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Market Segmentation,
Positioning, and the
Value Proposition
PPT 6-1
2
STP Marketing and the
Evolution of Marketing Strategy
1. Target Market: A sub-group of a larger market chosen as
the focal point for a marketing or advertising campaign. (NOT
illegal or unethical!)
2. Positioning: Designing and representing a brand in a way
that is distinct in the consumer’s mind.
3. Positioning Strategy: Selecting key themes to
communicate to a target market.
4. Marketing Strategy: Evolves as a result of 1-3
PPT 6-2
3
Why do we need to segment?
• Because different consumer groups needs
are different
• To maintain focus on the customer target
segment
• To customise advertising according to
target segment
4
Segmentation is a spectrum
• Concentrated marketing :instead of competing
with big fish concentrate on smaller segments
based on need identification. e.g Lab equip for
educational institutions
• Differentiated marketing: several mktg programs
tailored for different segments. E.g M aruti . GM
• Mass marketing , segmentation not compulsory,
product n appeal effective for all. E.g Coca cola
• Niche mktg . Highly concentrated
5
Beyond STP—Regular
Assessment
1. Reassess segmentation strategy:
 Exam the current target segment to develop new and
better ways of meeting its needs.
 Change the target and reposition the brand to a new
segment.
2. Pursue product differentiation strategy:
 Emphasize or create differences in brands to
distinguish them from competitors.
 Advertising plays a critical role because the consumer
will have to be convinced that the difference is
meaningful.
PPT 6-3
6
The STP Marketing Process
(Segmenting, Targeting, Positioning)
1. Break the broad market into smaller, more
homogenous segments
2. Specifically target discrete market segments
3. Position the brand to appeal to the targeted
segments
PPT 6-5
7
Identifying Target Segments:
Market Segmentation
Demographics
Geography
Psychographics
Lifestyles
Benefits
Commitment
Levels
Usage Patterns
PPT 6-4
8
Segmenting by Usage and
Commitment
Advertising and promotion targeted to:
 Heavy users : 20 : 80 rule
 Nonusers
 Brand-loyal users
 Switchers/Variety seekers, use occasion
 Emergent Consumers
– Point of entry marketing strategy
PPT 6-6
9
Demographic Segmentation
 Age : different strokes for
different folks.
 Gender: women more
discerning, research more
and weigh factors more.
Don’t like to be preached .
Celebrities don’t cut much
ice with em
 Race. Hispanics , asians etc
etc
 Marital Status :single
independent…..
 Income. Masses vs classes
 Education
 Occupation
PPT 6-7
10
Geographic Segmentation
More vocal in local if operating in a smaller
area. Use mass media if in large area.
 Country
 Region
 State
 City
 Neighborhood
PPT 6-10
11
Psychographics and
Lifestyle Segmentation
Activities
Interests
Opinions
Lifestyle Lifestyle segmentation
provides insight into
consumer’s motivations. E.g
fragrance . Different perfumes
towards different types of
people. According to VALS
framework people can be inner
directed or outer directed
PPT 6-11
12
Benefit Segmentation
Safety?Prestige?
Fuel Economy?
PPT 6-12
DIFFERENT NEEDS
SO DIFFERENT
IMPORTANCE ON
BENEFITS
SOUGHTE.G
TOOTH PASTE .
FOUR SEGMENTS
IDENTIFIED
1. SENSORY
2. SOCIABLES
3. WORRIERS
4. INDEPENDENTS
13
Business to Business Markets
Markets segmented by:
 Usage rates
 Geographic location
 SIC (Standard Industrial Classification)
Code
 Stage in the purchase process: first time
vs. experienced buyers
 Benefits desired
PPT 6-13
14
STP Marketing is
used in the
business-to-business
market as well as the
consumer market.
STP Marketing is
used in the
business-to-business
market as well as the
consumer market.
