Chapter 9 STP process

Six steps to derive a perceptual map

1. determine consumers perceptions and evaluations of the product in relation to competitors product or service 2. identify the market's ideal points and size 3. identify competitors positions 4. determine consumer preferences

Segment profitability Equation

= (Segment size x Segment adoption percentage x Purchase behavior x Profit margin percentage) - Fixed Costs

Micromarketing

An extreme form of segmentation that tailors a product or service to suit an individual customer's wants or needs; also called one-to-one marketing.

reachable

Consumer must know that the product or service exists, understand what it can do for him or her and recognize how to buy it

identifiable

Firms must be able to identify who is within their market to be able to design products or services to meet their needs Equally important to ensure that the segments are distinct from one another

5 steps to evaluate segment attractiveness

Identifiable Substantial Reachable Responsive Profitable

Step 3: Evaluate Segment Attractiveness

Involves evaluating the attractiveness of various segments

undifferentiated targeting strategy

a marketing strategy a firm can use if the product or service is perceived to provide the same benefits to everyone, with no need to develop separate strategies for different groups

concentrated targeting strategy

a marketing strategy of selecting a single, primary target market and focusing all energies on providing a product to fit that market's needs

differentiated targeting strategy

a strategy through which a firm targets several market segments with a different offering for each

salient attributes

attributes considered most important to consumers in the purchase decision process

occasion segmentation

behavioral segmentation based on when a product or service is purchased or consumes Ex: prom promotions for Men's warehouse

psychographic segmentation

delves into how consumers actually describe themselves 1. self Values 2. Self Concept 3. lifestyle

position using perceptual Mapping

displays, in two or more dimensions, the position of products or brands in the consumers mind

behavioral segmentation

divides customers into groups on the basis of how they use the product of service. Ex; Occasion and loyalty

self-values

goals for life, not just the goals one wants to accomplish in a day; a component of psychographics that refers to overriding desires that drive how a person lives his or her life

Loyalty segmentation

investing in retention and loyalty initiatives to retain their most profitable customers

marketing positioning

involves the process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products

Step 5: Identify and Develop Positioning Strategy

market positioning and value proposition

geographic segmentation

organizes customers into groups on the basis of where they live

Profitable

Marketers must focus their assessments on the potential profitability of each segment

Symbols

Nike swoosh or Ralph polo player are strong symbols that create a position for the brand

substantial

Once the firm has identifies its potential target markets, it needs to measure their sizes

value

reflects the relationship of benefits to costs, or what the consumer gets for what he or she gives

demographic segmentation

segmenting markets by age, gender, income, ethnic background, and family life cycle

Responsive

the customers in the segment must react similarly and positively to the firms offering

STP

Segmentation, Targeting, Positioning

STP Process

Segmentation: Step 1: Establish Strategy or objectives Step 2: Use Segmentation Methods Targeting: Step 3: Evaluate Attractiveness Step 4: Select Target Market Positioning: Step 5: identify and develop positioning strategy

Step 1: Establish Overall Strategy or Objectives

the first step in the segmentation process is to articulate the vision or objectives of the company's marketing strategy clearly. The segmentation strategy must be consistent with and derived from the firm's mission and objectives, as well as its current situation - its strengths, weaknesses, opportunities, and threats (SWOT).

benefit segmentation

the grouping of consumers on the basis of the benefits they derive from products or services

self-concept

the image a person has of himself or herself; a component of psychographics

Step 4: Select a Target Market

the key factor likely to affect this decision is the marketer's ability to pursue such an opportunity or target segment

ideal points

the position at which a particular market segment's ideal product would lie on a perceptual map

Step 2: Use Segmentation Methods

the second step in the segmentation is to use a particular method or combination of methods to segment the market

lifestyle

the third component of people's psychographic makeup, are the ways we live

4 Targeting Strategies

Undifferentiated Targeting Strategy or Mass Marketing Differentiated Targeting Strategy Concentrated Targeting Micromarketing

value proposition

the unique value that a product or service provides to its customers and how it is better than and different from those of competitors

geodemographic segmentation

uses a combination of geographic, demographic and lifestyle characteristics to classify consumers.