9. Why STP?
• To Compete Effectively
• Focus on Customer and Satisfy
10. Requirements for STP?
• Identifying and Profiling distinct group of
Buyers who differ in their needs and wants
• Select one or more market segments to enter
• For each segment, establish and communicate
the distinctive benefit of the Company’s
market offering
11. Market Segment
• Consists of group of customers who share
similar needs or wants
• Factors considered for Segmentation
– Measurable – Size, Purchase
– Accessibility – Effectively reached and served
– Actionability – Effective programs can be designed
– Differentiable – Distinguishable
– Substantial – Large and Profitable
12. Variables for Segmentation
• Descriptive Characteristics
– Geographic
– Demographic
– Psychographic
• Behavioral Characteristics
– Needs and Benefit
– User and Usage Related
– Loyalty Status
13. Geographic Segmentation
• Regions
• Cities
• Rural / Urban
• Nations
• Grassroot Marketing
• Size and Market Attractiveness of different
geographic markets are important
considerations
15. Psychographic Segmentation
• Use of Psychology to understand customers
• Division based on Psychological / Personality
Traits / Lifestyle / Values
• People in the same demographic group can
display different Psychographic profiles
• Most popular classification is VALS
Framework, classifies adults into 8 groups
based on responses to a questionnaire
18. VALS Framework
• Consumers are inspired by one of three
primary motivations
– Ideals: People guided by knowledge and principles
– Achievement: look for products and services that
demonstrate success to their peers
– Self Expression: Social / Physical Activity, Variety
and risk
19. VALS Framework
• The 4 groups with higher resources are
– Innovators
– Thinkers
– Achievers
– Experiencers
• The 4 groups with lower resources are
– Believers
– Strivers
– Makers
– Survivors
20. Behavioral Segmentation
• Needs and Benefit
• Decision Roles
• User and Usage Related: Occasions, User
Status, Usage Rate
• Buyer Readiness Stage
• Loyalty Status
21. TARGETING
• There are many statistical techniques for
developing market segments
• Marketers are increasingly combining several
variables in an effort to identify smaller better
defined target groups
• This has led to need based market
segmentation appraoch
23. Roger Best’s Seven Step
• Needs Based Segmentation: Group customers into
segments based on similar needs and benefits
sought by customers in solving a particular
consumption problem
• Segmentation Identification: For each needs based
segment, determine which demographics, lifestyle
and usage behaviors make the segment distinct and
identifiable (actionable)
• Segment Attractiveness: Using predetermined
segment attractiveness criteria(market growth,
competitive intensity, market access) determine
overall attractiveness of each segment
24. Roger Best’s Seven Step
• Segment Profitability: Determine Segment
Profitability
• Segment Positioning: For each segment, create a
“Value Proposition” and product-price positioning
strategy based on that segment’s unique customer
needs and characteristics
• Segment Acid Test: Create “Segment Story Board” to
test the attractiveness of each segment’s positioning
strategy
• Marketing Mix Strategy: Expand Segment Positioning
strategy to include all aspects of marketing mix:
Product, Price, Promotion and Place
25. Michael Porter’s Five Force
• Threat of Intense Segment Rivalry
• Threat of new entrants
• Threat of Substitute Products
• Threat from Buyer’s growing bargaining power
• Threat from Supplier’s growing bargaining
power
26. Evaluating and Selecting the Market
Segments
• 2 Factors: Segment Overall Attractiveness and
Company’s Objectives and Resources
• There are 4 approaches
– Full Market Coverage
– Multiple Segment Specialization
– Single Segment Concentration
– Individual Marketing
27. Full Market Coverage
• A firm attempts to serve all customer groups with all the
products they might need, e.g. Microsoft, GM, Coca-Cola
• Undifferentiated Marketing
– Mass Communication
– Largest Potential Market
– Lowest cost, highest margin
– Narrow product line keeps R&D, production, inventory costs
down
• Differentiated Marketing: Different product to different
segments
– Creates more sales than undifferentiated marketing
– Increases the cost of business
28. Multiple Segment Specialization
• Selective Specialization: A firm selects a subset of all
the possible segments
• There may be little or no synergy among segments,
but each promises to be a moneymaker
• This strategy diversifies risk
• Supersegment is a set of segments sharing some
exploitable similarities
• A firm can attempt to achieve some synergy with
– Product Specialization e.g. Microscope
– Market Specialization
29. Single Segment Concentration
• Firm markets to only one particular segment
• Concentrated Marketing
• Niche is a narrowly defined customer group
seeking a distinctive mix of benefits within a
segment
30. Individual Marketing
• Ultimate level of segmentation leads to
Customized Marketing or one-to-one
marketing
• Customerization combines operationally
driven mass customization with customized
marketing in a way that empowers consumers
to design the product and service offering of
their choice
31. Ethical Choice of Market Targets
• Marketers must target carefully to avoid any
backlash
• Targeting can generate controversy when
marketers take unfair advantage of vulnerable
groups
• Socially Responsible Marketing
32. POSITIONING
• Company can make a mark
• Requires keen understanding of consumer needs,
and wants, company’s capability and competitive
actions
• “Foot in the present” and a “foot in the future”
• Trick is to strike the right balance between what
the brand is and what it could be
• Result is creating customer focused value
proposition
33. POSITIONING
• Requires that marketers define and
communicate similarities and differences
between their brand and its competitor
• Positioning requires:
– Determining a frame of reference by identifying
the target market and relevant competition
– Identifying the optimal points of parity and points
of difference brand association
