3. STP

• what is market segmentation

  dividing the market into identifiable sub-markets, each with its own customer characteristics
• • segmentation allows businesses to produce goods or services that are precisely targeted at the specific needs of consumers
  • this helps to reduce wastage on marketing to groups of consumers who hold little or no interest in your goods and to strengthen your relationship with those that do
  • firms can stress those elements of their goods and services that appeal to their target market
• what four ways are markets segmented

  • demographic
  • income based
  • geographic
  • behavioural
• what is demographic segmentation

  dividing a market into segments based on demographic variables such as age, gender, lifestyle, nationality
• what is geographic segmentation

  dividing a market into segments based on location, such as nations, regions, and cities
• what is income segmentation

  dividing the market into segments based on how much people earn

  • this enables a business to more accurately target their customers matching their income with the product or service being provided
• what is behavioural segmentation

  dividing a market into segments based on the different ways customers use of respond to a product and the benefits they seek
• what are the benefits of segmentation

  • businesses can identify new market segments and use this to increase their market share
  • less profitable market segments can be avoided
  • identify the most effective means of marketing your products to make the best use of limited funds
• what are the problems of segmentation

  • you might ignore those potential customers who do not fit into a clear market segment
  • market tastes and fashions are constantly changing
  • it is not always easy to place customers into clear targets
• what are the three steps to STP

  • segment the market into groups of customers with similar characteristics
  • decide on what segment of the market to target
  • position the product on the market by identifying how it will be viewed in relation to its competitors
• what is targeting

  when a business selects which segments of the market that they will focus their efforts upon
• what is target market

  the set of customers sharing common needs and wants that a business decides to target
• a business will choose the segment that offer the best opportunities for :

  • growth
  • profit
  • competitiveness
  • accessibility
  • fulfilling corporate objectives
• what are mass markets

  mass market goods are targeted at everyone within the target population

  • mass marketing provides a business with access to a much larger number of customers to aim at the chances of earning high profits
  • the competition levels are higher
  • cheaper costs due to bulk buying
• what are the advantages of a mass market

  • businesses can reach out to the widest potential customer base
  • lower risk because resources are focused on one very large market
  • cheaper to buy suppliers
  • market research is easier to obtain
• what are the disadvantages of a mass market

  • often highly competitive markets
  • requires heavy advertising which is expensive
  • good distribution is crucial to reach target customers
• what is a niche market

  niche market goods are targeted at small segments of a larger market

  • niche market goods and services sell in lower quantities but often at a higher price as consumers are prepared to pay for specialist items
  • levels of competition are initially low but is likely to change if high profits start to be earned
  • by targeting at a small section of a larger market, a business is risking ignoring the needs of the majority to try and satisfy
• what are the advantages of a niche market

  • less competition
  • accurate customer targeting, increases ability to meet customer needs
  • unique selling point due to products being more differentiated
• what are the disadvantages of a niche market

  • smaller marker size which may limit growth opportunities
  • fewer customers
  • unlikely to be able to benefit from bulk buying discounts
  • greater vulnerability to changing tastes and fashions
• what is differentiation

  where a business distinguishes their product or service in the eyes of the consumer from those of their competition
• what is positioning

  looks at reasons why customers would select your product over that of rivals

  • businesses need to consider their products and what it is that makes them different to the competition and adjust their marketing accordingly
• what are the key influences on positioning

  • business strengths
  • competition
  • business innovation
  • market conditions