WEEK 4 STP (segment, target, position)

Segmentation

• Markets are heterogeneous 

• Identify a homogenous group (segment) of customers

• Determine the size & potential of the group

What is the segmentation model?

Look which categories are relevant and how we would describe our customers across these categories

Geographic

• Region

• Country size

• City size

• Population density

• Climate

Demographic

• Age

• Gender

• Family size 

• Family life cycle 

• Income

• Occupation 

• Education

• Religion 

• Race

• Nationality 

Psychographic 

• Social class

• Lifestyle 

• Personality

Behavioural

• Purchase occasion 

• Benefits sought

• User status

• Usage rate

• Loyalty status 

• Readiness state 

• Attitude toward product

Targeting

Evaluate market (segment) attractiveness

1. size and growth of the market (e.g. size = how many cars per annum. Growth = over the last 5 years, review reasons e.g. pandemic)

2. Competition (an industry is highly concentrated if the top 4 players have more than 80%, more concentrated = potentially less competitive = more attractive. Less concentrated = more competitive = less attractive. More competitors with smaller shares = less attractive)

3. Apply porters 5 forces to see attractiveness to join industry

Using competitors market share as guidance for our own market share

Looking at the top 4 or 5 competitor’s market share can provide guidance for our own target

• For example, we could say we want 10% of the top 5 combined share:

• Combined = 58%

• 10% = 5.8%

• A more concentrated (less competitive) segment would offer a higher share opportunity

• EG combined = 80%

• 10% = 8%

Targeting for the assignment tips

• Provide size of market as well as potential selected segment(s)

• Provide / forecast the segment’s growth with justification

• Looking at the top 4 or 5 competitor’s market share can provide guidance for your own target share %

• Provide a relevant persona

Positioning

Two types of positioning:

Physical = compare products against a set of objective physical characteristics (e.g compare nike vs adidas using physical attributes, technical attributes, price and usage)

Perceptual = use subtle messages to convey a positioning (e.g. red bull’s action lifestyle positioning)

Value proposition

A statement why people should do business with you

• Should reference target market

• Should show benefits

• Should demonstrate value