STP- targeting

Question 1

size

Answer 1

generally larger is better

Question 2

growth

Answer 2

growing>static>declining… growth tends to reduce competitive tendencies, but if requiring more immediate profit, a mature segment is better

Question 3

predictability

Answer 3

more predictable, more attractive

Question 4

profitability

Answer 4

more profitable, more attractive

Question 5

bargaining power of consumers

Answer 5

lower means more attractive: less able to push prices down

Question 6

seasonality and cyclicality

Answer 6

If company is serving one seasonal market, another seasonal market may be attractive to utilise capacity all year round

Question 7

barriers

Answer 7

lower barriers more attractive

Question 8

bargaining power of suppliers

Answer 8

more bargaining power=monopoly so less attractive

Question 9

level fo technology utilisation

Answer 9

more technologically advance companies attracted to markets where they can utilise their expertise

Question 10

competition

Answer 10

good for customers, but not companies, low competition more attractive

Question 11

degree of differentiation

Answer 11

companies that can offer more product differentiation are attracted to segments with little differentiation

Question 12

threat of substitution

Answer 12

if less technologically innovative, seek segments where substitution is less likely

Question 13

exposure to economic fluctuations

Answer 13

vulnerable markets are generally less attractive

Question 14

degree of regulation

Answer 14

regulated markets Amy offer more protection but this may lead to inefficiencies

Question 15

social acceptability or physical environment impact

Answer 15

increasing concern: can be used to build a brand

Question 16

How do you know if a difference is worth establishing?

Answer 16

To the extent it satisfies:

• Important
• Distinctive
• Superior
• Communicable
• Pre-emptive (competitors cannot copy)
• Affordable
• Profitable

Question 17

traps to be avoided

Answer 17

2. Peripheral businesss (strong competitive position, low market attractiveness)
3. Illusion business (weak competitive position, high market attractiveness)
4. Dead-end business (weak competitive position, low market attractiveness)

Question 18

ideally firm wants to seek a position in:

Answer 18

. Core business (strong competitive position, high market attractiveness)

Question 19

questions to ask:

Answer 19

• how do we define the market- scope and constitution?
• how is the market segmented into different customer groups
• how attractive are the alternative market segmentations
• how strong a competitive position could we take- where do our strength lie?

Question 20

stage of industry evolution

Answer 20

• depending on company’s objectives (cash generation or growth) different stages may be more attractive
• initial targeting: markets in early stages of evolution are generally more attractive> offer more future potential & less competitors

this would require a lot of investment for growth so short term returns = modest

immediate cash and profit is attractive but usually more competitive

Question 21

predictability

Answer 21

-more predictable > less prone it is to discontinuity and turbulence > easier to predict outcome of potential value of segment.

Question 22

price elasticity and sensitivity

Answer 22

-unless it has a major cost adv

markets that are less price sensitive> price elasticity demand is low> more attractive than sensitive ones

high sensitivity= higher probability of price wars

Question 23

bargaining power of customers

Answer 23

buyers have strongest negotiating power so less attractive

Question 24

seasonality and cyclicality of demand

Answer 24

• extent to which demand fluctuates by season or cycle

- for company in a highly seasonal market a new opportunity in a counter seasonal market might be attractive

Question 25

economic technological factors

Answer 25

• barries to entry
• barriers to exit
• bargaining powers of suppliers
• level of technological utilisation
• investment required
• margins available- result of price sensitivity

Question 26

competitive factors

Answer 26

-competitive intensity: monopoly oligopoly etc. either needs a cost advantage or ability to create uniqueness

• quality of competition
• threat of substitution (if the company is less tech innovative seek markets with less likely substitution)

-degree of differentiation

Question 27

the general business environment

Answer 27

-exposure to economic fluctuations
-exposure to political and legal factors
-degree of regulation: regulated Ms > more protection once entered
less regualted> more pop for innovation
-social acceptability and physical impact

Question 28

considering strength:

Answer 28

-market postion
>relative market share (raises awareness and better perfomance in serving customer needs
>rate of change of market share
>exploitable marketing resources (assets and capabilities)
>unique produit/ service

-economic technological position
>relative cost position: company cost structure
>capacity utilisation
> tech position

-Capability profile
> management strength and depth
>forward/ backward integration (extent of control of supply of raw material and distribution channels
>marketing strength (experience and synergy with other product areas)

Question 29

strategies

Answer 29

• undifferentiated marketing
• differentiated marketing
• concentrated marketing

Question 30

undifferentiated marketing

Answer 30

single produce designed to appeal across all segments

Question 31

differentiated marketing

Answer 31

different product to each segment

Question 32

concentrated marketing

Answer 32

focusing attention to one or a few segments