PPT 6-14
Ad in Context Example
15
Prioritizing Target Segments
1. Examine your ability to deliver value
to the segments and costs of new
capabilities—distinct competencies
of the firm
2. Research segment size, growth
potential and usage frequency
3. Assay the competitive environment
4. Find a niche you can scratch
PPT 6-15
16
Reaching Target segments
• Controlled coverage : target specific adv
e.g auto components in auto magazines
• Customer self-selection: release the ad to
3veryone customers respond themselves
rest of them ignore. Promote golf
equipment golf lovers would respond .
17
Positioning strategies
• Product
characteristics/benefits.:Toyota
economy reliability,
volkswagen safety and
durability. Aim at new product
char too . E.g viva, aim at 2 or
more prod char e.g toothpaste
cavities and fresh breath, ariel
clean and fragrant
• Price-quality approach:some
brands offer more compared to
others so they harp more too.
Cameras dvd’s tv ‘s ,
cosmetics etc.
18
• Use or application
approach:cadbury’s
for celebrating n
gifting, expand brands
market: dabur honey
• Product class
approach: margarines
vs butter, dove vs.
others, 7 up vs .
Colas
19
Positioning strategies
• Product user approach:associate
prd with a user / class of users.
Celebrities are used . Michael
jordan, miller beer
• Cultural symbol approach. Use
entrenched cultural symbyols
to differentiate. Marlboro man .
Taj mahal tea , pilsbury
doughboy
• Competitor approach: refer to
competitors. Competitors image is
used as a bridge for
communicating another image.
Pepsi : nothing official about it.
Sprite seedhi baat, horlicks,
chocolibe sun tv
20
Effective Positioning
 Deliver on the brand promise: Org should
be committed to create substantative value .
Mobil campaign towards Road Warriors co.
people have to live up to it. Eureka forbes
friedly sales man
 There is magic in consistency: pos strtegy
should be consistent internally and
overtime. Everything must work in sync to
reinforce perception in consumer mindsabt
what the brand stands for e. g southwest
airlines .if its ontime reliability it will invest in
state of art baggage hasndling , preventive
maintainenc etc etc and not food and
hospitality etcetc. Also the strategy needs
consistency too. Year in and year out some
consistency shapes perception . Specific
copy may change thematic core does not
. Eg lux – beauty soap of film stars, maggi its
different, bajaj
 Make the positioning different and
simple for consumers to understand . In
this fast paced life the harried consumer is
expected to distort, ignore or forget most
ads so complicated messages have no
chance of getting thru . Pos should be
simple and distinctive. E.g HONDA JAZZ
VS FIAT LINEA
PPT 6-16
21
Fundamental Positioning
Themes
TRY TO SETTLE ON SINGLE PREMISE though can be combined
tocreatea synergy. 3 FUNDAMENTAL THEMES
 Benefit Positioning: functional(are mostly same e.g washes,
cleans ), emotional ( fresh breath, reduces body odour etc),
self expressive(gucci, BMW, ROLEX)
 User Positioning : instead of benefit takes a specific profile
of the user as focal point of positioning. Virgin mobile
 Competitive Positioning : goal is explicit reference to an
existing ccompetitor to help define yr brand. E,g éclairs vs
chocolibe. Rin vs. weel, horlicks vs complan etc.
sometimesused by smaller brand to carve out a position
PPT 6-17
22
Positioning strategies
• Identify competitors
• Determine how competitors are perceived
and evaluated
• Determine the competitors positions
• Analyse the customers
• Select the position
• Monitor the position
23
Do you think this ad for
Ryka shoes is
emphasizing benefit,
user, or competitive
positioning?
Do you think this ad for
Ryka shoes is
emphasizing benefit,
user, or competitive
positioning?
PPT 6-18
Ad in Context Example
24
Repositioning
 Used to revive an ailing brand or fix a
lackluster new market entry
 Advertising themes and positioning
can be trendy and become outdated
 The challenge: Changing perceptions
of a brand forged over years of
advertising.
