SHWETANSHU GUPTA (49)ARJUN GUPTA (09)

SIDHARTH GUPTA (50)

STP STRATEGIES

Marketing Mix

STP• The STP process is an important concept in the study and application

of marketing. The letters STP stand for segmentation, targeting, and positioning.

• The STP process demonstrates the links between an overall market and how a company chooses to compete in that market. The goal of the STP process is to guide the organization to the development and implementation of an appropriate marketing mix, as highlighted in the following diagram.

STP

Importance of Segmentation & Targeting

• Helps distinguish one customer group from another within a given market.

• Facilitates proper choice of target market• Facilitate effective tapping of market.• Helps divide the market and in conquering them.• Makes marketing efforts more efficient and economic• Helps to spot less satisfied segments and succeed by satisfying such

segments.• When segmentation reaches high sophistication, companies and

customers can choose each other and stay together.• Helps crystallize the needs of target market and ellicit more

predictable responses from them.

• Segmentation as a process consists of segment identification, segment selection and the creation of marketing mixes for target segments.

• The outcome of the segmentation process should yield "true market segments" which meet three criteria: (a) Group identity: true segments must be groupings that are homogeneous within segments and heterogeneous across groups. (b) Systematic behaviors: a true segment must meet the practical requirement of reacting similarly to a particular marketing mix. (c) The third criteria refers to efficiency potential in terms of feasibility and cost of reaching a segment (

Segmentation

Segmentation strategies

• In the undifferentiated strategy, all consumers are treated as the same, with firms not making any specific efforts to satisfy particular groups. This may work when the product is a standard one where one competitor really can’t offer much that another one can’t. Usually, this is the case only for commodities .

• In the concentrated strategy, one firm chooses to focus on one of several segments that exist while leaving other segments to competitors. For example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned seating for low prices.

• In contrast, most airlines follow the differentiated strategy: They offer high priced tickets to those who are inflexible in that they cannot tell in advance when they need to fly and find it impractical to stay over a Saturday. These travelers—usually business travelers—pay high fares but can only fill the planes up partially. The same airlines then sell some of the remaining seats to more price sensitive customers who can buy two weeks in advance and stay over.

Bases for Segmentation Base(s) represents the core attributes of a group existing or potential

customers. Consumer’s characteristics are divided into two criteria:

Facts , which can be determined from direct questioning versus Cognitions , which are abstract & can be determined only by complex questioning.

Consumer rooted features arising out of social, physical & psychological characteristics versus consumption-specific usage behaviors or attitude and preference towards specific products or buying situations

Bases for Segmentation

Consumer rooted segmentation bases

Demographics

Geodemographic

Personality Traits

Lifestyles

Sociocultural

Age, Gender, Marital Status, Family life cycle, Income, education and Occupation

Geography and Demographics

Geography and Demographics

VALS (Values and Lifestyles)

Culture, Sub-Culture, Indian Culture and Cross culture

Demographic Segmentation

Age

Kids: Amul Kool, chocolate milkYouth: Amul Kool Kafe

Women and adults: Amul Calci+

Gender

Marital status

Market segmentation can also be as per the marital status of the individuals. Travel agencies would not have similar holiday packages for bachelors and married couples.

Education

Market can be segmented on the basis of education – matriculation or less, under graduates, graduates, post-graduation, etc. Most studies show that the highly educated people spend more than the poorly educated in respect of housing, clothing, recreation, etc.

Age and stage of family life cycle

Consumers’ wants and abilities change with age. On the basis of age, a market can be divided into four parts viz., children, young, adults and old. For the consumers belonging to the different age groups, different types of products are produced. For instance, Pepsodent kids is for children while Pepsodent Gum Care is for adults.

Income

Buying patterns depends on income of the consumers. No two individuals or families spend money in exactly the same way. If a researcher knows a person’s income, he can predict with some accuracy wants and needs of that person and how those wants are likely to be satisfied.

Pantaloon, Shopper’s stop target the high income group as Big bazaar who cater to the individuals belonging to the lower income segment.

Market can be segmented on the basis of education – matriculation or less, under graduates, graduates, post-graduation, etc. Most studies show that the highly educated people spend more than the poorly educated in respect of housing, clothing, recreation, etc.

