STP

Question 1

What are the elements of STP?

Answer 1

Market segmentation

Targeting

Product Positioning

Question 2

What are the benefits of the STP process?

Answer 2

1) Enhances a company’s competitive position.

2) Examines and identifies market growth opportunities.

3) Effective and efficient matching of company resources.

Question 3

What is market segmentation?

Answer 3

The division of a market into different groups of customers with distinctly similar needs, who respond similarly to a marketing situation.

Question 4

What are the steps of segmentation?

Answer 4

1) Identify bases to segment the market.

2) Develop profiles of the segment.

Question 5

What are the purposes of market segmentation?

Answer 5

1) To leverage scare resources.

2) To ensure that elements of the marketing mix are designed to meet particular needs of different customer groups.

3) Allow organisations to focus on specific customer needs, the most efficient and effective way.

Question 6

What is the aim of market segmentation?

Answer 6

To identify segments where we can have identifiable differences between segments but also similarities between members within each segment.

Need both:
Segment heterogeneity
Members homogeneity

Question 7

What is the basic principle of market segmentation?

Answer 7

Variation within groups should be less than variation across groups on the relevant customer characteristics.

Question 8

What are the two main approaches of market segmentation?

Answer 8

1) Breakdown Method

2) Build-Up Method

Question 9

What is the breakdown method?

Answer 9

In this case, the market is considered very homogeneous, that is, customers in the market are seen as essentially the same.

Therefore, the task is to identify groups that are different.

Question 10

What is the build-up method?

Answer 10

The build-up method sees the market as a mix of very different customers.

Therefore, the task is to find similarities at first.

Question 11

What are the three groups of variables (consumer criteria) used to segment consumer markets?

Answer 11

Behavioural

Psychological

Profile

Question 12

What is behavioural criteria?

Answer 12

Behavioural criteria divide the market based on where, when, and how the market segments behave.
* What do people in that market watch?
* Where do they shop?
* How do they shop?

Question 13

What is psychological criteria?

Answer 13

Psychological criteria divide the market based on the reasons consumers may have to buy the product, or the attitudes they have.
* Why does the market behave in the way it does?

Question 14

What is profile criteria?

Answer 14

Profile criteria focusses on the who and the where.
* Who are the people in the market?
* Where are the people in the market?

Question 15

What is the framework used to evaluate the suitability of a market segment?

Answer 15

DAMP:

Distinct - Is each segment clearly different from other segments?

Accessible - Can buyers be reached through appropriate promotional programs and distribution channels?

Measurable - Is the segment easy to identify and measure?

Profitable - Is the segment sufficiently large to provide a stream of constant future revenues and profits?

Question 16

What are the three groups of variables (organisational criteria) used to segment business markets?

Answer 16

Firmographic

Economic

Geographic

Question 17

What is firmographic criteria concerned with?

Answer 17

Size - Micro, SME, Large

Age/Life Cycle - Start-up, 1-3 years, 10 years

Industry (SIC Codes) - Health, Education, ICT

Type/Role - Charity, For-Profit, Supplier

Question 18

What is economic criteria concerned with?

Answer 18

Revenue/Turnover

Profit

Budget

Question 19

What is geographic criteria concerned with?

Answer 19

Local

National

Multinational

Global

Question 20

What is targeting?

Answer 20

Identifying which groups of customers (segments) to aim for.

Question 21

What are the steps of targeting?

Answer 21

1) Evaluate segment attractiveness

2) Select target segments

Question 22

When deciding which segment to target, the firm should ask what two questions?

Answer 22

1) How attractive is this segment?

2) Does the firm have the capabilities to win in this segment? (Is it willing to invest in the required capabilities?)

Question 23

What are the segment attractiveness factors?

Answer 23

Market growth

Segment profitability

Segment size

Competitive intensity within the segment

Cyclical nature of the industry

Question 24

Once the segments are evaluated, target markets are identified based on the company’s strategy.

What are the three main targeting strategies?

Answer 24

1) Undifferentiated Marketing

2) Differentiated Marketing

3) Concentrated Marketing

Question 25

What is undifferentiated marketing?

Answer 25

The undifferentiated strategy assumes that all segments in the market can be treated as one large segment, and one marketing mix is developed for the whole market.

Question 26

What is differentiated marketing?

Answer 26

The differentiated strategy segments the market while identifying differences amongst segments and develops a separate marketing mix for each segment.

Question 27

What is concentrated marketing?

Answer 27

The concentrated approach targets one or more (but not all) segments of the market with separate marketing mixes.

Question 28

What is positioning?

Answer 28

The positioning concept is based on the idea of differentiation. Positioning is the act of designing the company's offerings and image so that they occupy a meaningful and distinct competitive position in the target customers' minds.

Question 29

What are the steps of positioning?

Answer 29

1) Develop product or brand positioning for each target segment. 2) Develop marketing offerings for them.

Question 30

What are the two fundamental elements involved in positioning?

Answer 30

1) Physical attributes - the functionality and capability that a brand offers. 2) Communication - the way in which the information about a brand is communicated, and how consumers perceive the brand relative to other competing brands in the market place (is more supple/flexible).

Question 31

What are the repositioning strategies?

Answer 31

1) Change the tangible attributes and then communicate the new proposition to the same market. 2) Change the way a product is communicated to the original market. 3) Change the target market and deliver the same product. 4) Change both the product (attributes) and the target market.