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MKT 300 Chapter 9

Segmentation, Targeting, & Positioning

QuestionAnswer
The STP Process Step 1. Strategy or Objectives Step 2. Segmentation Methods Step 3. Evaluate Segment Attractiveness Step 4. Select Target Market Step 5. Identify and Develop Positioning Strategy
Step 1. Establish Overall Strategy or Objectives This first step is to articulate the vision or objectives of the company's marketing strategy clearly. Must be consistent with and derived from the firm's mission objectives as well as its SWOT.
Step 2. Segmentation Methods Use a particular method or combination of methods to segment the market. This step also develops descriptions of the different segments, which helps firms better understand the customer profiles in each segment.
Geographic Segmentation The grouping of consumers on the basis of where they live.
Demographic Segmentation The grouping of consumers according to easily measured, objective characteristics such as age, gender, income, and education.
Psychographics Used in segmentation; delves into how consumers describe themselves; allows people to describe themselves using those characteristics that help them choose how they occupy their time (behavior) and what underlying psychological reasons deter those choices
Self-Values Goals for life, not just the goals one wants to accomplish in a day. They are overriding desires that drive how a person lives his or her life.
Self-Concept The image people ideally have of themselves.
Lifestyles The way we live.
Three components of people psychographic makeup are? Self-Values, Self-Concept, & Lifestyles.
The most widely used in psychographic segmentation efforts? Value Lifestyle Survey (VALS)
Value and Lifestyles Survey (VALS) Classifies consumers into eight segments: Innovators, Thinkers, Believers, Achievers, Strivers, Experiencers, Makers, or Survivors.
Benefit Segmentation Groups consumers on the basis of the benefits they derive from products or services.
Behavioral Segmentation Divides customers into groups on the basis of how they use the product or service.
Occasion Segmentation A type of behavioral segmentation based on when a product or service is purchased or consumed.
Loyalty Segmentation Strategy of investing in loyalty initiatives to retain the firm's most profitable customers.
Geodemographic Segmentation Uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers.
Two of the most widely used tools for geodemographic segmentation are? PRIZM (Potential Rating Index by Zip Market) & ESRI's Tapestry
Step 3. Evaluate Segment Attractiveness Involves evaluating the attractiveness of the various segments. Is the segment identifiable, substantial, reachable, responsive, and profitable.
Indentifiable Firms must be able to identify who is within their market to be able to design products or services to meet their needs.
Substantial Once the firm has identified its potential target markets, it needs to measure their size. If a market is too small or its buying power is insignificant, it wont generate sufficient profits or be able to support the marketing mix activities.
Reachable The best product or service cannot have any impact no matter how identifiable or substantial the target market is, if the market cannot be reached (or accessed through pervasive communications and product distribution.
Responsive For a segmentation strategy to be successful, the customers in the segment must react similarly and positively to the firm's offering.
Profitable Marketers must also focus their assessments on the potential profitability of each segment, both current and future.
Key factors to keep in mind for profitable analysis Market Growth, Market Competitiveness, Entry Barriers, & Market Access.
Segment Profitability Formula (Segment Size x Segment Adoption % x Purchase Behavior x Profit Margin %) - Fixed Costs
Step 4. Select Target Market 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.
Undifferentiated Targeting Strategy, or Mass Marketing When everyone might be a potential user of its product the firm uses this method. Focuses on the similarities in needs of the customers as opposed to the differences.
Differentiated Targeting Strategy A firm using this strategy target several market segments with a different offering for each.
Concentrated Targeting Strategy When an organization selects a single, primary target market and focuses all energies on providing a product to fit that market's needs.
Micromarketing or One-to-One Marketing An extreme form of segmentation that tailors a product or service to suit an individual customer's wants or needs.
Step 5. Develop Positioning Strategy Market positioning involves a 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.
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.
Positioning Methods Firms position products and services based on different methods such as the value proposition, salient attributes, symbols, and competition.
Value Reflects the relationship benefits to costs, or what the consumer gets for what he or she gives.
Positioning Using Perceptual Mapping Determine consumers' percep and evaluations of the product or service in relation to competitors, Identify the market's ideal points and size, Identify competitors' position, Determine consumer, preferences, Select the position, Monitor position strategy.
Created by: towilliamsjr
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