PPT 6-19
25
Capturing the Value Proposition
VV
AA
LL
UU
EE
BenefitsBenefits
Relative PriceRelative Price
Functional
Emotional
Self-expressive
PPT 6-20

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Market segmentation, positioning and value proposition

  • 1. 1 © 2009 South-Western, a part of Cengage Learning Market Segmentation, Positioning, and the Value Proposition PPT 6-1
  • 2. 2 STP Marketing and the Evolution of Marketing Strategy 1. Target Market: A sub-group of a larger market chosen as the focal point for a marketing or advertising campaign. (NOT illegal or unethical!) 2. Positioning: Designing and representing a brand in a way that is distinct in the consumer’s mind. 3. Positioning Strategy: Selecting key themes to communicate to a target market. 4. Marketing Strategy: Evolves as a result of 1-3 PPT 6-2
  • 3. 3 Why do we need to segment? • Because different consumer groups needs are different • To maintain focus on the customer target segment • To customise advertising according to target segment
  • 4. 4 Segmentation is a spectrum • Concentrated marketing :instead of competing with big fish concentrate on smaller segments based on need identification. e.g Lab equip for educational institutions • Differentiated marketing: several mktg programs tailored for different segments. E.g M aruti . GM • Mass marketing , segmentation not compulsory, product n appeal effective for all. E.g Coca cola • Niche mktg . Highly concentrated
  • 5. 5 Beyond STP—Regular Assessment 1. Reassess segmentation strategy:  Exam the current target segment to develop new and better ways of meeting its needs.  Change the target and reposition the brand to a new segment. 2. Pursue product differentiation strategy:  Emphasize or create differences in brands to distinguish them from competitors.  Advertising plays a critical role because the consumer will have to be convinced that the difference is meaningful. PPT 6-3
  • 6. 6 The STP Marketing Process (Segmenting, Targeting, Positioning) 1. Break the broad market into smaller, more homogenous segments 2. Specifically target discrete market segments 3. Position the brand to appeal to the targeted segments PPT 6-5
  • 7. 7 Identifying Target Segments: Market Segmentation Demographics Geography Psychographics Lifestyles Benefits Commitment Levels Usage Patterns PPT 6-4
  • 8. 8 Segmenting by Usage and Commitment Advertising and promotion targeted to:  Heavy users : 20 : 80 rule  Nonusers  Brand-loyal users  Switchers/Variety seekers, use occasion  Emergent Consumers – Point of entry marketing strategy PPT 6-6
  • 9. 9 Demographic Segmentation  Age : different strokes for different folks.  Gender: women more discerning, research more and weigh factors more. Don’t like to be preached . Celebrities don’t cut much ice with em  Race. Hispanics , asians etc etc  Marital Status :single independent…..  Income. Masses vs classes  Education  Occupation PPT 6-7
  • 10. 10 Geographic Segmentation More vocal in local if operating in a smaller area. Use mass media if in large area.  Country  Region  State  City  Neighborhood PPT 6-10
  • 11. 11 Psychographics and Lifestyle Segmentation Activities Interests Opinions Lifestyle Lifestyle segmentation provides insight into consumer’s motivations. E.g fragrance . Different perfumes towards different types of people. According to VALS framework people can be inner directed or outer directed PPT 6-11
  • 12. 12 Benefit Segmentation Safety?Prestige? Fuel Economy? PPT 6-12 DIFFERENT NEEDS SO DIFFERENT IMPORTANCE ON BENEFITS SOUGHTE.G TOOTH PASTE . FOUR SEGMENTS IDENTIFIED 1. SENSORY 2. SOCIABLES 3. WORRIERS 4. INDEPENDENTS
  • 13. 13 Business to Business Markets Markets segmented by:  Usage rates  Geographic location  SIC (Standard Industrial Classification) Code  Stage in the purchase process: first time vs. experienced buyers  Benefits desired PPT 6-13
  • 14. 14 STP Marketing is used in the business-to-business market as well as the consumer market. STP Marketing is used in the business-to-business market as well as the consumer market. PPT 6-14 Ad in Context Example
  • 15. 15 Prioritizing Target Segments 1. Examine your ability to deliver value to the segments and costs of new capabilities—distinct competencies of the firm 2. Research segment size, growth potential and usage frequency 3. Assay the competitive environment 4. Find a niche you can scratch PPT 6-15
  • 16. 16 Reaching Target segments • Controlled coverage : target specific adv e.g auto components in auto magazines • Customer self-selection: release the ad to 3veryone customers respond themselves rest of them ignore. Promote golf equipment golf lovers would respond .
