STP Competitive Advantage

*Segmentation, Targeting & Positioning for Competitive AdvantageBy S. Rashid Hussain

*Marketing Process Involves

Market orientation as philosophy Market segmentationTargeting marketPositioningMarketing mix

*Marketing StrategySelect base for segmentation and identify appropriate market segments.Evaluate and appraise the market segments resulting from the first step.Select an overall market targeting strategy and specific target segments.Tailoring a distinct position in selected marketsDeveloping marketing mixes that serve desired positioning strategy in the marketplaceAuditing marketing environments and efforts

*Importance of Segmentation and Targeting

The focus of a successful marketing program is the customer. Effectively marketing must fully understand the needs.Customers with decent life and individualism have Heterogeneous demands, This has given rise to need segmenting.The process of understanding the customer and choosing a group of customer you can serve best is targeting.So target a segmentation is core of the marketing process.

*Identify the Total MarketObjective 3Identify Total MarketEffective SegmentationBases for SegmentationSelect Target SegmentPositioning StrategyMarketing MixMonitor, Evaluate and Control

*Identify the Total Market

The first step in the target market selection process is to specifically define the total market of all potential customers for a product category.

* Segmentation and EffectivenessObjective 3Identify Total Market Effective SegmentationBases for SegmentationSelect Target SegmentPositioning StrategyMarketing MixMonitor, Evaluate and Control

*Segmentation Segmenting means dividing a heterogeneous demanding markets into homogenous groups based on similar characteristics or traitsHeterogeneous demand- different groups of customers have differing needs from specific products.Homogeneous segment- the separation of markets into distinctive groups based on homogeneous characteristics.

*Criteria for successful segmentation

*Criteria for successful segmentationClear differences in consumer preferences for a product must exist.

*Criteria for successful segmentationDifference preferences for a product must be identifiable and capable of being related to measurable variables.

*The proposed market segment must have enough size and purchasing power to be profitable.Criteria for successful segmentation

*Companies must be able to respond to difference preferences with an appropriate marketing mix.ActionableCriteria for successful segmentation

*The proposed market segment must be readily accessible and reachable with market programs.companyCriteria for successful segmentation

*Determine Bases for SegmentationObjective 3Identify Total MarketEffective SegmentationBases for SegmentationSelect Target SegmentPositioning StrategyMarketing MixMonitor, Evaluate and Control

*Bases for Segmentation

To divide a market into segments, firms use segmenting criterion that describe the characteristics of each part of the market.

*Segmentation BaseSituation SegmentationPsychographic SegmentationGeographic SegmentationBehavior/Usage SegmentationDemographic SegmentationBenefits-Sought Segmentation

*Social classIncome LevelEthnicEducationLife-cycleSegmentation Base

*Segmentation BaseLocalizes its marketing efforts to specific geographic regions

*Segmentation BaseGrouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)Useful but more difficult to identify and measure compared to demographic variables

*Segmentation BaseMarkets can be segmented based on the benefits that consumers desire from using a specific product

*Segmentation BasePurchase situation or occasionPhysical surroundingsSocial surroundingsTemporal perspective

*Light Users80%Heavy Users20%Segmentation BaseMarkets can be segmented by how often or how heavily consumers use a specific productParetos Principle or 80/20 Principle - 80% of revenue generated by 20% of customers

*Segmentation Base

Information for segmenting markets may be obtained from database such as Census, State Statistics, ACORN

* Segmenting Business MarketsWhile the steps in the target market selection process are essentially the same for business markets, there are three major differences:The purchasing process, which differs greatly from the household consumer market.The use of different segment variables, in simple way, a Standard Industrial classification is often employed

* Segmenting Business MarketsSegmentation variables used to segment business markets:

SizeIndustryPurchasing approachesProduct usageSituational factors (seasonal trend)Geographic

*Select Segments for TargetingObjective 3Identify Total Market Determine Need for SegmentationDetermine Bases for SegmentationSelect Target SegmentPositioning StrategyMarketing MixMonitor, Evaluate and Control

*Targeting marketsTargeting: choose the specific segment toward which a firm directs its market efforts.Niche Marketing: the process of targeting a small market segment with a specific, specialized marketing mix.Micromarketing- the process of targeting smaller, more narrowly defined market segments.On the individual consumer end of the continuum, a firm may decide to target individual consumers and personalize marketing efforts toward each.

