Market Segmentation, Positioning, & the Value Proposition

6

Objectives

• Explain STP Process• Segmentation Bases• Target Segment Criteria• Elements of Effective Positioning• Creating Brand Value/Equity

STP Marketing & 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.

2. Positioning: Designing & 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

Beyond STP—Regular Assessment

1. Reassess segmentation strategy: A detailed examination of the current target segment to develop new & better ways of meeting its needs, or a need to change the target & reposition the brand to a new segment.

2. Pursue product differentiation strategy: Product differentiation is a firm’s effort to emphasize or even create differences in brands to distinguish them from competitors. Advertising plays a critical role as part of the product differentiation strategy because the consumer will have to be convinced that the difference is meaningful.

The STP Marketing Process(Segmenting, Targeting, Positioning)

1. Break the market into smaller, more homogenous segments

2. Specifically target discrete market segments

3. Position the brand to appeal to the targeted segments

Identifying Target Segments: Market Segmentation

Demographics

Geography

Psychographics

Lifestyles

Benefits

Commitment Levels

Usage Patterns

Segmenting by Usage & Commitment

• Advertising & promotion targeted to:– Heavy users– Nonusers– Brand-loyal users– Switchers/Variety seekers– Emergent Consumers

Demographic Segmentation

1. Age2. Gender3. Race4. Marital Status5. Income6. Education7. Occupation

How would you describe the demographic

segment targeted by this advertising campaign?

How would you describe the demographic

segment targeted by this advertising campaign?

How about this ad? What is the target

demographic for this ad campaign?

How about this ad? What is the target

demographic for this ad campaign?

Geographic Segmentation

Psychographics & Lifestyle Segmentation

Activities

Interests

OpinionsLifestyle

Lifestyle segmentation provides insight into consumer’s motivations

Benefit Segmentation

Passenger Safety vs speed?

Prestige?

Fuel Economy?

Design?

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

SIC Codes• Standard Industrial Classification (SIC)= 2,3,4-digit SIC.

• Enter a SIC CODE:Enter keyword(s):BEER• 2082 Malt Beverages • 2086 Bottled and Canned Soft Drinks and Carbonated Waters • 3411 Metal Cans • 3585 Air-Conditioning and Warm Air Heating Equipment and

Commercial and Industrial Refrigeration Equipment • 5149 Groceries and Related Products, Not Elsewhere Classified • 5181 Beer and Ale • 5813 Drinking Places (alcoholic Beverages) • 5921 Liquor Stores • 5963 Direct Selling Establishments

Prioritizing Target Segments

Examine your ability to deliver value to the segments & costs of new capabilities—distinct competencies of the firm

Research segment size, growth potential & usage frequency

Assay the competitive environment

Find a niche you can scratch

Effective Positioning….

• …is based on substance of the brand’s values

• …is consistent over time

• …is both simple & distinctive

Fundamental Positioning Themes

• Benefit Positioning

• User Positioning

• Competitive Positioning

Do you think this ad for Pepsi is emphasizing

benefit, user or competitive positioning?

Do you think this ad for Pepsi is emphasizing

benefit, user or competitive positioning?

Repositioning

• Used to revive an ailing brand or fix a lackluster new market entry

• The challenge: Changing perceptions of a brand forged over years of advertising.

Capturing the Value Proposition

VALUE

Benefits

Relative Price

FunctionalEmotional

Self-expressive

Review/?s

1.Explain STP Process

2.Segmentation Bases

3.Target Segment Criteria

4.Elements of Effective Positioning

5.Creating Brand Value/Equity