what is STP
segmentation, targeting, and positioning
what’s purpose of STP
used to identify and select groups of potential customers (eg. organization, buying centres, individuals)
what’s S in STP
Whose needs within-groups are similar and whose needs between-groups are different
what’s T in STP
Can be reached profitably
what’s P in STP
using a focused marketing program
STP approach
Segmentation
* Phase 1: Segment the market using basis variables
* Phase 2: Describe the market segments identified using variables that help the firm understand
how to serve those customers
Targeting
* Phase 3: Evaluate the attractiveness of each segment using variables that quantify the demand
levels and opportunities associated with each segment
* Phase 4: Select one or more target segments to serve on the basis of their profit potential and
fit with the firm’s corporate strategy
* Phase 5: Find and reach targeted customers and prospects within targeted segment in a variety
of ways
segmentation bases
geographic, demographic, psychographic, behavioural
what’s in geographic segmentation
- countries: Canada, Germany. China
- regions: Atantic Canada, Western Canada
- province: Ontario, Alberta
- Cities
- Neighbourhoods
- Climate
use for geographic segmentation
develop the appropriate marketing program for the respective location, eg: china and canada sell different product
what’s in demographic segmentation
-most common method
- gender
- age
- ethic group
- family life cycle stage
- household type
- income
- other (eg. occupation, education, religion)
- not always useful– nike example
what’s in the psychographic segmentation
- how consumer describe themselves
- self-value: lifegoal (self-respect, self-fulfilment, sense of belonging)
- self-image: the image people have of themselves (Loreal uses the tagline: because I’m worth it)
- lifestyle: how we live life to achieve our goal (Lululemon was built on the idea of having a healthy, balanced, fun filled lifestyle
what’s in the behavioural segmentation
- benefit segmentation: consumers are grouped based on the benefits they received from products and services
- loyal segmentation: through loyalty program to retain the most profitable customer of the firm.
- other method of segmentation ( -usage rate: heavy users, regular users, light users, occasional users; user status: current users, ex-users, potential users)
process of managing segmentation for marketing analytics
- define segmentation problem
- dentify data needs
- conduct market research
- build segmentation database
- define market segments
- describe market segments
- implement results
definition of target market
Group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchange
targeting strategies
- Undifferentiated targeting strategy (everyone is a potential user)
- Differentiated (Multisegment) targeting strategy ( the firm targets several markets segments with different offering)
- concentrated targeting strategy (selecting only one target marketing and put all energies on providing a product that fits that market’s needs
- Micromarketing
—– An extreme form of segmentation that tailors a product or service to suit an individual customer’s wants or needs (one-to-one marketing, customized, nikes’ online make your own shoes)
advantage and disadvantage of Undifferentiated targeting strategy
advantage: potential saving on production/ market cost
disadvantage: unimaginative product offering and company more susceptible to competition
advantage and disadvantage of concentrated targeting strategy
advantages:
- concentrates resources
- can better meet needs for the narrowly defined segment
- allows some small firms to compete with large firms
- provide strong positioning
disadvantage:
- segments too small or changing
- large competitor may more effectively market to niche segments
advantage and disadvantage of differentiated targeting strategy
advantage:
- greater financial success
- economies of scale in producing/ marketing
disadvantage:
- high cost
- cannibalization
advantage and disadvantage of one-on-one targeting strategy
advantages:
- delivering highly customized service
- high customer engagement/retention
- increasing revenue through loyalty
disadvantage:
- High costs
