Target and positioning

Question 1

Why is the STP model used?

Answer 1

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.

Question 2

Why do we need target and positioning?

Answer 2

• 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.

Question 3

What is the main goal of targeting?

Answer 3

• 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.

Question 4

What is the role of growth?

Answer 4

• 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.

Question 5

What is the role of competitive position?

Answer 5

• 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?

Question 6

How does the compatibility with its own objectives and resources have an impact?

Answer 6

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.

Question 7

What are porter 5 forces?

Answer 7

• New entrants
• Buyers
• Suppliers
• Substitutes

Question 8

What are new entrants?

Answer 8

• EOS
• Government policy
• Capital requirements
• Proprietary products/ services/ technologies

Question 9

What are buyers?

Answer 9

• Price/ total purchases.
• Buyer concentration vs firm concentration
• Ability to backward integrate
• Price sensitivity

Question 10

What are suppliers?

Answer 10

• Differentiation of inputs
• Supplier concentration
• Threat of forward integration
• Switching costs

Question 11

What are substitutes?

Answer 11

• Switching costs and propensity to substitute
• Relative price performance of substitutes

Question 12

What is a target market?

Answer 12

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.

Question 13

What are the 4 market targeting strategies?

Answer 13

• Undifferentiated (mass) marketing
• Differentiated (segmented) marketing
• Concentrated (niche) marketing
• Micromarketing: Local marketing / Individual marketing

Question 14

What is the mass market?

Answer 14

• 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.

Question 15

What is the mass market example?

Answer 15

• 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.

Question 16

What is differentiated marketing?

Answer 16

• 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.

Question 17

What is an example of a differentiated marketing example?

Answer 17

• 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.

Question 18

What is concentrated marketing?

Answer 18

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.

Question 19

What is micromarketing?

Answer 19

• 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.

Question 20

What is individual marketing?

Answer 20

• 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.

Question 21

What is CSR in relation to target markets?

Answer 21

• 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?

Question 22

What is positioning?

Answer 22

• 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.

Question 23

What are positioning/perceptual maps?

Answer 23

• 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.

Question 24

What’s differentiation?

Answer 24

• 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.

Question 25

What are the features of choosing the competitive environment?

Answer 25

• 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.