stp in marketing
DESCRIPTION
This doc gives an overview about Segmentation,targeting and Positioning at an initial levelTRANSCRIPT
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Sessions 8 and 9
Segmentation Targeting and Positioning
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Learning Outcomes
1. Explain the importance of market segmentation. 2. Discuss criteria for successful market segmentation. 3. Describe the steps involved in segmenting markets. 4. List the steps involved in segmenting markets. 5. Understand how a company should choose the
most attractive segments 6. Describe the concept of differentiation and its role in
building brands. 7. Understand the positioning process with details on
perceptual positioning.
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The STP Process
Segmentation
Identifying similar groups of customers with distinct needs, characteristics or behaviour
Targeting
Identifying segments to aim based on attractiveness and company objectives and resources
Positioning
Creating a concept to appeal to the target segment
Male/female consumers of
skincare products, aged 18-25. 26-35, 36-45, 46-65, 65+
Female consumers 18-25
Position skincare products as
essential for self-respect
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Segmenting Consumer Markets
Why segment the market? o Better focus on customer needs o Customers are differentially responsive to marketing
efforts. o Facilitate right choice of target market. o Leverage scarce resources. o Help identification of less satisfied segments and
concentrate on them.
The marketer does not create the segments. He only identifies them and decides which ones to target
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Requirements for Effective Segmentation
Size, purchasing power, and profile of segment Measurable
Can be reached and served Accessible
Large enough to warrant a special marketing mix Substantial
Respond differently Differentiable
Effective programs can be developed Actionable
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Segmentation Criteria
Consumer Criteria
Profile
Demographic
Socioeconomic
Geographic
Psychological
Lifestyle
Personality
Perceptions
Attitudes
Motives
Benefits sought
Behavioural
Purchase
Usage
Media usage
Technology usage
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WHO & WHERE WHO, HOW, WHERE & WHEN
WHY & WHO
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Segmentation Considerations
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Demographic
Geodemographic
Psychological
Behavioural
Predictability of consumer choice behaviour
Ease
an
d c
ost
of
me
asu
rem
ent
Low High
Easy and Low
Difficult and High
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Demographics
0 to 5, 6 to 11, 12 to 19, 20 to 34, 35 to 49, 50 to 64, 65 plus Age
Single, married no children, married with children, old married without children, senior citizens Family size
Male, female Gender
Pre-independence, post independence, post liberalisation Generation
Low ( up to Rs. 50,000), lower middle ( 50000 to 100000), middle(100001 to 200000, upper middle (200001 to 300000 ), upper (Over 300,000) Income
Unskilled worker, skilled worker, petty trader, businessman, industrialists, self-employed professionals, white collared workers, supervisors, managers Occupation
Illiterate, school up to 4 years, school 5 to 9 years, SSC/HSC, Non-graduate, graduate, post graduate, post graduate professional Education
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Most popular and easiest to measure
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New SEC System
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Household Distribution New SEC
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9.7
15.4
18.4
14.7
11.4
7.9
7.5
5.3
4.3
3.2
1.8
0.4
0.0 5.0 10.0 15.0 20.0
E 3
E 2
E 1
D 2
D 1
C 2
C 1
B 2
B 1
A 3
A 2
A 1 Punjab has the highest percentage population of SEC A (A1+A2+A3) followed by Maharashtra, Kerala and Goa. Gujarat, Tamil Nadu and Uttarakhand are average. The states with the lowest percentage of SEC A are Bihar, Madhya Pradesh and West Bengal
Source: MRUC Hansa
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Geographic
Urban and rural o 31% and 69% with buying power of 55% to 45%
Regions o North, South, West, East
Cities o Metros / mini metros Popn. of 5 million plus ( 8 22.6%) o Cities with a population of 1 million to 5 million ( 38 17.2%) o Cities with population of 5 lakhs to 1 million ( 45 9.6%) o Cities with population of 2 to 5 lakhs ( 139 13.2%) o Cities with population of 1 to 2 lakhs ( 267 10.9%) o Rurban Population less than 1 lakh (7438 26.6%)
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Change in Living Standards
HPI 2010 Q4 2011 Q 4 Change 2012 Q 4 Change
200 + 2.1 2.7 28.6% 3.4 25.9%
151-200 1.2 1.5 25.0% 1.7 13.3%
101-150 1.8 2.3 27.8% 2.8 21.7%
71-100 3.5 4.1 17.1% 5.4 31.7%
51-70 2.3 2.8 21.7% 3.3 17.9%
31-50 7.5 8.6 14.7% 10.0 16.3%
21-30 8.1 9.4 16.0% 11.1 18.1%
11-20 30.7 33.6 9.4% 36.6 8.9%
6-10 41.2 46.8 13.6% 50.4 7.7%
0-5 135.0 126.1 -6.6% 118.1 -6.3%
Average HPI 13.7 15.9 16.1% 18.1 13.8%
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Source: Indian Readership Survey Reports Household Premiumness Index is a composite of 50 variables including demographics, product ownership/usage and services. It is an indicator of Living Standard It is a continuous variable which lets you define your target group more finely.
