Target and positioning Flashcards
Why is the STP model used?
STP marketing model is used to divide the market into segments, select the most attractive/appropriate segments, and position the product/service in the marketplace to be the most appealing to your target segments.
Why do we need target and positioning?
- Marketing becomes hyper-personalised with personalisation:
- Your brand messaging becomes more personal and empathetic because you have your customer personas and know exactly whom you’re talking to;
- Your marketing mix becomes more crystallised and yields higher return on investment because you’re no longer wasting budget on channels that your audience simply ignores;
- Your market research and product innovation become more effective because you know exactly whom to ask for advice and feedback in the development phase.
What is the main goal of targeting?
- The main goal here is to look at the segments you have created before and determine which of those segments are most likely to generate desired conversions.
→ Your ideal segment is one that is actively growing, has high profitability, and has a low cost of acquisition.
→ It is VERY important to understand that there is NO SINGLE WAY to target a segment. A marketer has to try different targeting variables - alone, and in combination, to find the best way.
→ Generally we consider targeting variables across 3 key areas.
What is the role of growth?
- Larger segments with more growth potential are always better.
- But don’t have to go after the biggest market with the most growth.
- Everything is relative to the organisation.
- Can target smaller markets that may be unattractive to some – but not for your company.
What is the role of competitive position?
- Are there lots of strong aggressive competitors in that marketplace?
- Is it easy for new entrants to enter? Are there lots of substitutes on the market?
- Porter’s Five Forces – remember from earlier lecture materials?
How does the compatibility with its own objectives and resources have an impact?
Will influence the and, but if you don’t have the resources you still can’t compete effectively.
What are your firm’s long-term objectives?
A company should only enter a segment in which it can create superior customer value and gain advantage over its competitors.
What are porter 5 forces?
- New entrants
- Buyers
- Suppliers
- Substitutes
What are new entrants?
- EOS
- Government policy
- Capital requirements
- Proprietary products/ services/ technologies
What are buyers?
- Price/ total purchases.
- Buyer concentration vs firm concentration
- Ability to backward integrate
- Price sensitivity
What are suppliers?
- Differentiation of inputs
- Supplier concentration
- Threat of forward integration
- Switching costs
What are substitutes?
- Switching costs and propensity to substitute
- Relative price performance of substitutes
What is a target market?
Target market consists of a set of buyers who share common needs or characteristics – based on your segmentation analysis.
Most targeting can be carried out at different levels. Range of strategies you need to be aware of.
What are the 4 market targeting strategies?
- Undifferentiated (mass) marketing
- Differentiated (segmented) marketing
- Concentrated (niche) marketing
- Micromarketing: Local marketing / Individual marketing
What is the mass market?
- Ignores segment differences and targets all the market – mass marketing.
- Focuses on what is COMMON in a segment but not what is DIFFERENT.
- Marketing Mix that will appeal to the largest number of buyers.
- Generally not a strategic approach – develop a brand and product that can satisfy all? And unable to compete against those in the market who are more focused.
What is the mass market example?
- Product – Designed for everyone classic salad dressing that isn’t intended for a particular demographic or customer need, or Royal Mail product range
- Price – Single pricing structure that doesn’t consider willingness to pay for the different segments in the market. E.g. cloud computing service with same price for individuals as business; Royal Mail delivery costs for individuals all the same regardless of age, location in the UK etc.
What is differentiated marketing?
- A firm targets several market segments and designs SEPARATE offers for each.
- Hope for higher sales and a stronger position within each market segment.
- More overall sales that in an undifferentiated approach * Increases the costs of doing business – more expensive to develop and produce lots of different products compared to one.
- Separate Marketing plans, extra marketing research, promotional planning, communications and campaign costs and channel management.
What is an example of a differentiated marketing example?
- Product – A running shoe company produces a product with a cushioned ride for runners worried about impact, or performance models.
- Price – An organic coffee with a standard and premium version, standard version highly competitive price for people on a budget but the premium version is for those with no budget restraints and who want the best one available.
- Promotion – A ski slope produces 2 videos, one for young people and the other for families. They place the adverts alongside content that appears to the demographic – online or in local news perhaps.
What is concentrated marketing?
Most focussed approach and involved specialising in serving 1 segment.
Very detailed knowledge of the target segment’s needs and wants and you are seen as the specialist.
What is micromarketing?
- Tailoring products and the marketing mix to the needs and wants of specific individuals and local customer segments a. Local Marketing:
- Tailoring brands and promotions to the needs and wants of local customers.
Location based marketing – track consumers whereabouts and personalise the message to them quickly and easily and directly to them when they are in that location.
Can be expensive – reduces economies of scale.
Logistically – meeting requirements of different local markets. - Tailoring products and the marketing mix to the needs and wants of specific individuals and local customer segments.
What is individual marketing?
- The extreme of local marketing.
- Tailoring products and the marketing mix to individual customers – one to one marketing.
- Customised marketing – increased again through technology…mass customisation (mass but individual!).
- Hyper personalisation – products, promotions, experiences.
What is CSR in relation to target markets?
- Targeting CAN generate controversy based on the way the segment is chosen – perhaps think back to last week’s discussion on unconscious bias.
- Fast food retailers that target low income families with convenience foods – which is laden with salt, sugar etc.
- Banks – mortgages for those who can’t afford them or subprime where they have debt and charge more as a result.
- Marketing to children – huge area of concern for many as to how marketers target children though their products and promotions…children don’t know the difference between an advert and their favourite cartoon.
- Smartphones – tailored, unscrupulous messages to consumers who are vulnerable.
Stalking customers – or serving them?
What is positioning?
- What is your value proposition – how will you position yourselves compared to the competition so that I, as the consumer, know who you are, what you give to me and how do I perceive you in my mind?
- The space in the consumer’s mind that you occupy in relation to others in the same market.
- Products are made in factories – brands happen in the minds of consumers.
- A product’s position is the complex set of perceptions, impressions and feelings that consumers have for the product.
What are positioning/perceptual maps?
- Positioning maps help to show what consumers think of you compared to others – and can inform your future strategies to change if you are not where you want to be.
- Sometimes brands/products represented by circles of different sizes – simply to illustrate the relative market share the brand/product has.
What’s differentiation?
- Differentiation is where you may gain your competitive advantage.
→ Product Differentiation – brands can differentiate on features, performance, style or design (Apple, BOSE, BMW).
→ Services Differentiation – speedy convenient service (Amazon PRIME, Singapore Airlines).
→ Channel Differentiation – the way the company designs its channel coverage, expertise and performance.
→ People Differentiation – hiring and training better people than the competitors do (Apple store v Curry’s).
→ Image Differentiation – strong, visible, memorable images and logos.
What are the features of choosing the competitive environment?
- Important: The difference delivers a highly valued benefit to target buyers.
- Distinctive: Competitors do not offer the difference or the company can offer it in a more distinctive way.
- Superior: The difference is superior to other ways that customers might obtain the same benefit.
- Communicable: Competitors cannot easily copy the difference.
- Pre-emptive: Competitors cannot easily copy the difference.
- Affordable: Buyers can afford to pay the difference.
- Profitable: The company can introduce the difference profitably.
