Ch 6

Question 1

The STP Process

Answer 1

Segmentation
Step 1: strategy/objectives
Step 2: Segmentation bases

Targeting
Step 3: Evaluate segment attractiveness
Step 4: Select Target market

Positioning
Step 5: Identify and Develop Positioning Strategy

Question 2

Step 1: establish overall strategy or objective

Answer 2

Articulate the mission and the objectives of the company’s marketing strategy clearly
Segmentation strategy must be consistent with and derived from firm’s mission and objectives as well as strengths, weaknesses, opportunities and threats (SWOT)

Question 3

Step 2: segmentation bases

Answer 3

Geographic, demographic, psychographic, behavioural

Question 4

Geographic

Answer 4

organizes customers into groups on the basis of where they live

Question 5

Demographic

Answer 5

groups consumers according to who they are using easily measured, objective characteristics such as age, gender, income, education, race, occupation, religion, marital status, family size, home ownership, family life cycle

Question 6

Psychographic

Answer 6

how consumers actually describe themselves or how they live (personality, lifestyle, motives)

Innovators/Thinkers/Believers/Achievers/Strivers/Experiencers/Makers/Survivors

Question 7

Behavioural

Answer 7

groups consumers on the basis of why they buy, how often and how they plan to use the products

occasional/benefit/loyalty

Question 8

Occasion segmentation

Answer 8

based on when a product is purchased or consumed

Question 9

Benefit segmentation

Answer 9

considers benefits customers are looking for from products

Question 10

Loyalty segmentation

Answer 10

customers that feel so strongly that the firm can meet their relevant needs so well that competitors are virtually excluded from their consideration

Question 11

Geodemographic segmentation

Answer 11

combination of geographic, demographic and lifestyle characteristics

Better to use multiple segmentation methods

Question 12

Step 3: evaluate segment attractiveness

Answer 12

identifiable, reachable, responsive, substantial, profitable

Question 13

Identifiable

Answer 13

Determine who is within their market to be able to design products to meet their needs

Need to ensure that segments are distinct from one another

Who is their market, are the segments unique, does each segment require a unique marketing mix

Question 14

Reachable

Answer 14

Consumers must know the product exists, understand what it can do for them and recognize how to buy it

Question 15

Responsive

Answer 15

For segmentation strategy to be successful, customers in the segment must react similarly and positively to the firm’s offering

Customers must:
Reach positively to firm’s offering
Move toward the firm’s products/services
Accept the firm’s value proposition

Question 16

Substantial and profitable

Answer 16

Once the potential target market is identified, it needs to be measured to determine size and growth potential

Question 17

Segment profitability

Answer 17

Segment profitability = (segment size * segment adoption percentage * purchasebehaviour * profit margin percentage) - Fixed Costs

(PUT ON CHEAT SHEET)

Question 18

Step 4: select target market

Answer 18

Undifferentiated, differentiated, concentrated, micromarketing

Question 19

Undifferentiated targeting strategy (mass marketing)

Answer 19

Used when product is perceived to provide the same benefits to everyone or smaller firms
Ex. toilet paper, toothpaste

Question 20

Differentiated targeting strategy

Answer 20

Targets several market segments with a different offering to each

Help obtain bigger share of the market and increases the market for their products overall

Helps diversify business and lowers company’s overall risk

Must develop, manufacture, transport, store and promote accessories separately for each of its store concepts

Question 21

Concentrated (niche) targeting strategy

Answer 21

When selecting a single primary target market and focuses all its energies on providing a product to fit the market’s needs
Often used by entrepreneurs

Question 22

Micromarketing

Answer 22

When firms tailors a product to suit an individual customer’s wants or needs
Mass customization: firms that interact on a one-to-one basis with many people to create custom-made products

Question 23

Step 5: identify and develop positioning strategy

Answer 23

Positioning is how consumers view a company’s products & services based on important attributes. It places a company in mind relative to competing products

Positioning Methods

Value
Product attributes
Benefits & symbolism
Competition
Market leadership

Question 24

Value

Answer 24

relationship of price to quality is most important consideration for consumers
Different consumers = different value

Question 25

Product attributes

Answer 25

focuses on those attributes most important to the target market and can vary from target market to target market

Question 26

Benefits and symbolism

Answer 26

emphasizes benefits of the brand as well as the psychological meaning of the brand to consumers

Question 27

Competition

Answer 27

Head to head; positioning products head to head against specific competitor Position against a specific competitor Position against an entire product classification

Question 28

Market leadership

Answer 28

emphasizing their leadership position within their industry

Question 29

Positioning by using perceptual mapping

Answer 29

1. Determine consumers’ perceptions and evaluations of the firm’s product or service in relation to competitors 2. Identify the market’s ideal points and size -> Use different sized ovals 3. Identify competitors’ positions 4. Determine consumer preferences -> Find out what customers value most in each segment 5. Select position 6. Monitor the positioning strategy

Question 30

Repositioning

Answer 30

strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences -> Expensive and risky