9. Decisions - STP

    Cards (17)

    • Market segmentation = The classification of customers or potential customers into groups or sub-groups (market segments), each of which responds differently to different products or marketing approaches
    • Types of marketing segmentation:
      1. Demographic segments
      2. Geographic segments
      3. Income segments
      4. Behavioural segments
    • Stage 1 = Market segmentation
      Stage 2 = Market targeting
      Stage 3 = Market positioning
    • The main forms of demographic segmentation are age and gender but could also include:
      • marital status
      • family size
    • Benefits of market segmentation
      • to increase market share (identify gaps and target those)
      • to assist new product development
      • to extend products into new markets
      • to identify ways of marketing a product
    • Drawbacks of market segmentation
      • Difficulty to always identify most important segments to a product
      • reaching chosen segments with marketing (e.g. how do you reach primary school teachers on a national scale)
      • meeting needs of customers not included in the segments
    • The first step to market targeting is to asses the nature of each market segment and identify those that provide the best match to the businesses existing capabilities
    • Niche marketing = targeting a product or service at a small segment of a larger market
    • Advantages of Niche Marketing:
      • Less competition
      • Small-scale production
      • Tailor-made products
      • Easier to target customers
    • Disadvantages of Niche Marketing:
      • lower profits due to small-scale of market
      • changes in demand
      • market entry - from larger firms who notice interest
    • Mass marketing - Aiming a product at all (or most) of a market
    • Advantages of mass marketing:
      • large scale production leads to lower unit costs
      • high revenue due to volume of customers
      • barriers to entry - MM allows businesses to use the most expensive marketing
      • research and development - requires large funding
      • increases brand awareness
    • Disadvantages of mass marketing:
      • fixed capital costs are high (e.g. factories, machinery, delivery lorries)
      • vulnerable to changes in demand
      • competition
      • effects of standardisation (harder to appeal to all customers)
    • Market positioning = where your product or brand stands in relation to other businesses products or brands
    • Good market positioning means that consumers believe they receive benefits from buying the product
    • Factors that help decide on market positioning:
      • attributes and benefits of the product
      • competition
      • product user
      • pricing
      • product application
    • Value of market positioning is:
      • maximise sales revenue by increasing sales volume
      • provides scope for higher prices as establishes a USP
      • marketing dept save money by focusing budget
      • increases marketing efficiency due to understanding of customer needs
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