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Psychographic Segmentation
Division of market into different groups based on social class, lifestyle, or personality characteristics. People in the same demographic classification often have very different lifestyles and personalities. It measures persons activities, interests and opinions.
ACTIVITIES INTERESTS OPINIONS
Work Family Themselves
Hobbies Home Social Issues
Social Events Job Politics
Vacation Community Business
Entertainment Recreation Economics
Club Membership Fashion Education
Community Food Products
Shopping Media Future
Sport Achievements Culture
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VALS Model
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Action oriented Follow fashion and fads Maximum spend on socialising Impulsive buyers
Hands on Shop for comfort, durability and value Unimpressed by luxuries
Self-confident Enjoy the finer things Receptive to new products and technologies Sceptical of advertising
Value knowledge Little interest in image or prestige Like educational programming Voracious readers
Image conscious Limited discretionary income Spend on clothing and personal care products Prefer TV to reading
Traditional Family oriented Slow to change habits Look for bargains Watch TV more than average
Image conscious Relatively affluent Attracted to premium products Average TV watchers
Restricted consumption Concerned with security and safety Brand loyal Trust advertising
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Behavioral Segmentation
Benefits Sought Different segments desire
different benefits from the same products. Examples
Decision Roles Initiator Influencer Decider Buyer User
Loyalty Status Hard core loyals Split loyals Shifting loyals Switchers
Occasion Special promotions & labels for
holidays. Special products for special
occasions.
Usage Rate Non-users Light users Medium users Heavy users
Buyer Readiness Stage Unaware Aware Informed Interested Ready to buy
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User & Loyalty Status Segmentation
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Benefit Segmentation - Toothpaste Market
Segment
Sensors Sociables Workers Independent
Principal benefit sought Flavour, product Brightness Decay Price
appearance of teeth prevention
Demographic strengths Children Teens, young Large families Men
people
Special behavioural Users of Smokers Heavy users Heavy users
characteristics spearmint-
flavoured
toothpaste
Personality characteristics High self- High High High
involvement sociability hypochondriasis autonomy
Lifestyle characteristics Hedonistic Active Conservative Value-
oriented
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Major Segmentation Variables for Business Markets
Demographic 1. Industry: Which industries should we serve? 2. Company size: What size companies should we serve? 3. Location: What geographical areas should we serve?
Operating Variables 4. Technology: What customer technologies should we focus
on? 5. User status: Should we serve heavy users, medium users,
light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or
few services?
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Major Segmentation Variables for Business Markets
Purchasing Approaches 7. Purchasing-function organization: Should we serve companies with
highly centralized or decentralized purchasing organizations? 8. Power structure: Should we serve companies that are engineering
dominated, financially dominated, and so on? 9. Nature of existing relationships: Should we serve companies with
which we have strong relationships or should we go for the most desirable?
10. General purchase policies: Leasing? Service contracts? Systems purchases? Sealed bids?
11. Purchasing criteria: Go for quality, service or price?
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Major Segmentation Variables for Business Markets
Situational Factors 12. Urgency: Do we go for companies with low lead times? 13. Specific Application: Do we focus on some applications of our
products or all applications? 14. Size of order: Should we focus on small or big orders?
Personal Characteristics 15. Buyer Seller similarity: Should we serve companies whose people
and values are similar to ours? 16. Attitudes towards risk: Should we serve risk taking or risk avoiding
concerns? 17. Loyalty: Should we serve companies that show high
loyalty to their customers?
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Targeting
Which segment should the company serve? Normally done on the basis of: o Segment size and growth o Segment profitability o Competitive intensity within the segment o Cyclical nature of the industry
Each of these factors is rated on a 10 point scale and loosely categorised as high, medium and low. Firms select target markets which are a good fit with the firm.
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Selecting Target Market Segments
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Undifferentiated (mass) marketing
Treats market with no individual segments
Differentiated (segmented) marketing
Separate offers for different segments
Concentrated (niche) marketing
Go after a large share of a small segment
Micromarketing (local or individual) marketing
Seeing the individual in marketing
Advantages and disadvantages of each?
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Choosing a Target Marketing Strategy
Considerations include: o Company resources o The degree of product variability o Products life-cycle stage o Market variability o Competitors marketing strategies
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Patterns of Target Market Selection:
Product x Market Matrices
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Positioning
Act of designing a companys offering and image to occupy a distinctive place in the mind of the consumers Fundamental elements are physical attributes and communication The result of positioning is the successful creation of a customer focused value proposition.
