Segmentation, Targeting & Positioning
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The document discusses the STP process of market segmentation, targeting, and positioning. It defines segmentation as classifying customers into groups, targeting as evaluating segment attractiveness and selecting segments, and positioning as arranging a product to occupy a clear place in the consumer's mind. The document then provides details on how to conduct segmentation, targeting, and positioning including identifying bases for segmentation, developing selection criteria, and choosing a market coverage strategy.
Segmentation, Targeting & Positioning
- 1. Lesson 15 Lesson 15 Market Segmentation, Targeting, and Positioning
- 2. The STP Process The STP Process • Segmentation is the process of classifying customers into groups which share some common characteristic • Targeting involves the process of evaluating each segments attractiveness and selecting one or more segments to enter • Positioning is arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the mind of the consumer
- 3. Target Market Target Market • A market is a set of all actual and potential buyers • A target market is a group of people toward whom a firm markets its goods, services, or ideas with a strategy designed to satisfy their specific needs and preferences. • Any marketing strategy must include a detailed (specific) description of this.
- 4. Advantages of Segmentation (pp 164 -- 165) Advantages of Segmentation (pp 164 165) 1. The process of breaking up a homogeneous market into heterogeneous segments forces the marketer to analyse and consider both the needs of the market and the company’s ability to competently serve those needs – thereby making the company better informed about its customers 2. Competitor offerings and marketing positioning must also be analysed in this context so the company must consider what its competitive advantages and disadvantages are, helping it to clarify its own positioning strategy 3. Limited resources are used to best advantage, targeted at those segments that offer the best potential
- 5. Requirements for Effective Segmentation Requirements for Effective Segmentation Measurable Measurable • Size, purchasing power, profiles of segments can be measured. Accessible Accessible • Segments can be effectively reached and served. Substantial Substantial • Segments are large or profitable enough to serve. Differential • Segments must respond Differential differently to different marketing mix elements & programs. Actionable Actionable • Effective programs can be designed to attract and serve the segments.
- 6. Steps in Segmentation, Targeting, and Steps in Segmentation, Targeting, and Positioning Positioning 6. Develop Marketing Mix for Each Target Segment Market 5. Develop Positioning Positioning for Each Target Segment 4. Select Target Segment(s) Market 3. Develop Selection Criteria Targeting 2. Develop Profiles of Resulting Segments Market Segmentation 1. Identify Bases for Segmenting the Market
- 7. Step 1. Market Segmentation Step 1. Market Segmentation Levels of Market Segmentation Levels of Market Segmentation Mass Marketing Mass Marketing Same product to all consumers Same product to all consumers (no segmentation) (no segmentation) Segment Marketing Segment Marketing Different products to one or more segments Different products to one or more segments (some segmentation) (some segmentation) Niche Marketing Niche Marketing Different products to subgroups within segments Different products to subgroups within segments (more segmentation) (more segmentation) Micromarketing Micromarketing Products to suit the tastes of individuals and locations Products to suit the tastes of individuals and locations (complete segmentation) (complete segmentation) Local Marketing Individual Marketing Tailoring brands/ promotions Tailoring products/ programs to local customer groups to individual customers
- 8. Step 1. Market Segmentation Step 1. Market Segmentation Bases for Segmenting Consumer Bases for Segmenting Consumer Markets Markets Geographic Nations, states, regions or cities Demographic Age, gender, family size and life cycle, or income Psychographic Social class, lifestyle, or personality Behavioural Occasions, benefits sought, user status, usage rate, loyalty
- 9. Step 1. Market Segmentation Step 1. Market Segmentation Bases for Segmenting Business Markets Bases for Segmenting Business Markets Personal Demographics Characteristics Bases Bases for Segmenting for Segmenting Business Business Situational Operating Factors Markets Markets Characteristics Purchasing Approaches
- 10. Segmenting Business Segmenting Business Markets Markets • Segmentation by customer size or geographic location • Four segments of business customers – Programmed buyers – Relationship buyers – Transaction buyers – Bargain hunters
- 11. Step 1. Market Segmentation Step 1. Market Segmentation Bases for Segmenting International Markets Bases for Segmenting International Markets Industrial Markets Industrial Markets Political/ Political/ Geographic Geographic Economic Economic Legal Legal Cultural Cultural Intermarket Intermarket
- 12. Linking the Concepts Linking the Concepts • Using the segmentation bases you’ve just heard about, segment the Irish clothing market. >Describe each of the major segments and subsegments.
