mktg STP 1

segmentation strategy

primary methods:

• geographic

• demographic

• psychographic

• benefits

• behavioral

GO FROM LEAST PREDICTIVE TO MOST PREDICTIVE

geographic segmentation

group based on physical location

• country, state, city, neighborhood, climate/weather

satisfy regional needs

called product localization

demographic segmentation

most common strategy

easy to identify

easy to reach

psychographic segmentation

how consumers describe themselves

psychological reasons underlying decisions (so inner psychology)

self values, self concept, lifestyles

• more effective at predicting consumer behavior than demographics

benefit segmentation

group based on whose needs/wants are satisfied by products benefits

• so what benefits are the customers seeking from the product?

behavioral segmentation

group based on how product or service is used

2 types:

1. occasion so when is the product purchased or consumed?

2. loyalty: retaining most profitable customers

segment attractiveness how to evaluate

1. identifiable

2. substantial

3. reachable

4. responsive

5. profitable

identifiable

who is the segment

what makes the segment unique

how difficult is it to determine whether consumers are part of segment

does each segment require a unique marketing mix?

substantial

too small of a target segment? (like the shop that only sells christmas decor)

maybe it’s small but will a lot of people buy it

reachable

can consumers actually buy it though? is it available to buy as in is it reachable?

responsive

customers must react positively to firms offering & move towards the firms product/service & accept the firms value proposition

profitability

will the segment actually make the firm profit?

targeting strategy

• undifferentiated/mass marketing

• differentiated

• concentrated

• micromarketing 1 to 1

undifferentiated

mass marketing

target everyone equally

ignore segmentation

less common

differentiated

target several segments & design separate offers for each

diversifies business but expensive

concentrated

target single primary segment

lower cost but risky (like the dog birthday cake shop)

micromarketing or 1 to 1 marketing

tailoring products to individual customers (face on m&ms)

market positioning

defining marketing mix so target customers clearly understand how their product differs from competitors

• communicates value proposition & competitive advantage

so it’s the way brands position themselves in the consumers mind

if there competitive advantage is low cost they’ll say they’re affordable THAT IS THERE POSITION IN THE CUSTOMERS MIND/MARKET

value proposition

a statement that highlights why the product should be chosen by the customer b/w customer needs & wants & company offering

what is the competitive advantage of your product?

goal : create a distinct impression in the consumers mind

• reflects the specific needs of the target consumers

• shows how to distinguish from competitors