The Battle for the Mind
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Ladders in the Mind Product ladders with each brand ranked as a step on them
To gain a step you either dislodge the brand above you or
relate to the other companys position
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The Positioning Process
Write positioning statement or value proposition to guide marketing strategy
Identify positions where products may be placed
Examine the fit between preferences of market segments and current product position
Determine customers most preferred combination of attributes
Analyse the current positions of products in the competitive set
Collect data about customers perceptions in the competitive set
Identify the set of determinant attributes
Identification of relevant set of competitive products serving a target market
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1. Competitive Frame of Reference
Define the category and sub-category of product. Identify the relevant competitors in the category. Competitors can be based on industry or markets they serve. Identify each competitors real and perceived strengths and weaknesses. Determine their objectives and strategies. Review customer ratings on key success factors.
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Possible Competitive Advantages
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
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Right Competitive Advantage
Important
Distinctive
Superior
Communicable
Pre-emptive
Affordable
Profitable
The idea is to create a Unique Selling Proposition
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2. Determinant Attributes
Features Benefits Parentage Manufacturing process Ingredients Endorsements Comparisons Pro environment Price/Quality
Consumers can consider only attributes of which they are aware More the variables, more the confusion Consider only the important ones Attribute may not be considered important if all alternative brands considered more or less equal
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Defining Associations
Points-of-difference
Attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand
Strong brands may have multiple PODs
Points-of-parity
Associations that are not necessarily unique to the brand but may be shared with other brands Some are seen to be essential to a category
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3. Collect Data
Qualitative research through interviews or focus groups Quantitative research to determine scores of competitive products
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4. Perceptual Map
A visual technique to show the average target market consumer s understanding of competing brands and their associated attributes. Normally done on two axes which represent the two most important determinant attributes in consumer purchase decision You may superimpose the various segments on the map . Examine the map for gaps to launch a new brand or reposition an existing brand
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Steps for Perceptual Maps
1. Select two determinant attributes Price is preferably not taken as a key dimension: o Imitable by competitors o Claim normally not credible
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CATEGORY Likely Determinant Attributes
Shoes Comfort, design/style, quality, functionality
Instant coffee Flavour/taste, country of origin, variety, quality
Breakfast cereal Healthiness, sugar level, variety, fun element
Holiday destination Temperature, travel distance, culture difference, facilities
Camera Zoom, memory, size/weight, picture quality
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Steps for Perceptual Maps
2. List the main competitors in the category 3. Create scores for these brands. Simplest way is to
use a 5 point scale 4. Plot the same on a graph paper. This can actually be
done from an excel sheet by converting it to a diagram
5. Superimpose the tastes of different segments.
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Soft Drinks Perceptual Map
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Market Positioning Analysis
Check whether axes represent those which the customers normally use. Are the labels on the axes polarised? Does our product have a clear and distinct market positioning? Are we positioned correctly in regard to our target market? Are the company products positioned too closely together? Does this raise competitive barriers or lead to cannibalisation?
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Value Propositions
Represent the full positioning of the brand. Possible value propositions are: Review the positioning of Dominos and how it is changing.
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Example of a Perceptual Map
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Constructing a Brand Positioning Bulls-Eye
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Developing a Positioning Statement
A concise description of your target market as well as a compelling picture of how you want that market to perceive your brand. It needs to look at the competitive positioning and the frames of reference that the customer uses while making choices. It becomes a guide post for your marketing efforts. It should be simple, memorable and credible. It should provide an easily understood picture of your brand.
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Communicating and Delivering the
Chosen Position
Once position is chosen, company must take strong steps to deliver and communicate the desired position to target consumers. All the companys marketing mix must support the positioning strategy (e.g., IMC). Positioning strategy must be monitored and adapted over time to match changes in consumer needs and competitors strategies. ..\..\STP\Big Bazaar.docx
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Alternative Positioning Strategies
Attribute Positioning o The largest theme park in the world
Benefit positioning o The park for people seeking a fantasy experience
Use/Application positioning o The park for people who can spend only an hour
User positioning o The park for thrill seekers
Competitive positioning o More animals than the Japanese Deer Park
Product category positioning o The educational park
Quality/Price positioning o Best value for money
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Which Positioning Approach to Follow?
Look for gaps and see whether you can fill them Internal capability to deliver on the promise Are benefits of most interest to target market? Possible reaction by competitors Profitability Communicability
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Next Session
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Google Case
Deliverables
Chapter 12 with case lets
Single sheet hand written on plain A 4 by each student
Power point presentation by each group