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© 2009 South-Western, a part of Cengage Learning

Market Segmentation,

Positioning, and the

Value Proposition

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STP Marketing and the Evolution of Marketing Strategy

1. Target Market: A sub-group of a larger market chosen as the focal point for a marketing or advertising campaign. (NOT illegal or unethical!)

2. Positioning: Designing and representing a brand in a way that is distinct in the consumer’s mind.

3. Positioning Strategy: Selecting key themes to communicate to a target market.

4. Marketing Strategy: Evolves as a result of 1-3

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Why do we need to segment?

• Because different consumer groups needs are different

• To maintain focus on the customer target segment

• To customise advertising according to target segment

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Segmentation is a spectrum

• Concentrated marketing :instead of competing with big fish concentrate on smaller segments based on need identification. e.g Lab equip for educational institutions

• Differentiated marketing: several mktg programs tailored for different segments. E.g M aruti . GM

• Mass marketing , segmentation not compulsory, product n appeal effective for all. E.g Coca cola

• Niche mktg . Highly concentrated

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Beyond STP—Regular Assessment

1. Reassess segmentation strategy: Exam the current target segment to develop new and

better ways of meeting its needs. Change the target and reposition the brand to a new

segment.

2. Pursue product differentiation strategy: Emphasize or create differences in brands to

distinguish them from competitors. Advertising plays a critical role because the consumer

will have to be convinced that the difference is meaningful.

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The STP Marketing Process(Segmenting, Targeting, Positioning)

1. Break the broad market into smaller, more homogenous segments

2. Specifically target discrete market segments

3. Position the brand to appeal to the targeted segments

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Identifying Target Segments: Market Segmentation

Demographics

Geography

Psychographics

Lifestyles

Benefits

Commitment Levels

Usage Patterns

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Segmenting by Usage and Commitment

Advertising and promotion targeted to: Heavy users : 20 : 80 rule Nonusers Brand-loyal users Switchers/Variety seekers, use occasion Emergent Consumers

– Point of entry marketing strategy

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Demographic Segmentation

Age : different strokes for different folks.

Gender: women more discerning, research more and weigh factors more. Don’t like to be preached . Celebrities don’t cut much ice with em

Race. Hispanics , asians etc etc

Marital Status :single independent…..

Income. Masses vs classes Education Occupation

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Geographic Segmentation

More vocal in local if operating in a smaller area. Use mass media if in large area.

Country Region State City Neighborhood

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Psychographics and Lifestyle Segmentation

Activities

Interests

OpinionsLifestyle

Lifestyle segmentation provides insight into consumer’s motivations. E.g fragrance . Different perfumes towards different types of people. According to VALS framework people can be inner directed or outer directed

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Benefit Segmentation

Safety?Prestige?

Fuel Economy?PPT 6-12

DIFFERENT NEEDS SO DIFFERENT IMPORTANCE ON BENEFITS SOUGHTE.G TOOTH PASTE . FOUR SEGMENTS IDENTIFIED

1. SENSORY

2. SOCIABLES

3. WORRIERS

4. INDEPENDENTS

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Business to Business Markets

Markets segmented by:

Usage rates Geographic location SIC (Standard Industrial Classification)

Code Stage in the purchase process: first time

vs. experienced buyers Benefits desired

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STP Marketing is used in the business-to-business market

as well as the consumer market.

STP Marketing is used in the business-to-business market

as well as the consumer market.

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Ad in Context Example

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Prioritizing Target Segments

1. Examine your ability to deliver value to the segments and costs of new capabilities—distinct competencies of the firm

2. Research segment size, growth potential and usage frequency

3. Assay the competitive environment

4. Find a niche you can scratch

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Reaching Target segments

• Controlled coverage : target specific adv e.g auto components in auto magazines

• Customer self-selection: release the ad to 3veryone customers respond themselves rest of them ignore. Promote golf equipment golf lovers would respond .

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Positioning strategies

• Product characteristics/benefits.:Toyota economy reliability, volkswagen safety and durability. Aim at new product char too . E.g viva, aim at 2 or more prod char e.g toothpaste cavities and fresh breath, ariel clean and fragrant

• Price-quality approach:some brands offer more compared to others so they harp more too. Cameras dvd’s tv ‘s , cosmetics etc.

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• Use or application approach:cadbury’s for celebrating n gifting, expand brands market: dabur honey

• Product class approach: margarines vs butter, dove vs. others, 7 up vs . Colas

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Positioning strategies• Product user approach:associate

prd with a user / class of users. Celebrities are used . Michael jordan, miller beer

• Cultural symbol approach. Use entrenched cultural symbyols to differentiate. Marlboro man . Taj mahal tea , pilsbury doughboy

• Competitor approach: refer to competitors. Competitors image is used as a bridge for communicating another image. Pepsi : nothing official about it. Sprite seedhi baat, horlicks, chocolibe sun tv

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Effective Positioning

Deliver on the brand promise: Org should be committed to create substantative value . Mobil campaign towards Road Warriors co. people have to live up to it. Eureka forbes friedly sales man

There is magic in consistency: pos strtegy should be consistent internally and overtime. Everything must work in sync to reinforce perception in consumer mindsabt what the brand stands for e. g southwest airlines .if its ontime reliability it will invest in state of art baggage hasndling , preventive maintainenc etc etc and not food and hospitality etcetc. Also the strategy needs consistency too. Year in and year out some consistency shapes perception . Specific copy may change thematic core does not

. Eg lux – beauty soap of film stars, maggi its different, bajaj

Make the positioning different and simple for consumers to understand . In this fast paced life the harried consumer is expected to distort, ignore or forget most ads so complicated messages have no chance of getting thru . Pos should be simple and distinctive. E.g HONDA JAZZ VS FIAT LINEA

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Fundamental Positioning Themes

TRY TO SETTLE ON SINGLE PREMISE though can be combined tocreatea synergy. 3 FUNDAMENTAL THEMES

Benefit Positioning: functional(are mostly same e.g washes, cleans ), emotional ( fresh breath, reduces body odour etc), self expressive(gucci, BMW, ROLEX)

User Positioning : instead of benefit takes a specific profile of the user as focal point of positioning. Virgin mobile

Competitive Positioning : goal is explicit reference to an existing ccompetitor to help define yr brand. E,g éclairs vs chocolibe. Rin vs. weel, horlicks vs complan etc. sometimesused by smaller brand to carve out a position

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Positioning strategies

• Identify competitors

• Determine how competitors are perceived and evaluated

• Determine the competitors positions

• Analyse the customers

• Select the position

• Monitor the position

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Do you think this ad for Ryka shoes is

emphasizing benefit, user, or competitive

positioning?

Do you think this ad for Ryka shoes is

emphasizing benefit, user, or competitive

positioning?

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Ad in Context Example

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Repositioning

Used to revive an ailing brand or fix a lackluster new market entry

Advertising themes and positioning can be trendy and become outdated

The challenge: Changing perceptions of a brand forged over years of advertising.

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Capturing the Value Proposition

VVAALLUUEE

BenefitsBenefits

Relative PriceRelative Price

FunctionalEmotional

Self-expressive

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