Marketing Decisions - STP

• Main categories of market segment:

  • Demographic

  • Income

  • Behavioural

  • Geographical
• Benefits of market segmentation:

  • Focuses resources on parts of a market where the business can succeed

  • Allows a business to grow share in markets or to "ride the wave" of fast-growing segments

  • Helps make the marketing mix more effective

  • Helps with new product development
• Potential drawbacks of market segmentation:

  • Segmentation is an imprecise science - data isn't always available, up to date or reliable

  • Markets are increasingly dynamic - fast-changing; so too are the segments
• Three main strategies for targeting a market:

  • Mass marketing (undifferentiated) - whole market

  • Segmented (differentiated) - several segments within the same market

  • Concentrated (niche) - narrowly on smaller segments
• Marketing positioning:

  • Having chosen which segments to target - businesses need to decide how to compete in those segments

  • Marketing people call this the value proposition

  • Market position is defined by customers - the place a product occupies in customer minds relative to competing products
• The marketing (positioning) map: Advantages ~

  • Helps spot gaps in the market

  • Useful for analysing competitors

  • Encourages use of market research
• The marketing (positioning) map:

  • Not a guarantee of success

  • How reliable is the market research

  • Just because there is a "gap" doesn't mean there is demand
• STP:

  • Customers choose products based on the value proposition

  • Providing superior value than the competition is a source of competitive advantage

  • There are various possible value differences which can deliver competitive advantage
• Possible positioning strategies:

  • Offer more for less

  • Offer more for more

  • Offer more for the same

  • Offer less for much less
• Purpose of product differentiation:

  • Positioning v competition

  • Protect and build a brand

  • Add more value
• Requirements for effective product differentiation:

  • Delivers things that are important to customers

  • Distinctive compared with the competition

  • Not easily copied by competitors

  • Afforded by the target customers

  • Profitable