chapter nine- STP
Market Segmentation, Targeting, and Positioning
Learning Overview
Learning fundamentally alters perspectives and behaviors in various fields.
Market and Market Segments
Market: Defined as a potential group of individuals or organizations with specific needs or wants, who possess both the willingness and ability to purchase.
Market Segment: A subgroup within a broader market that comprises individuals sharing similar needs or characteristics, all having the intent and capacity to buy a certain offering.
Market Segmentation: This refers to the process of breaking down a broad market into distinct subsets or segments that exhibit common needs, thereby allowing for targeted marketing strategies.
Visualizing Market Segments
Illustration demonstrates the concept of market segmentation with segments visually represented (Market Segment 1, Market Segment 2, etc.).
Consumer Needs in Sports - Running Shoes
Consumer Categories:
Casual Runner: Seeks comfortable and stylish shoes suitable for occasional exercise.
Marathon Runner: Requires high-performance shoes prioritized for durability and efficiency over longer distances.
Adapting the 4Ps (Product, Price, Promotion, Place):
Air Zoom Streak5: Priced at $100, designed for competitive runners.
Flyknit Airmax: Priced at $225, marketed towards consumers seeking high-end, fashionable athletic footwear.
Purpose of Market Segmentation
Objective: To aggregate potential buyers into coherent groups that can be effectively targeted based on shared needs, enhancing responsiveness to marketing initiatives.
Product Differentiation: Utilizes segmentation to create distinct product lines (ex: Air Zoom Streak5 and Flyknit Airmax at different prices).
Linking Market Needs to Marketing Actions
Steps in Linking Needs to Actions:
Identify market needs.
Analyze benefits corresponding to:
Product Features
Expense
Quality
Time and Convenience Savings.
Segment and target markets.
Execute tailored marketing program actions.
Marketing Mix Components:
Product: The items offered to meet consumer needs.
Price: Costing strategies reflecting consumer expectations and perceptions.
Promotion: Marketing communications and outreach efforts.
Place (Distribution): Channels through which products are sold.
Steps in Market Segmentation and Targeting
Group Potential Buyers: Identify segments based on shared characteristics.
Categorize Products: Align similar products into defined groups.
Market-Product Grid Development: Create a grid to visually represent market segments against products, estimating potential size of markets.
Select Target Markets: Choose which market segments to focus marketing efforts on.
Marketing Actions Execution: Implement specific actions tailored to target markets.
Product-Market Grid Example
Segments:
Side Sleepers, Back Sleepers, Stomach Sleepers, each requiring different pillow types (Medium, Soft).
Segmentation Strategies
When to Segment: There is an acknowledgment of opportunities for enhanced returns on investments.
How to Segment: Outlined through three primary strategies:
One product across multiple market segments (e.g., books).
Multiple products across multiple market segments (e.g., various car models).
One-to-one segmentation, or “mass customization” (e.g., build-to-order goods).
Criteria for Base Segmentation
Effective Segment Formation Requirements:
Simplicity and cost-effectiveness.
Similarity of needs within segments.
Differentiation of needs between segments.
Types of Market Segmentation
Geographic Segmentation: Based on geographic regions or characteristics (e.g., climate, population density).
Demographic Segmentation: Criteria include age, gender, income, ethnicity, and family life cycle considerations.
Psychographic Segmentation: Based on lifestyle, personality traits, or individual motives.
Behavioral Segmentation: Focused on usage rates, consumption behaviors, and the extent of product engagement.
Usage Rate: Quantity of product utilized or store visits within a defined timeframe.
80/20 Rule: Suggests that 20% of customers are responsible for 80% of demand and vice versa.
Examples of Segmentation Bases in Use
A bank targeting young married professionals for home loans.
Luxury car brands conveying a status message within their marketing to appeal to affluent consumers.
Local vendors, like plumbers, focusing marketing efforts based on geographic demographics.
Book publishers centered solely on children’s book markets.
Persona Development for Marketing
Definition of Personas: Character profiles representing ideal customers, infused with real market data to create relatable marketing strategies.
Primary Persona: Represents the main consumer audience.
Secondary Persona: Refers to a less significant, yet relevant audience segment.
Persona Attributes: Examples of detailed persona attributes include age, occupation, income, goals, needs, motivations, and fears.
Consumer Biography Example: Sarah Collins
Background:
Age: 21
Occupation: Assistant Editor, Fashion Magazine
Status: Single
Location: Chicago, US
Income: $70,000
Personality Traits: Mix of perceiving and feeling, introverted, cautious about surgery costs, seeking qualified professionals for cosmetic surgery with a focus on realistic results and genuine testimonials.
Motivation: Desire for personal and career growth, contemplating surgery to enhance body appearance for improved career advancement.
Frustrations and Fears: Concerns about the quality of procedures and transparency in marketing communications.
Market-Product Grid and Market Sizing
Construction of Market-Product Grid: Axis representing market segments against product offerings, aiding in the visualization and analysis of how different products can meet varying market needs.
Market Sizing: Sales estimations based on expected performance within identified segments.
Targeting and Market Positioning
Steps to Analyze and Target Markets:
Profile segments thoroughly to select optimal target markets.
Design and implement tailored marketing mixes appropriate for each identified target segment.
It is crucial to understand that non-target market consumers can still engage with the product.
Key Considerations for Consumer Profile Development
Ensure the focus remains on consumer behavior and needs rather than on brand identity.
Assign specificity when describing target markets, concentrating on commonalities in demands and desires.Limited approaches should be tailored uniquely to each market’s specificifications and actions.
Criteria for Target Market Selection
Considerations might include:
Size of market opportunities.
Growth possibilities within segments.
Competitive landscape.
Cost-effectiveness for reaching market segments.
Alignment with organizational capabilities and goals.
Positioning Strategies
Product Positioning: Refers to the perception stakeholders have of a product in comparison to competing offerings based on key attributes.
Positioning Types:
Head-to-Head Positioning: Competing directly on said attributes with competitors.
Differentiation Positioning: Seeking to create a unique niche apart from the competition.
Creating a Positioning Statement
Detailed structure for a clear positioning statement:
For (target market)
Who (problem or need)
Your brand name (solution provided)
Because (unique benefits and competitive advantages)
Perceptual Maps in Positioning
Function of Perceptual Maps: Illustrate customer perceptions of brands or products within certain attributes, aiding in market positioning and potential product revitalization.
Practical Example: The depiction of how fast food restaurants like In-N-Out, Wendy's, Chick-fil-A, etc., are assessed concerning taste and price in the dual-dimensional chart.
Repositioning Strategies
Definition of Product Repositioning: Involves modifying the perceived positioning of a product in the consumer’s mind compared to the competition, impacting market engagement.