Chapter 9- Segmentation, Targeting, Positioning Flashcards
(23 cards)
What are the steps in the STP process?
- Establish overall strategy/objectives (segmentation)
- Use segmentation methods (segmentation)
- Evaluate segment attractiveness (targeting)
- Select a target market (targeting)
- Identify and develop a positioning strategy (positioning)
Types of segmentation?
Geographic: grouping based on where consumers live
can make adjustments depending needs of customers at each location
Demographic: grouping according to easily measured, objective characteristics e.g. age, gender, income, education
Psychographic:
Segmenting customers based on how they spend their time + money, what activities they pursue and their attitudes and opinions about the world they live in
Need to know/understand: lifestyle, self-concept, self-values
Benefit:
convenience, economy, prestige
Behavioral:
occasion, loyalty
What is self-concept?
Image a person has of themself; a component of psychographics
What are self-values?
Goals for life, not just the goals one wants to accomplish in a day; a component of psychographics that refers to overriding desires that drive how a person lives their life
What is benefit segmentation?
Grouping of consumers on the basis of the benefits they derive from products or services (customers whose needs and wants are best satisfied by the product benefits)
e.g. Hollywood- a variety of films for different audiences
What is behavioral segmentation?
Segmentation method that divides customers into groups based on HOW they use the product/service
Occasion: type of behavioral segmentation based on WHEN a product is purchased/consumed
Loyalty: strategy of investing in loyalty initiatives to retain most profitable customers
What is market basket analysis?
Mathematical modeling technique that utilizes millions of customer purchases, often referred to as big data, to determine an association between a group of items that customers purchase at the same time and place into their actual or virtual market basket. Allows the firm to classify consumers into behaviorally oriented market segments
What is geodemographic segmentation?
Grouping of consumers on the basis of a combination of geographic, demographic and lifestyle characteristics
e.g. Tapestry segmentation classifies all US residential neighborhoods into 65 distinctive segments
How do firms determine whether a segment is attractive and worth pursuing?
(ISPRR)
Use criteria: is the segment
identifiable
(who is in the market? are the segments distinct from one another)
substantial
(how big is the market?)
reachable
(can the consumer be reached? can they understand the product and recognize how to buy it)
responsive
(are the consumers going to react similarly and positively to this new offering)
profitable
(will this increase market growth, market competitiveness and market access)
Equation to illustrate profitability of a segment
segment profitability = (segment size * segment adoption % * purchase behavior * profit margin percentage) - fixed costs
segment size = no of people in segment
segment adoption %: % of customers in segment likely to adopt the product/service
purchase behavior = purchase x price * number of times the customer would buy the product/service in a year
profit margin percentage (selling price - avg variable costs) divided by selling price
Difference between undifferentiated and differentiated targeting strategy?
Undifferentiated: Marketing strategy a firm can use when everyone might be considered a potential user of its product
Also called mass marketing
Differentiated: Strategy through which a firm targets several marketing segments with a different offering for each e.g. Condé Nast’s 26 niche magazines
(can help firms obtain a bigger share of the market)
Types of targeting strategies?
1) differentiated
2) undifferentiated
3) concentrated
4) micromarketing
What is a concentrated targeting strategy?
Marketing strategy of selecting a single, primary target market, focusing all energies on providing a product to fit that market’s needs
e.g. Entrepreneurial start-up ventures
What is micromarketing?
An extreme form of segmentation that tailors a product or service to suit an individual’s wants or needs
e.g. custom-made shoes, cars etc
What is market positioning?
The process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does/represents in comparison with competing products
What is a value proposition?
The unique value that a product/service provides to its customers and how it is better than/different from those of competitors
How to visualize value proposition?
Use Circles for a Successful Proposition
7 spaces, each with different implications
What are the main value proposition components? (TOPU)
- Target market
- Offering name or brand
- Product/service category or concept
- Unique point of difference/benefits
What is value?
Reflects the relationship of benefits to costs, or what the consumer gets for what they give
What are some positioning methods:
Value: the relationship of price to quality, depends on how the consumer sees value
Salient attributes: e.g. a symbol
Competition: positioning against specific competitor or an entire product
What is a perceptual map?
Displays in two or more dimensions, the position of products or brands in the consumer’s mind
What is an ideal point?
Position at which a particular market segment’s ideal products would lie on a perceptual map
6 steps to derive a perceptual map
- determine consumers’ perceptions and evaluations of the product/service in relation to the competitor’s product/service
- identify market’s ideal points and size
- identify competitor’s positions
- determine consumer preferences
- select position
- monitor positioning strategy
