Marketing Midterm: 3 – Intro to STDP

– dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes
– the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter
– differentiating the market offering to create superior customer value
– don’t have to physically alter product to differentiate
– easiest/most common: lower price
– arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers
– perceptual understanding about brand
– positioning maps help visually understand consumer preferences
Market Segment
– consists of consumers who respond in a similar way to a given set of marketing inputs
Major Segmentation Variables
1. Geographic: nations, region, states, climate, population density

2. Demographic: age, life-cycle stage, gender, income, education, religion, generation

3. Psychographic: social class, lifestyle, personality

4. Behavioral: occasions, benefits, user status, usage rate, loyalty status

Benefit Segmentation
– dividing the market into segments based upon the different benefits that consumers seek from the product
– requires finding the major benefits people look for in a product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit
Requirements for Effective Segmentation
1. Measurable
2. Accessible
3. Substantial
4. Differentiable
5. Actionable
Tools to Segment Markets
1. Segmentation Trees
2. Semantic Differential Scale: Ask people to rate aspects of a product; trade-off analysis
Target Market
– a set of buyers sharing common needs or characteristics that the company decides to serve
Undifferentiated Marketing
– mass marketing
– marketing strategy when a firm decides to ignore market segment differences and go after the whole market with one offer
– difficult to develop a product/marketing campaign to satisfy all, and difficult to compete
Differentiated Marketing
– segmented marketing
– marketing strategy in which a firm decides to target several market segments and designs specific offers for each
– Toyota offering different kinds of cars
– increased costs compared to undifferentiated
Concentrated Marketing
– niche marketing
– marketing strategy in which a firm goes after a large share of one or a few segments or niches
– Whole Foods
– stronger market positioning, more effective and efficient marketing
– tailoring products and marketing programs to the needs of specific individuals and local customer segments
– includes local marketing (cities/neighborhoods/stores) and individual marketing (Nike personalization)
Product Positioning
– the way a product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products
– use perceptual positioning maps
Competitive Advantage
– an advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices
Unique Selling Proposition (USP)
– focus on the most salient benefit of the offering to the target consumer
– simmers the Value Proposition down to a actionable message
– Walmart –> low prices
– Burger King –> personal choice
Value Proposition
– the full positioning of a brand – the full mix of benefits on which it is positioned
– answers “why should I buy your brand?”
– the relationship of benefits from product relative to price
– “more for more/same/less” etc.
Positioning Statement
– describes what you have to do to stay relevant with customers
– compares the positioning/benefit to the price
– a statement that summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference)
– “To busy, mobile professionals who need to always be in the loop, the BlackBerry is a wireless business connectivity solution that gives you an easier, more reliable way to stay connected to data, people, and resources while on the go”
Tools to pick segments to target
1. Competitor Capability Matrix
– Assessment of my capabilities relative to competitors on factors that are important to market success within the segment
1. Product development capability
2. Channels
3. Supply chain
2. Profitability Analysis
– Risk adjusted (Based on CCM) assessment of profitability potential in the market
1. Growth rate and size
2. Risk of failure
3. Longevity of cash flow
4. Margin available
Target Selection Process
1. Identify segments
2. Competitive assessment for each segment
3. Evaluate segment profitability
4. Adjust for risk
5. Choose segments to target