*Target the Mass Market versus the Individual ConsumerMass MarketNicheMicro-marketingThe IndividualPersonal-izationMicro-marketingNicheStandardized Marketing MixContinuum of Market Segmentation Size

* Advantage of Targeting EffortsCannot effectively serve all the segments, must target marketing efforts to a segment or segments.Marketing opportunities and unfilled gaps are more accurately identifiedMarketing mix is more delicately meet toe potential customers needsOffer the greatest potential to achieve profit or relationship goals

*Targeting Strategy1.Undifferentiated marketing2.Differentiated marketing3.Concentrated marketing4.Custom marketing

*Targeting StrategyUndifferentiated targeting strategyConcentrated strategyDifferentiated strategyCompanies might develop one marketing mix strategy that is appropriate for all members of the total market.

*Targeting StrategyUndifferentiated targeting strategyConcentrated strategyDifferentiated strategyOnly one marketing mix is developed and directed toward a few, or perhaps one, profitable market segments.

*Targeting StrategyUndifferentiated targeting strategyConcentrated strategyDifferentiated strategyExists when a firm develops different marketing mix plans specially tailored for each of two or more market segments.

* Alternative of Targeting Strategy1. Single segment(concentrated)2. Multi segment(differentiated)3. Product specialized(one prodcuct but different markets)4. Market specialized(one market with different markets)5. Full market coverage(undif-(mass)/differentiated)

*Select Positioning StrategyObjective 3Identify Total MarketEffective SegmentationDetermine Bases for SegmentationTargeting SegmentPositioning StrategyMarketing MixMonitor, Evaluate and Control

*Positioning

Positioning

Kotler defined: designing an offer so that it occupies a distinct and valued place in the minds of the target customer.

*PositioningPositioningImage that customers have about a product in relation to the products competitors

*Positioning Strategy

Key to developing the appropriate marketing mix is the positioning strategy of the product.

*Presumptions of PositioningAll products have object and subject attributes RecognizableComparable

*Select Positioning StrategyEffective positioningWhat consumers currently think about the product, especially in relation to competing productsWhat the marketer wants consumers to think about the productWhich positioning strategy will elevate the consumers current product image to the desired product image.

*Select Positioning Strategy

Position Mapping- creating a visual description about consumer perceptions of a product on two or more dimensions in relation to competitors.

*Select Positioning Strategy

*Select Positioning StrategyThe positioning strategy must determine where a company wants to go And how to get there by positioning the product according to any of the following ways:Price/Quality(q-mobile)Product Attributes(thickness of milk)Product User(rural urban)(omni ad)Product Usage(vim 1 spoon)Product Class(razor and shave creamCompetition(excel +express)Symbol(end symbol samsung)

*Marketing MixObjective 3Identify Total MarketSegmentationBases for SegmentationSelect Target SegmentPositioning StrategyMarketing MixMonitor, Evaluate and Control

*Marketing Mix

The final steps are to develop and a marketing mix matched to the needs of the target marketThis must support the chosen positional strategy in the selected target marketsTherefore determine the 4Ps or 7Ps of its marketing mix as a tool to achieve the desired position

*Recognize 4Ps and the 7PsProductcustomer valuePricecostPlaceconveniencePromotioncommunicationPeopleconsideration(respect)Processesco-ordination (Physical evidenceconfirmation(approval)

*Marketing Strategy and the Marketing MixObjective 4Marketing Mix

*Refers to goods, services, people, places and ideasHousehold consumersBusiness-to-business customersMarketing Strategy and the Marketing Mix

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Marketing channel is the network of organizations that create time, place and ownership utilities for household consumers and business customers.

Marketing Strategy and the Marketing Mix

*Integrated Marketing Communication (IMC)System of management and integration of marketing communication elementsAdvertising, publicity, sales promotion, personal selling, sponsorship marketing, and point-of-purchase communicationsMarketing Strategy and the Marketing Mix

*Pricing decisions are complex and are driven by a variety of considerations including:Customer demand, costs, information availability, competition, profit motives, product considerations, and legal considerationsMarketing Strategy and the Marketing Mix

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STP Competitive Advantage