Education

Occupation

A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it caters specifically to the professionals.

Geodemographic segmentation

• Geodemographic segmentation combines geographical and demographic segmentation.

• Geographic segmentation usually involves dividing up geographic markets by using existing political boundaries, natural climatic zones, or population boundaries.

• For example, Bennett, Coleman and Co. Ltd divided markets according to geographical units for their tabloids. In Bangalore, the tabloid is known as Bangalore Mirror where as it is Mumbai Mirror in Mumbai.

Psychological factors

MotivationMotivation is what stimulates all human behavior.It is very important for the marketers to know the motives influencing the consumer as they initiate and direct all human behavior.Abraham Maslow tried to arrange such significant needs into a hierarchy of five levels, depending on the relative importance of the needs to a person. The five levels of needs given by him are 1) physiological needs, 2) safety needs, 3) social needs, 4) egoistic or self esteem needs and finally 5) self actualization needs.

Personality traitsWhen Marketers use personality variables to segment the markets, they endow their products with brand personality that corresponds to consumer personalities.For example, Raymond advertises its fabrics with the tag ‘The Complete Man.’Parker Pens use Amitabh Bachchan as their brand ambassador to project it as a status symbol.

Lifestyle

VALS (Values and Lifestyles)

• High resource and high innovation people.• Successful, sophisticated, high self esteem.• Most receptive to new ideas and technologiesINNOVATORS

THINKERS

• Motivated by ideals: high resources• Well educated, favor durability, functionality and value in

products

BELIEVERS

• Motivated by Ideals: low resources• Strongly traditional, respect rule & authority• Conservative, slow to change, technology averse• Choose familiar products & established brands

ACHIEVERS

• Motivated by achievement: high resources• Goal oriented lifestyles that center on family & career• Avoid changes: Prefer premium products that demonstrate

their success to peers

STRIVERS

• Motivated by achievement: low resources• Trendy and fun-loving: little income, tend to have narrow

interests: Favor stylish products

EXPERIENCERS

• Motivated by self-expression: high resources• Appreciate the unconventional: are active & impulsive:

Spend high proportion of income on fashion, socializing and entertainment

MAKERS

• Motivated by self-expression: low resources• Value practicality and self sufficiency• Spend leisure time with family and close friends: prefer

value to luxury and buy basic products.

• High innovation and high resource: Lead narrowly focused lives: Primarily concerned about safety and security

• Tend to be brand loyal and buy discounted merchandiseSURVIVORS

Sociocultural values and beliefs

• Social class and cultural factors affect consumer buying behavior.

• Social groups include: family, friends, peers, colleagues.

• Culture influence consumer behavior deeply. A given culture brings its own unique pattern of social conduct. A person usually acquire his cultural attributes right at his childhood. Culture includes religion, caste, language, social behavior.

• Example: Mc Donald don’t offer beef products in India and in Saudi Arabia Mc Donald outlets include separate dining sections for both men& women.

Social Class

Buying behaviour is reflected by the influence of social class to which the consumers belong. The social class can be segmented as – lower -lower, middle-lower, upper-lower, lower-middle, middle-middle, upper-middle, lower-upper, middle-upper and upper-upper. Firms dealing in clothing, home furnishing, automobiles, etc. can design products for specific social class.

Consumption specific segmentation bases

Usage rateUsage situation

Benefit segmentation

Perceived brand loyalty

Brand relationship

Heavy, Medium, Light, Non-users

Frequently, Occasionally, Regularly

Functional, value for money, social, positive & negative

emotional

Behavior and attitude

Usage rate

• Consumers are divided on the basis of usage rate: heavy users, light users, medium users and non users (prospective adopters or persistent non adapters).

• For example about 25% of all beer drinkers account for 75% of all beer consumed. Therefore most beer companies focus on those 75% of beer consumers.

• Besides usage rate consumers can also be segmented on the basis of awareness status and also level of involvement: awareness of product, readiness to buy the product, unawareness and involvement in product.

• Alan Paine textile brand, offered 4 cotton trousers for Rs. 999. Here, the Company is interested in getting profits from sales volume rather than its selling price.

Usage situation

• Occasion or situation often determines what consumers will purchase or consume.

