Marketing Principles 2 - Segmentation, Targeting and Positioning (STP) PDF

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Marketing Principles 2 (Semester 2, Year 1)

Marketing Principles 2 – Segmentation, Targeting and Positioning (STP) Objectives 1. Understand how and why organisations segment markets 2. Explain how marketers develop a targeting strategy 3. Understand how a firm develops and implements a positioning strategy and differentiates itself.

1. How and Why Organizations Segment Markets? Designing a Customer Driven Makreting Strategy = STP

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Different product and service offerings must be made to satisfy customer needs successfully (Fahy and Kotler 2012)

Need for Segmentation

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There are different needs in the world Meet consumer needs more precisely – distinct marketing mix Increase profits (easier to cater exactly to the needs of one segment) Segment Leadership Retain customers Benefits of market segmentation

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By segmenting markets, companies can identify which segments they might most effectively compete in and develop strategies suitable for that segment

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Marketing Principles 2 (Semester 2, Year 1)

Consumer Segmentation

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Behavioural Segmentation     

Occasions o E.g. Crème Eggs Benefits sought User status Usage rate Loyalty status

Psychographic Segmentation   

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Dividing a market into segments based on lifestyle, or personality characteristics The products people buy reflect their lifestyles VALS Framework Values- Attitude and Lifestyle o Innovator Active consumers, o Survivors Cautious consumers 4C model.customer guided approach

Profile Segmentation 

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Geographic o IKEA  Mix of products in store influenced by characteristics of the local area Demographic o Dove Pro Age  Aimed at 50+ segment Gender o While the target market for a given product can include females and males, one gender may represent a larger share of a company's target market. o Businesses can segment their markets by gender, and come up with variations of their products devoted to serving a specific gender or alter their marketing campaigns to appeal to the male or female segment.

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Marketing Principles 2 (Semester 2, Year 1)

5 Criteria for successful segmentation To determine whether a company has properly segmented its market five criteria are usually considered 1. Differentiable - homogenous needs within the segment 2. Measurable- identify customers in the segment 3. Accessible- formulate effective marketing programmes 4. Actionable- resources to exploit the opportunity 5. Substantial – large enough to be profitable Key Elements of Evaluating Market Segments 

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Three factors: o Segment size and growth o Segment attractiveness e.g. no. of competitors (REWORD) o Company objectives and resources- company fit Post evaluation the company must decide on which and how many segments it will target based on common needs or characteristics

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Marketing Principles 2 (Semester 2, Year 1)

2. How Marketers Develop a Targeting Strategy

Undifferentiated Marketing

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This strategy can occur by default, when a company lacks marketing orientation and practices undifferentiated marketing through lack of customer knowledge Any easy process for a company to follow as only a single product/marketing strategy is developed …………..but not a market leading strategy!

Differentiated Marketing

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Organisation really understands customer base and who they want to target Variation of products (multiple) Product and marketing variations = higher sales BUT!! Increased costs due to number of different products. Separate market plans for separate segments: o Packaging o Promotions o Channels

Concentrated (Niche)

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Limited resources Exclusive target market In-depth knowledge of smaller segment Niche players can become major players

Micromarketing

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Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments

Mass Customization   

Advances in Technology build your own Customise your own personal product

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Marketing Principles 2 (Semester 2, Year 1) Personalisation 

E.g. Design your own shoes

Socially Responsible Targeting

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Important as can long term affect brand image if not responsible with targeting/ads Breweries accused of targeting under-age drinkers with alcopops Internet increases accessibility to vulnerable groups who are not supervised

3. Developing and Implementing a Positioning Strategy and Differentiating    

Having decided which segments of the market it will target, the company must decide what position it wants to occupy in those segments A product’s position is the way the product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products “Competitive positioning is designing the company’s offer and image so that they occupy a meaningful and distinctive position in the target customers mind” Kotler & Keller (2006)

1. Plan position that will give the product the greatest advantage in selected target markets 2. Must design marketing mixes to create these planned positions Differentiation and Positioning

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Product position is the way the product is defined by consumers on important attributes. A firm can create differentiation on: o Product o Services o Channels o People o Image E.g. Seventh Generation, a maker of household cleaning supplies, differentiates itself not by how its products perform but by the fact that its products are greener

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Marketing Principles 2 (Semester 2, Year 1) Communication and Delivering the Chosen Position

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Whatever the position is, it is really important to communicate this positioning to the customer: o Product (Brand) o Price o Place o Promotion o People o Processes o Physical o Evidence

Competitor Analysis

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Who are your competitors? Where you are placed in relation to them? What criteria do you use? Perceptual Map

Creating a Perceptual Map..

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Put the following brands for jeans on a perceptual map. ... Decide the axis to use and their position o (e.g. price & Quality) Largely based on personal perceptions – differs between customers/people

Summary   

Segmenting – Grouping consumers according to similar characteristics Targeting – Deciding which segments to enter and how to reach them Positioning – How to position product/service in relation to competitors o (Differentiation & Competitive Advantage)

Segment customers into sections, then decide which ones to target, then position your product within the segment that is targeted.

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