Marketing Principles, Chapter 9 – STP

Strategy or Objectives
Step one of STP process (segmentation)
Segmentation Methods
Step two of the STP process (segmentation)
Evaluate Segment Attractiveness
Step three of the STP process (targeting)
Select Target Market
Step four of the STP process (targeting)
Identify and Develop Positioning Strategy
Step five of the STP process (positioning)
Geographic
Method for Describing Market Segments (where customers live)
Demographic
Method for Describing Market Segments (objective characteristics of the customer, can be measured; age, gender, income, education)
Psychographic
Method for Describing Market Segments (self values, self concept, lifestyles)
Benefit
Method for Describing Market Segments (grouping by what consumers derive from products or services)
Behavioral
Method for Describing Market Segments (grouped by how consumers use a product or service)
Geodemographic
Combination Method for Describing Market Segments (geographic, demographic, and lifestyles combined)
VALS (Value and Lifestyle Survey)
Test that groups consumers into eight segments to identify their psychological motivations for buying (survivors vs innovators, high resources and innovation vs low resources and innovation)
Identifiable
Segment Attractiveness criteria, based on being able to distinguish segments from one another
Substantial
Segment Attractiveness criteria, based on being able to measure the size of the segment
Reachable
Segment Attractiveness criteria, based being able to get knowledge of its product or service to the segment
Responsive
Segment Attractiveness criteria, based on being able to react positively and similarly to a firm’s offering
Profitable
Segment Attractiveness criteria, based on the segment market growth, competitiveness, and accessibility
Profitability Formula
Segment size x adoption percentage x purchase behavior (price x # of purchases per year) x profit margin percentage – fixed costs
Undifferentiated Targeting or Mass Marketing
Marketing strategy where everyone is a potential target and the product provides a similar benefit to most consumers (sugar)
Differentiated Targeting
Marketing strategy targeting several segments with different offerings for each (various magazine brands owned by one company)
Concentrated Targeting
Marketing strategy focusing on one specific group to save resources (high tech running shoes)
Micromarketing (Targeting)
Marketing tailored to each specific customer (custom computers, custom suits)
Value Proposition Venn Diagram
Venn Diagram with 3 overlapping circles corresponding to the customers needs, the competitions’s benefits, or our firm’s benefits. What can the firm offer that our competition cannot?
Perceptual Map
Displays position of products or brands in a consumer’s mind along two or more dimensions (taste vs health value)