– Creating a brand mantra to summarize the
positioning and essence of brand
34. Determining a competitive frame of
reference
• Defines which other brands a brand competes
with, therefore which brands should be the
focus of competitive analysis
• Decision about the competitive frame of
reference are closely related to target market
decisions
• Target market can define the nature of
competition
35. Determining a competitive frame of
reference
• Identifying competitors
– Category membership, Aquafina, CitiBank
– Range of actual and potential competitors can be
much broader than the obvious
– More likely to be hurt by emerging competitors or
new technology rather than current competition,
Nokia vs Samsung
– Firms should identify their competitive frame in the
most advantageous way possible, Sensodyne
– Industry
– Competitors
36. Determining a competitive frame of
reference
• Analyzing competitors
– Company needs to gather info about each competitor’s
real and perceived strengths and weakness
– Once company has identified competitor and its
strategy, it must understand what is each competitor
seeking in the marketplace
– Many factors shape a competitor’s objective including
size, history, current management and financial situation
– Parent company running for growth or for profit
– Marketers must formally define the competitive frame of
reference to guide positioning
37. IDENTIFYING OPTIMAL POINTS OF
DIFFERENCE AND POINTS OF PARITY
• Once frame of reference is defined, the
company has to define the appropriate points
of difference and points of parity associations
• Points of difference
– Attributes or benefits that consumers strongly
associate with a brand, positively evaluate and
believe they could not find to the same extent
with a competitive brand
38. IDENTIFYING OPTIMAL POINTS OF
DIFFERENCE AND POINTS OF PARITY
• Points of Difference
– POD can be any type of attribute or benefit
– Strong brand may have multiple points of difference,
Apple – Design, ease-of-use, Nike – Performance,
innovative tech, winning
– Creating strong, favorable and unique associations is a
real challenge, but essential one for competitive
brand positioning
– Criteria to determine if brand association can be POD
• Desirability
• Deliverable
• Differentiable
39.
40. IDENTIFYING OPTIMAL POINTS OF
DIFFERENCE AND POINTS OF PARITY
• Points of Parity
– Attribute or benefit association that are not
necessarily unique to the brand but in fact be
shared with other brands
– Category POP
– Competitive POP, Hyundai, McDonalds
41. Situation What to emphasize
When the firm is a ‘me-too’
competitor
In this case, being a weaker competitor, the goal is to piggyback on the
success of the market leader by highlighting many points-of-parity
When the firm as a market
leader
This is the reverse situation from the one above. To maintain market
leadership, the brand/product needs to be seen in as superior/different in
key ways, thus highlighting the need to focus on relevant points-of-
difference
When the firm enters an
established and mature
market
In this case, the likelihood of switching is relatively lower, so points-of-
difference are required to break their habitual loyalty
When the firm and is a fast-
growing market
Fast-growing markets have primary demand (that is, first-time customers to
the market), therefore points-of-parity positioning will should be quite
successful in capturing new customers
When there is a diversity of
needs, even when looking at
fairly narrow market
segments
When there is significant diversity of consumer needs, a points-of-
difference positioning should ensure that reasonable market share is
generated
In a target market where the
firm already offers multiple
products
To reduce the risk of cannibalization of sales, the firm would need to have
more emphasis on points-of-difference
In a relatively price sensitive
market
Our goal in this case would be to provide additional benefits, in order to
reduce the importance of price in the decision. Therefore, a points-of-
difference positioning emphasis would be required
42. BRAND MANTRA
• Mantra is an articulation of the heart and soul
of the brand
• Short 3 to 5 word phrases that capture the
irrefutable essence or spirit of positioning
• Ensure understanding of the brand by
employees as well as customers
– Nike – Authentic Athletic Performance, Just do it
– Disney – Fun Family Entertainment
43. Positioning Strategies
• Using Product Characteristics or Customer
Benefits
• Positioning by Price and Quality
• Positioning by use or application
• Positioning by Product User
• Positioning by Product Class
• Positioning by Cultural Symbols
• Positioning by Competitor
44. Tasks Involved in Positioning
• Identify the competitors
• Determine how the competitors are perceived
and evaluated
• Determine the competitors positioning
• Analyze the customers
• Select the position
• Monitor the position
45. BRANDING
• AMA defines Brand as a “name, term, sign,
symbol or design or a combination of them,
intended to identify the goods or services of
one seller or group of sellers and to
differentiate them from those of competitors
• Differences may be functional, rational or
tangible
46. Role / Functions of Brands
• Simplify Product Handling / Tracing
• Organize Inventory and Accounting Records
• Legal Protection
• Quality
• Intangible Asset
• A good brand name should be
– Easy to pronounce and remember
– Short and sweet
– Legally protectable
– original
48. Selecting Brand Name and Logo
• Easy to pronounce, recognize and remember
• Denote something about the nature / function
of the product
• Types of Brands
– Individual and Family
– Manufacturer and Distributor Brand
– Regional / National Brand
49. Brand Equity
• Refers to a set of assets and liabilities linked to
brand, its name and symbol that add or to
subtract from the value provided by the product
or service to a form and or that firms competition
• Components
– Customer Loyalty
– Brand Awareness – Brand Recall
– Perceived Quality
– Brand Association – Attributes and Benefits
– Proprietary Assets
50. Brand Equity – Benefits to Customers
• Information Processing
• Confidence
• Usage Satisfaction