- 13. Step 2. Market Targeting Step 2. Market Targeting Evaluating Market Segments (developing Evaluating Market Segments (developing selection criteria) selection criteria) • Segment Size and Growth – Analyze sales, growth rates and expected profitability for various segments. • Segment Structural Attractiveness – Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers. • Company Objectives and Resources – Company skills & resources relative to the segment(s). – Look for Competitive Advantages.
- 14. Step 2. Market Targeting Step 2. Market Targeting Market Coverage Strategies Market Coverage Strategies Company Company Marketing Marketing Market Market Mix Mix A. Undifferentiated Marketing Company Company Marketing Mix 1 Segment 1 Segment 1 Marketing Mix 1 Company Company Segment 2 Segment 2 Marketing Mix 2 Marketing Mix 2 Company Company Segment 3 Segment 3 Marketing Mix 3 Marketing Mix 3 B. Differentiated Marketing Segment 1 Segment 1 Company Company Marketing Marketing Segment 2 Mix Segment 2 Mix Segment 3 Segment 3 C. Concentrated Marketing
- 15. Step 2. Market Targeting Step 2. Market Targeting Choosing a Market-Coverage Strategy Choosing a Market-Coverage Strategy Company Resources Product Variability Product’s Life-Cycle Stage Market Variability Competitors’ Marketing Strategies
- 16. Linking the Concepts Linking the Concepts • At the last ‘linking the concepts’, you segmented the Irish clothing market. > Now, pick two companies that serve this market and describe their segmentation and targeting strategies. > Can you come up with one that targets many different segments versus another that focuses on only one or a few segments? • How does each company you choose differentiate its marketing offer and image? • How has each done a good job of establishing this differentiation in the minds of targeted consumers?
- 17. Step 3. Positioning for Competitive Step 3. Positioning for Competitive Advantage Advantage • Product’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products. • Marketers must: – Plan positions to give their products the greatest advantage in selected target markets, – Design marketing mixes to create these planned positions.
- 18. Step 3. Positioning for Competitive Step 3. Positioning for Competitive Advantage: Strategies Advantage: Strategies Product Product Product Product Class Class Attributes Attributes Away from Away from Benefits Benefits Competitors Competitors H GG Offered Offered H CC AA D Against a Against a EE B D Usage Usage B Competitor Competitor FF Occasions Occasions User Class User Class
- 19. Steps to Choosing and Implementing Steps to Choosing and Implementing a Positioning Strategy a Positioning Strategy • Step 1. Identifying Possible Competitive Advantages: Competitive Differentiation. • Step 2. Selecting the Right Competitive Advantage: Unique Selling Proposition (USP). • Step 3. Communicating and Delivering the Chosen Position. • Step 4. Support the positioning strategy with a unique marketing mix
- 20. Developing Competitive Developing Competitive Differentiation Differentiation Product Product Service Service Areas for Competitive Areas for Competitive Differentiation Differentiation Image Image People People
- 21. Selecting the Right Competitive Selecting the Right Competitive Advantages Advantages Important Important Profitable Profitable Criteria Criteria Distinctive Distinctive for for Determining Determining Which Which Differences Differences Affordable Affordable to to Superior Superior Promote Promote Preemptive Preemptive Communicable Communicable
- 22. Step 4 – Supporting the Step 4 – Supporting the positioning strategy positioning strategy • At this stage the company has decided on its positioning strategy and must now design a marketing mix to support this strategy. The next part of the course looks at ‘Developing the Marketing Mix’