Chapter 6-STP - Brent Barr PDF

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CHAPTER 6: SEGMENTATION, TARGETING, AND POSIITIONING The Segmentation- Targeting- Positioning Process STEP 1: ESTABLISH OVERALL STRATEGY OR OBJECTIVES  Articulate mission and obj of comp marketing strategy. Segmentation strategy must be consistent with and derived from firms’ mission and objectives, current situation (SWOT), and social life objectives STEP 2: SEGMENTATION BASEES  Use formal approach to segment market develop description of diff target market with their needs and wants  Helps firm understand profile of customer in each segment can distinguish customer similarities w/in segment and dissimilarities across segments  Segmentation: 1) Geographic 2) Demographic 3) Psychographic: how you think: lifestyle—personality, social class - Self-Value: goals for life, overriding desires that shapes their life - Self Concept: image ppl have of themselves - Lifestyle: how we live our lives - Thinkers and achievers 4) Behavioural: how you act: benefit sought, usage, loyalty - Occasion Segmentation: group consumers based on when they purchase or consume p/s - Benefit Segmentation: group consumers based on the benefits they derive from p/s - Loyalty Segmentation: strategy of investing in retention and loyalty to retain firms’ most profitable custo - Usage Rate: how often person uses p/s.  Ex. Tide: how often one does laundry, Tides obv going to target heavy users - Convenience, economy, prestige 

Using Multiple Segmentation Methods - Geodemographic Segmentation: grouping custo on basis of combination of geo and demo characteristics

STEP 3: EVALUATE SEGMENT ATTRACTIVENESS  Evaluating attractiveness of various target market segments 1) Determine whether target market is worth pursuing by using descriptive criteria - Identifiable: ensure segments different because if it does overlap btwn segments - Reachable: must reach custo through persuasive communication and product distribution - Responsive: custo must react similarly and positively to firm’s offering - Substantial and profitable: must measure their size and their growth potential Segment Profitability= (Segment Size x Segment Adoption % x Purch bH x Profit Margin %) – Fc Segment Size= # of ppl in the segment Segment Adoption % = % of custo in segment who are likely to adopt p/s Purch bH= purch price x # of times custo would buy p/s during given time period Profit Margin %= (selling price- variable cost)/ selling price Fc= advertising exp, rent, utilities, insurance, admin, salaries STEP 4: SELECT TARGET MARKET  Firm assess attractiveness of the opp and its own competencies very carefully  Undifferentiated Targeting Strategy or Mass Marketing: marketing strategy firm can use if p/s is perceived to provide same benefits to everyone, with no need to develop separate strategies for diff groups  Differentiated Targeting Strategy: strategy through which a firm targets several market segments with a diff offering for each.

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Concentrated (Niche) Targeting Strategy: strategy of selecting single, primary target market and focusing all energies on providing a product to fit that market’s needs Micromarketing (One to One): extreme form of segmentation that tailors p/s to suit an indi custo wants or needs - Mass Customization: practice of interacting on one-to-one basis with many ppl to create custom-made product or service; providing one-to-one marketing to the masses

STEP 5: IDENTIFY AND DEVELOP POSITIONING STRATEGY  Positioning: mental pic of thoughts, feelings and impression that ppl have about comp and its products and brands relative to competing product, brands or companies  Value Proposition: communicates custo benefits to be received from p/s and reasons for wanting to buy it  Market Position: process of defining marketing mix variable so that target customer have clear, distinctive and desirable understanding of what the product does or reps in comparison with competing product - Letting custo know what company’s unique value proposition is and for whom it is intended  Elements: 1) Target Market 2) Offering name or brand 3) P/s or category 4) Unique point of difference/ benefits  Positioning Methods 1) Value 2) Product Attributes 3) Benefits and Symbolism 4) Competition 5) Market Leadership  Positioning by Using Perceptual Mapping - Perceptual Map: displays position of p/s in consumer mind - Ideal Point: market segment’s ideal product would lie on a perceptual map  To derive at perceptual map such as this, 1) Determine consumers’ perception and evaluations of firm’s p/s in relation to competitors 2) Identity the market’s ideal points and size 3) Identity competitors’ positions 4) Determine Consumer preferences 5) Select the position 6) Monitor the positioning strategy  Repositioning: - Brand Repositioning (Rebranding): strategy in which marketers change a brand focus to target new market or realign the brand’s core emphasis with changing market preference...