8. STP

STP

1. Segmentation (identify homogeneous groups)

2. Targeting (aim for a certain group)

3. Positioning (brand image perception)

Benefits of STP

1. Enhances a company’s competitive position

2. Examines and identifies market growth opportunities

3. Effective and efficient matching of company resources to targeted market segments

Market segmentation

The division of a market into different groups of customers with similar needs and requirements

→ Company can focus specifically on certain customer needs

Market segmentation and product differentiation

1. Build-up method: start with the offerings, then identify markets with needs that fit it

2. Breakdown method: start from the segment and their needs, tailor offerings to them

Heterogeneous vs homogenous market

1. Heterogeneous market → different traits, needs and preferences

2. Homogenous market → share traits or need (homogenous markets are different from each other, only similar WITHIN the market)

Market Segmentation in Consumer Markets (Consumer criteria

Profile segmentation (Consumer criteria)

1. Demographic (age, gender, family)

2. Socio-economic (social class, income)

3. Geographic (continent, region, density)

Geo-demographic segmentation

1. Affluent achievers = High-income earners

2. Rising prosperity= Upwards economic trajectory

3. Comfortable communities= middle-income earners, stable

4. Financially stretched= difficulty to make ends meet

5. Urban adversity= financially very challenged

→ Make sure to fit your offering to the segment of your choosing

BMRB-TGI life-stage analysis

We can use different life stages to target people (age, marriage status, eldest/youngest child etc)

Psychographic segmentation

Behavioral segmentation

Usage

Why do people use a certain product?

• Symbolic value

• To experience something

• Practocality

Behavioural segmentation: RFM metrics

1. Recency= How recently has the customer interacted with the company

2. Frequency= How often does the customer interact with the company

3. Monetary= How much/often does the customer give money to the company

Segmenting consumer markets

Businesses make decisions based on this graph

vertical = Acquisition cost

horizontal = Predictability

Segmentation in business markets: Organizational criteria

• Very big!!

1. Firmographic (info about the firm)

2. Economic (How they’re doing economically)

3. Geographic (Where they operate)

SIC = Standard Industrial Classification Code = Identify and categorize industries and businesses

Segmentation of business markets: Customer characteristics

= Characteristics of the company you’re targeting

1. Decision-making unit

2. Choice criteria

3. Purchase situation

Why targeting markets?

To better tailor the marketing mix to a specific market segment

Four criteria for effective targeting

DAMP

1. Distinct (Clear difference between each segment?)

2. Accessible (Are we able to reach the buyers?)

3. Measurable (Is the segment easy to identify?)

4. Profitable (Sufficient people to make production profitable)

Segment attractiveness factors

What makes a segment more attractive?

Mission fit

How does a segment fit with the mission, resources, capabilities of an organization?

• Superior value?

• Impact on organization image?

• Resources vs required investment?

Targeting approaches

Broad focus ←→ Narrow focus

1. Undifferentiated (mass) marketing: Reaching each market with the same marketing mix

2. Differentiated marketing: Target multiple segments, WITH changes to the marketing mix for each segment

3. Concentrated (niche) marketing: Focus on 1 segment, make sure that the marketing mix is well-tailored to it

4. Customized marketing (= One-to-one marketing): Target specific individual customers & personalize products to each specific customer

Undifferentiated marketing

= Mass marketing

• Look at the market as 1 big group of people, 1 segment

• Focus on needs that are common → Basic products

• Advantages: Cost-effective

• Risk: Being outperformed by others (they can tailor it better)

Ex. MNM’s

Differentiated marketing

• Change marketing mix for each targeted segment

• Advantage: Better tailored products & services (people will likely choose you)

• Disadvantage: Expensive!!

Ex. Ariel = Dreft = Dash (All with different segments, like affordable, gentle on skin…)

Concentrated marketing

= Niche marketing

• Only target one segment with a specialized marketing mix

• Go deeper, personalized products

• More expensive

Ex. Vegan products

Customized marketing

• Customized per customer

• Advantage: Better tailor your products to the customer needs

• Disadvantage: Extremely expensive and complex logistics/processes

Target groups

1. Search for prime prospects that are likely to buy your product in the future

2. Strategic target: consumers that are relevant and meaningful

3. All consumers

Holistic consumer profile

→ Make full customer profiles (360° view)

Persona

= A fictional character created to represent a user type that might use a site, brand or product in a similar way

→ Representative for specific segments

• Used to help guide decisions

Customer journey

From being aware of the brand to post-purchase

All touch points (interactions with the brand)

→ Important to map the consumer journey and make them satisfied during each step of it

Positioning

= The act of designing a company’s offering and image, so that they occupy a meaningful and distinct competitive position in the target customers’ minds

= The place you take in the mind of the customer

→ Perceptual mapping (how customers see our brand)

Perceptual mapping

How consumers see our brand

• Identify competing brands

• Identify important attributes when choosing between brands

• Compare your positioning to other brands

• In this example: A is not targeted yet!! Gap in the market

C-D Map

= The Centrality and Distinctiveness Map

Used to know what consumers’ perceptions are about different brands

1.Aspirational: Representative for category and distinct

2.Unconventional: Not representative, but very distinct

3.Mainstream: Very representative, but not that distinct or unique

4.Peripheral: Don’t really stand out or aren’t that representative

Value proposition (!!!)

• Unique benefits and values of an offering

• Differentiate from competitors

• Attract the right customers

• Red = Not interesting

More for more

• Offer specific benefits: status and identity

• Higher prices: quality = questionable

• Ex. Rolex

More for the same

• More benefits for the same price

• Ex. Toyota

More for less

• More benefits for a lower price

• Longer usage & Lower acquisition cost

• Ex. Dreft, Xiaomi (Basically cheaper alternatives)

The same for less

Ex. Aldi or discounters

Less for much less

Ex. Everyday, Ryanair…

Key to successful positioning (!!!)

1. Clarity= what we stand for needs to be clear

2. Consistency= be consistent with how we communicate with our consumers

3. Competitiveness= Which distinct advantages the product has

4. Credibility= create and maintain trust

Unique Selling Proposition (USP)

• Pick one attribute & aim to be the number 1 in it

• Ex. Colruyt: focus on being the one with the most affordable prices

Multiple differences (Positioning)

• Appeal to multiple segments

• Risk: People may not believe you & Brand dilution (people get confused on what the brand exactly stands for)

Proposition positioning strategies

1. Functional (Features, price-quality, use)

2. Expressive (User, benefit, heritage)

   1. Benefits (How it makes you feel: beauty, status…)

   2. Values (Customize to the beliefs of customer (sustainability, animal welfare…))

   3. Heritage (Traditions, knowledge (“established since 1803”))