STP

Question 1

What is a market?

Answer 1

The set of actual and potential buyers of a product or services.

Used to be just sellers market, now consumers market too by searching for products and interacting with companies.

Defining your market that you serve is crucial. STP would be wrong and then offerings to consumers would be irrelevant.

Question 2

What is value?

Answer 2

Value is utility at given price point. Value is the ratio of what you’re going to get vs what you’re going to give. E.g. people buy Gucci because of how it makes them look; so what the product does for them not the product itself. So value is the surplus of utility over the cost.

Peter drucker - what the customer buys and considers value is never a product. It is always utility - that is, what a product does for him.

Question 3

Why is value important to consumer?

Answer 3

Because customers make decisions based on judgements of relative value. Value is created for consumers during differentiation and positioning, where the company decided on the value proposition.

Question 4

Why is value important to organisations?

Answer 4

• Makes them sales
• Deliver value so they don’t lose out to competitors
• So they can make enough profit to satisfy shareholders and pursue expansion strategies

Question 5

What is STP

Answer 5

3 separate interrelated steps; segmentation, targeting and positioning.
It is a customer centred marketing strategy that connects the 4 p’s to the target market.

Question 6

why engage in STP?

Answer 6

• not everyone wants the same thing
• increases efficiency and effectiveness of companies e.g. helps focus companies and allocation of resources.
• Technological and cultural changes in our society have increased the diversity of people’s interests and backgrounds, leading to the creation of many consumer groups, each with its own set of needs. Market fragmentation, and the reduced effectiveness of mass marketing efforts in turn underscores the importance of developing a true STP or target marketing strategy.

Question 7

What is market segmentation?

Answer 7

Dividing a market into distinct groups of buyers who have distinct needs/characteristics

Question 8

Why segment a market?

Answer 8

• use resources more efficiently e.g throwing adverts at people who actually want to see them
• product differentiation
• can match promotions better to communicate why they would want your product
• a customer is willing to pay more for a product that matches exactly what they want so a homogenous market will create a sense of what they really need and want.

Question 9

Steps in segmentation

Answer 9

1. Understand benefits sought
2. Segment the market
3. Map the observable characteristics

Question 10

Types of segmentation

Answer 10

• geographical
• demographic
• psychographic
• behavioural
• multiple

Question 11

What is geographic segmentation?

Answer 11

Divides market into diff geographical units such as nations, regions, counties or cities.

e.g. Tesco express, sains locals locating in smaller urban areas instead of huge superstores that wouldn’t fit. supplying specific things that area like also.

Or stores monitoring what consumers buy and where and stock those products in only those stores.

Question 12

Demographic segmentation?

Answer 12

Divides market into segments based on variable such as age, life-cycle stage, gender, income, occupation, education etc.

Most common form as easy to measure such variables.

E.g. L’Oréal for men, student rail cards,

Question 13

Psychographic segmentation?

Answer 13

Divides the market into different segments based on social class, lifestyle, or personality characteristics. People in same demographic group can have very different psychographic characteristics.

E.g. Walmart resonate with budget conscious customers but targeting them though messages like unbeatable prices and best online specials.

Question 14

Behavioural segmentation

Answer 14

Divides a market into segments based on consumer knowledge, attitudes, uses of a product, or response to a product.

• occasions e.g. seasonal items
• benefits sought e.g. multiple benefits from fit-bits. It is generally more effective to first measure and split the market by needs or “benefits sought” and lay over demographics than to start with demographics and then guess at differences in benefits sought.
• user status e.g retain customers and get new ones
• usage rate e.g. heavy users are often small percentage of the market but account for high percentage of total consumption.
• loyalty status e.g. completely, somewhat, not at all.

Question 15

Multiple segmenting

Answer 15

is used to identify smaller, better-defined target groups e.g the lounges

Question 16

Effective segmentation?

Answer 16

o Measurable: The size, purchasing power, and profiles of the segments can be measured.
o Accessible: The market segments can be effectively reached and served.
o Substantial: The market segments are large or profitable enough to serve.
o Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.
o Actionable: Effective programs can be designed for attracting and serving the segments.

Question 17

What is target marketing?

Answer 17

Evaluating each segments attractiveness and selecting one or more segments to enter.

Question 18

What is a target market?

Answer 18

A target market is a set of buyers who share common needs or characteristics that the company decides to serve

Question 19

Evaluate segments

Answer 19

size - market potential
growth - growth forecasts
competition - barriers to enter and exit, potion of competitors.
saturation - gaps in the market
environmental risk - economic, political or technological change
fit- coherence with companies brand and image
profitability - entry costs, margin levels, ROI

Question 20

What is target marketing?

Answer 20

Segment profiles provide a detailed description of the typical customer in terms of key demographic, lifestyle, geographic, and product-usage behaviours. targeting is developing these profiles or descriptions of the typical customers within a segment. e.g. P&G sell many brands in same product category. Product modifications appeal to different niches within certain segments.

1st step evaluate
2nd step select and develop

Question 21

Choices of target marketing?

Answer 21

1. Undifferentiated (mass)
2. Differentiated (Segmented)
3. Concentrated (Niche)
4. Micro marketing (Individual/local marketing)

Question 22

What is undifferentiated marketing?