  • 17. 17 Positioning strategies • Product characteristics/benefits.:Toyota economy reliability, volkswagen safety and durability. Aim at new product char too . E.g viva, aim at 2 or more prod char e.g toothpaste cavities and fresh breath, ariel clean and fragrant • Price-quality approach:some brands offer more compared to others so they harp more too. Cameras dvd’s tv ‘s , cosmetics etc.
  • 18. 18 • Use or application approach:cadbury’s for celebrating n gifting, expand brands market: dabur honey • Product class approach: margarines vs butter, dove vs. others, 7 up vs . Colas
  • 19. 19 Positioning strategies • Product user approach:associate prd with a user / class of users. Celebrities are used . Michael jordan, miller beer • Cultural symbol approach. Use entrenched cultural symbyols to differentiate. Marlboro man . Taj mahal tea , pilsbury doughboy • Competitor approach: refer to competitors. Competitors image is used as a bridge for communicating another image. Pepsi : nothing official about it. Sprite seedhi baat, horlicks, chocolibe sun tv
  • 20. 20 Effective Positioning  Deliver on the brand promise: Org should be committed to create substantative value . Mobil campaign towards Road Warriors co. people have to live up to it. Eureka forbes friedly sales man  There is magic in consistency: pos strtegy should be consistent internally and overtime. Everything must work in sync to reinforce perception in consumer mindsabt what the brand stands for e. g southwest airlines .if its ontime reliability it will invest in state of art baggage hasndling , preventive maintainenc etc etc and not food and hospitality etcetc. Also the strategy needs consistency too. Year in and year out some consistency shapes perception . Specific copy may change thematic core does not . Eg lux – beauty soap of film stars, maggi its different, bajaj  Make the positioning different and simple for consumers to understand . In this fast paced life the harried consumer is expected to distort, ignore or forget most ads so complicated messages have no chance of getting thru . Pos should be simple and distinctive. E.g HONDA JAZZ VS FIAT LINEA PPT 6-16
  • 21. 21 Fundamental Positioning Themes TRY TO SETTLE ON SINGLE PREMISE though can be combined tocreatea synergy. 3 FUNDAMENTAL THEMES  Benefit Positioning: functional(are mostly same e.g washes, cleans ), emotional ( fresh breath, reduces body odour etc), self expressive(gucci, BMW, ROLEX)  User Positioning : instead of benefit takes a specific profile of the user as focal point of positioning. Virgin mobile  Competitive Positioning : goal is explicit reference to an existing ccompetitor to help define yr brand. E,g éclairs vs chocolibe. Rin vs. weel, horlicks vs complan etc. sometimesused by smaller brand to carve out a position PPT 6-17
  • 22. 22 Positioning strategies • Identify competitors • Determine how competitors are perceived and evaluated • Determine the competitors positions • Analyse the customers • Select the position • Monitor the position
  • 23. 23 Do you think this ad for Ryka shoes is emphasizing benefit, user, or competitive positioning? Do you think this ad for Ryka shoes is emphasizing benefit, user, or competitive positioning? PPT 6-18 Ad in Context Example
  • 24. 24 Repositioning  Used to revive an ailing brand or fix a lackluster new market entry  Advertising themes and positioning can be trendy and become outdated  The challenge: Changing perceptions of a brand forged over years of advertising. PPT 6-19
  • 25. 25 Capturing the Value Proposition VV AA LL UU EE BenefitsBenefits Relative PriceRelative Price Functional Emotional Self-expressive PPT 6-20