STP and Strategic Marketing

Question 1

Segment

Answer 1

• A group of individuals sharing similar characteristics which lead them to have similar product/service needs
  Needs and wants will vary
  
  • Make assumptions about similar groups, and dissimilar groups
  • Split market into groups with similar characteristics- will want similar products and services

Question 2

Target Market

Answer 2

• A group for whom a firm creates an offering through Marketing Mix elements to specifically meet their needs and wants
  
  • Blanket marketing/ mass marketing = hitting a lot of different segments
    ○ Different marketing mix (product, price, place promotion (process, people, physical evidence)

Question 3

Positioning

Answer 3

• The place that product occupies in consumer minds relative to other competing products based on important (consumer- defined) attributes
  
  • Positioning in the market comparatively to competitors
  • Decide variables that are important in the market and positioning yourselves relative to your competitors

Question 4

Why segment a market?

Answer 4

• Grouping customers by key needs, wants and characteristics allows for more focused marketing strategies and tactics
  
  • Better chances of success and meeting organisational objectives
  • Prioritisation of marketing targets
  • Effective use of marketing resources

Question 5

Bases of Segmentation

Answer 5

Bases of Segmentation
Geographic
Demographic
Psychographic
Behavioural (frequency of purchase, where etc.)

Question 6

1. Geographic

Answer 6

• Divides people or products into groups based upon where they live ( region or nationality)
  - Knowing where your customers live saves marketing time and money plus aids significantly in strategic planning
  - Customers of products and services have national sub-national differences in their preferences
  - Climate and physical environment are bases of differing needs and wants for some categories
  Physical environment and climate can cause a difference

Examples
- Seasonal Goods e.g. winter wear
- national dress, consumption of food, makeup/ hair products
- Product / Service with variation in preferences by region / country
- Products or Services affected by climate
- Modes of transportation
- Pepsi and coke
Transported as a concentrate, mix with water + carbonate- different places in the world have different tastes

Question 7

2. Demographic

Answer 7

• By gender
  - By age
  - By ethnicity
  - (5) Socioeconomic
  § Socioeconomic group, income, age of terminal education
  § E.g. where someone lives (types of property)
  Examples
  Books, products etc.

Question 8

Psychographic

Answer 8

• Lifestyle
  § Health, food preferences (veggie, non-veggie)
  § Outdoor people or not
  - Stage of life

Question 9

4. Behavioural (frequency of purchase, where etc.)

Answer 9

• Purchase behaviour
  - Purchase occasion
  - Frequency of purchase
  - Consumption patterns

Question 10

Benefit segmentation (Hayley, 60-70’s)

Answer 10

• Argues it’s more important as tells you why
  
  • Haley argues that benefit segmentation is the ultimate basis as the others are descriptive, they tell you “who” or “what”, but not always “why”
  • It is causal, others are ascriptive (i.e. they assume qualities and characteristics which fit with age, gender, life stage etc.

Question 11

Business Market Segmentation (Business to Business)

Answer 11

• Geographic
  
  • Size (of firm)
  • Industry
  • Business Need (why you’re buying it)

Question 12

Targeted Segments

Answer 12

Must be: 
	- Identifiable (must find data)
	- Viable (sufficient size)
	- Stable 
	- Marketable and Controllable
(Dibb and Simkin 1991)

Question 13

Targeting Strategies

Answer 13

• Concentrate on a single segment with one product/brand
  
  • Offering one product/brand to a number of segments
  • Target a different product/ brand at each of a number of segments.

Question 14

Positioning

Answer 14

• From a tactical view point, positioning represents the “sharp end” for marketers:
  - the product’s image relative to its competitors in the consumer’s view (Dibb and Simkin 2016).
  
  • The challenge here is to translate the needs and wants of the targeted customers into a tangible mix of
    
    • product,
    • price,
    • promotion,
    • distribution and
    • service levels with maximum appeal.
  • You compared to your competitors, how customer perceive you relative to other firms
  • position yourself for the segment you would like to target

Question 15

Determining Positioning Strategy

Answer 15

• Positions are described by variables and within parameters which are important to the customers and which essentially are selected by them.
• E.g.
  § Price may be the key in grocery shopping
  § Service level in selecting a hotel
  § Quality and reliability when purchasing an electrical appliance such as a washing machine
  § Value for money when choosing a family day out

Question 16

Creating Customer Loyalty (Day 1969)

Answer 16

Importance of loyalty

- Less convincing needed for customers to buy your products. Services
- Less effort + money to market for repeat customers
- And less info needed in buying process

Question 17

Behavioural Loyalty

Answer 17

• If you analyse the data, you see a repeat pattern of behaviour
  - E.g. go to Waitrose as its on your way home i.e. convenient

Question 18

• Attitudinal Loyalty

Answer 18

• Psychologically or motivationally or emotionally attached to the product/ service
  - e.g. save up for a luxury product
  - Better form of loyalty
  Marketers look at ‘touch-points’ to make someone attitudinal loyal

Question 19

Ladder of customer loyalty

Answer 19

Advocate (customer keeping)
Supporter
Client
Customer
Prospect (customer catching)

Question 20

What is sustainable competitive advantage?

Answer 20

• “An element of a marketing strategy that provides a meaningful advantage over both existing and future competitors”
  (Dacko, 2008)
  
  • Not easily eroded by competitors over time
  • Highly effective SCA difficult to achieve
  • Competitive advantages (CA) may not be sustainable
  • Almost all SCAs may be only temporarily achieved in the long run
  • Have something that has a meaningful advantage

Question 21

Competitive Situation

Answer 21

• Conflict ‘war strategy’
  
  • Competition – “zero-sum”
  • Co-existence - just i.e. if different markets, or same market and work together
  • Co operation (e.g. nike and apple brand = win-win and different markets and doesn’t affect competitive position)
  • Collusion ( fixing prices, artificially manipulate the market)

Question 22

Marketing strategies for different market positions

Answer 22

Build
Hold
Niche
Harvest
Divest

Question 23

Build Strategies

Answer 23

Flanking Attack

- “Targeting the competitor’s weak spot” 
- This may involve targeting geographic areas of market segments where the defender is poorly represented

Question 24

Challenger strategies

Answer 24

Encirclement Attack

- “Involves attacking from all sides.” 
- In Marketing terms this would involve targeting all segments and possibly even cutting off supplies to the competitor. 

Bypass Attack

- “Goes round the competitors position.” 
- Change the rules of the game, usually by technological leapfrogging.
eg: ipod and Sony Walkman

Question 25

Hold Strategies

Answer 25

- These involve defending current position against would-be attackers. - Influence of market conditions: - Market leader in mature or declining market - In growth where costs of growth outweigh benefits • Monitoring the competition Confronting the competition