiating factor.
What are three key criteria to choosing Points of Difference?
1) Desirable to Consumer
2) Deliverable by the company
3) Differentiating from competitors
What is a perceptual positioning map, and what does it tell you?
-It offers a visual summary of positioning analysis
-Spatial representation of brands/products on two of the most important attributes or benefits
-Highlights similarities and differences among competitors
-It reflects the position of each brand/product in the mind of the consumer
-The perceptual map tells you how you are doing compared to your competitors, as well as how well your product fits the market you’re targeting.
What are the six steps to creating a perceptual map?
1) Identify category
2) Identify top players within the category
-Who is your competition. They should be in a similar price range as you.
3) Create list of relevant product attributes
-What people care about when they are buying your items
-This is effectively done via market research in the form of focus groups and open-ended surveys
4) Assess brands on list of attributes
-Think about what consumers care about for that category.
5) Pull out dimensions that are most important
-These should be the two things on the axis
6) Plot brands in that dimensional space
-Think of the perceptual map
What is the positioning statement structure? Photo will be on your phone
When does strong behavioural segmentation occur?
When companies link their products to people who like various behaviours.
E.g. Folgers “the best part of waking up or “have a break have a Kit-Kat”
What three things must marketers do for effective target marketing?
1) Identify and profile distinct groups of buyers who differ in their needs and wants (market segmentation).
2) Select one or more market segements to enter (market targeting)
3) Establish, communicate, and deliver the right benefits to each target segment (market positioning).
What is psychographic segmentation?
Psychographics is the science of using psychology and demographics to better understand consumers. In psychographic segmentation, buyers are divided into groups on the basis of psychological/ personality traits, lifestyle, or values.
What is a supersegment?
A supersegment is a set of segments sharing some exploitable similarity
What is mass customization?
The ability of a company to meet each customer’s requirements—to prepare on a mass basis individually designed products, services, programs, and communications.