Answer 22

firm ignores market segment differences and go after whole market with one offer. It is appropriate where there is little market variability - most buyers have the same tastes, buy the same amounts, and react the same way to marketing efforts. When competitors use undifferentiated marketing, a firm can gain an advantage by using differentiated or concentrated marketing, focusing on the needs of buyers in specific segments.

e.g. fruit, Velo lounge

Question 23

What is differentiated marketing?

Answer 23

Targets several market segments and designs separate offers for each. In the mature stage of the product life cycle, however, differentiated marketing often makes more sense. e.g chocolate bars

Question 24

What is concentrated marketing?

Answer 24

firm goes after large share of one or a few segments. When the firm’s resources are limited or you are entering with a new product, concentrated marketing makes the most sense. e.g. Fabletics promote what they think you will like by asking u questions when you join. women and active segments.

Question 25

What is micro marketing?

Answer 25

Tailoring products to specific wants and needs of individuals or local segments. e.g. dress/suit designers make to measure.

Question 26

What is market positioning?

Answer 26

Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of the consumer. So therefore create a competitive advantage.

Question 27

What is product position?

Answer 27

Product position is the way the product is defined by consumers on important attributes, and so ensuring the differences have great importance to consumers. Ultimately, the company must decide on a value proposition-how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments

Question 28

What is differentiation? and what is meaningful?

Answer 28

Creation of intangible or tangible differences.

meaningful leads to and supports the brand image. e.g. innovation and design of shoes.

Question 29

What is positioning?

Answer 29

Positioning is the act of designing the company’s offering and image so that they occupy a meaningful and distinct competitive position in the target customers’ minds. Many firms focus on a brand’s competitive advantage as the basis of the positioning strategy. When there is no unique feature that differentiates the product, you should build from customer’s ego e.g. Evian, Cadburys gorilla, Horlicks position as night cap in England but morning energy booster in India.

Question 30

Steps in positioning

Answer 30

1. create positioning Map
2. define and select specific competitive advantage to use in positioning strategy
3. select positioning strategy - value prop
4. Develop a positioning statement

Question 31

What is a positioning map?

Answer 31

Positioning (or Perceptual) maps show consumer perceptions of marketer’s brands versus competing products on important buying dimensions.

Question 32

How to create a positioning map?

Answer 32

First, we need to ask consumers what personality characteristics are important.
Then we need identify how various brands are perceived compared to one another on the basis of these important characteristics.

Question 33

Why do a position map?

Answer 33

• help marketers understand where to position a new brand. The marketer might decide to compete directly with the…, shown in the upper right hand quadrant, or locate an underserved area, such as… . Generally speaking, underserved segments represent great opportunities AS LONG as the market segment in question meets the tests for viability discussed earlier.
• if a competitive brand is already strongly associated with a particular benefit or advantage, it will be difficult to convince consumers to perceive your brand as being superior with respect to the same benefit or advantage, unless you have compelling proof.

Question 34

Position map: Insight between brands

Answer 34

• How consumers perceive a brand relative to the others
• Which brands are the closest competitors
• Which brands have a unique position
• are there opportunities for new or existing brands

Question 35

Position map: Insight between position of brands on axes

Answer 35

• The major dimensions (attributes) used to distinguish the brands
• The location (or position) of a particular brand
• A better location (or position) for a new or existing brand

Question 36

What is competitive advantage?

Answer 36

Competitive advantages are desired because they demonstrate the brand’s superiority over the competition and give consumers a reason to buy the brand.

Question 37

What is a positioning statement?

Answer 37

The central idea that encapsulates a brands meaning and distinctiveness in relation to competitive brands.

E.g brand, category, segment, value and attributes.

Question 38

4 Factors of successful positioning:

Answer 38

1. Clarity: The positioning idea must be clear in terms of both target market and differential advantage.
2. Consistency: To break through the clutter and avoid confusion the message, a consistent message is required.
3. Credibility: The differential advantage that is chosen must be believable in the minds of the target customer.
4. Competitiveness: The differential advantage should have a competitive edge.

Question 39

What is 3 circles framework?

Answer 39

customers: value that the customers in a particular segment are looking for
company: Overlap represents what you actually do that the customers want. Left side shows what companies do that the customer isn’t interested in.
Competitors:

Question 40

What are the elements of framework?

Answer 40

A PODs - key differentiation items that we need to protect. Things that we do differently that the customer values.

C PODs - things that competitors do better than us

Blue space untouched (customer circle) - needs that no one has touched upon yet… good opportunities. Will try to move up into this space.

Light space untouched (company circle) - things that we do differently to competitors but doesn’t appeal to consumers. Could try move into A to get customer to value them.

Swamp untouched (where competitors and company overlap) - things that we and competitors do that customer doesn’t value - waste of money

Question 41

Opportunities for growth

Answer 41

1. Fix disequities / dissatisfiers: swamp, or bottom of competitors
2. Leverage/build A pod (build capabilities so competitors can’t match; extend where appropriate)
3. Differentiate B (middle pod) attributes - make them better, superior to push into Area A
4. Minimize / neutralize Area C (competitor’s strengths)
5. Find value customers haven’t yet realized: Areas D, F, G (outside of customer circle)
6. Identify / Explore / Brainstorm on E (not touches section of customers) to identify important unmet needs
7. Re think / improve / dump Areas D and F