STP: Targeting And Positioning Flashcards
1
Q
What is targeting?
A
- involves deciding on which consumer market segments a business will sell to
- when targeting, a business will:
1. Assess each market segment to see if it is capable of providing for it
2. Decide which segment to focus on - the main decision to be made is whether a business should focus on niche or mass marketing
2
Q
What are niche and mass markets?
A
- most markets have a dominant segment and several smaller (niche) segments
- chocolate bar is dominant mass market
- 90% of sales are made by three, Cadburys, nestle and mars
- many small specialist markets e.g. Luxury organic chocolate which are niche
3
Q
What is niche marketing?
A
-where a business targets a smaller segment of a larger market, where customers have specific needs and wants
4
Q
Advantages of niche marketing
A
- less competition, the firm is a big fish in a small pond
- clear focus as the business will target a particular segment
- tailor made specialised products
- builds up specialist skill and knowledge = market expertise
- can often charge a higher price -customers are prepared to pay for expertise
- profit margins often higher
- customers tend to be loyal
5
Q
Disadvantages of niche marketing
A
- lower profits, due to limited number of customers, despite any high price/profit margin
- risk of over dependence on a single product of market
- likely to attract competition if successful
- vulnerable to market changes, no diversification
6
Q
What is mass marketing
A
-conversely, mass marketing is:
Where a business sells into the largest part of the market, where there are many similar products on offer
7
Q
Features of mass markets?
A
- customer needs and wants are more general and less specific
- associated with higher production output and capacity
- success usually associated w low cost operation, heavy promotion, widespread distribution and market leading brands
8
Q
What is product differentiation?
A
-a business needs to differentiate products if it wishes to pursue the mass market
9
Q
Advantages of mass marketing?
A
- high revenues, lots of potential customers, so opportunity to make high volume of sales
- turn company name or product into a brand
- High level of marketing creates a barrier of entry for new small firms with low money
10
Q
Disadvantages of mass marketing?
A
- high costs
- standardised products aren’t as appealing as specialised
- vulnerable to competition, particularly foreign companies with low wage levels
- less scope to add value to products, those who even more may want higher quality, specialised products
11
Q
What is positioning?
A
- involves understanding how to position your product in relation to others within the market
- a business will
1. Look at characteristics of the product it sells
2. Develop a marketing mix for each segment
12
Q
What is competitive advantage?
A
- the idea of positioning is to make a business stand at from its competitors
- in this way the product will have something that no other product does
- called a competitive advantage, benefit that allows business to gain and retain customers over competitors
13
Q
What’s the USP?
A
- features of a product, have a USP that makes it different to all other products
- competition, is it in a unique position on the marketing map
- consumer, is it aimed at a particular market segment not already covered?
- pricing, is it a more value for money, alternative/inferior good or is a premium price being set to target the other end of the market
- use of the product, what function is will the product serve
14
Q
What is the value to a business of marketing positioning?
A
- business can maximise sales, and so maximise revenue
- by having a USP and covering a new section of the market, the business might be able to charge a higher price
- has a better understanding of technology market it’s customers and their needs
- can focus on marketing on a specific area - reducing costs