• Under different occasions or situations same consumer might make different choices.

• For example Diamond industry promotes Diamond ring as an engagement symbol.

Benefit segmentation• Functional benefits• Value for money• Social benefits

Peter England, a Madhura garment brand positioned its wrinkle free trousers on the basis of benefits.

• Positive emotional benefit• Negative emotional benefit

Colgate cavity protection range position itself as a product to protect teeth against cavity.

Brand loyalty

Loyalty: if companies can identify customer loyalty to their brand, and then delineate other characteristics these people have in common, they will locate the ideal target market.

Stage of readiness: potential customers may be unaware, aware, informed, interested, desirous, and intending to buy. If a marketing manager is aware of where the specific segment of potential customers is, he or she can design the appropriate market strategy to move them through the various stages of readiness.

User readiness stage

Targeting

• A target market refers to a group of individuals who are inclined towards similar products and respond to similar marketing techniques and promotional schemes.

• Kellogg’s K Special mainly targets individuals who want to cut down on their calorie intake. The target market in such a case would be individuals who are obese. The strategies designed to promote K Special would not be the same in case of any other brand say Complan or Boost which majorly cater to teenagers and kids to help them in their overall development. The target market for Kellogg’s K Special would absolutely be different from Boost or Complan.

Criteria for effective Targeting

• Identifiable: Target market segment should have same characteristics that are relevant to the product/service. Characteristics make it easier to identify the target market.

• Sizeable: In order to be a viable market, segment should consist of enough customers to make targeting profitable.

• Stable: Marketer prefer to target consumer segments that are relatively stable in terms of lifestyles and consumption patterns and avoid “fickle” segments that are unpredictable.

• Accessible: To be targeted a segment must be accessible, which means marketers must be able to reach that market segment in an economical way.

Strategies

• Behavioral targeting comprises a range of technologies and techniques used by online website publishers and advertisers aimed at increasing the effectiveness of advertising using user web-browsing behavior information. In particular, "behavioral targeting uses information collected from an individual’s web-browsing behavior to select advertisements to display".

• When a consumer visits a web site, the pages they visit, the amount of time they view each page, the links they click on, the searches they make and the things that they interact with, allow sites to collect that data, and other factors, create a 'profile' that links to that visitor's web browser. As a result, site publishers can use this data to create defined audience segments based upon visitors that have similar profiles.

• When visitors return to a specific site or a network of sites using the same web browser, those profiles can be used to allow advertisers to position their online ads in front of those visitors who exhibit a greater level of interest and intent for the products and services being offered.

Behavioral Targeting

• It is aggregating individual consumers into relatively small groups, based on data available on them from diff databases and targeting them with tailor made messages.

• Data sources of micro-targeting include virtually any piece of information available- voting records, residence and address change, tax records, media exposure, feedbacks, credit card records and much more.

• Individual messages are then transmitted via narrowcasting- using e-mails, mobile devices and even door to door presentation on small screens to deliver personalized messages to individuals

Micro Targeting

• A differentiated marketing strategy is when a company creates campaigns that appeal to at least two market segments or target groups. For example, a store can promote a sale that appeals to people in at least two cities or locations, or a company can market a product that appeals to women in at least two age groups.

• A concentrated marketing strategy is targeted to one specific market segment or audience. For example, a company might market a product specifically for teenage girls, or a retailer might market his business to residents in a specific town. Concentrated marketing strategies are often geared for smaller groups of people, because they are designed to appeal to a specific segment.

Concentrated Vs Differentiated Marketing

• Sometimes marketers adopt too many micro segments, which later become redundant. In such a case, all segments are clubbed together with a single marketing mix (counter segmentation).

Counter-segmentation

Positioning• Positioning is developing a product and brand image in the minds of

consumers. It can also include improving a customer's perception about the experience they will have if they choose to purchase your product or service. The business can positively influence the perceptions of its chosen customer base through strategic promotional activities and by carefully defining your business' marketing mix.

• Effective positioning involves a good understanding of competing products and the benefits that are sought by your target market. It also requires you to identify a differential advantage with which it will deliver the required benefits to the market effectively against the competition. Business should aim to define themselves in the eyes of their customers in regards to their competition.

PRACTICAL EXAMPLES

NESTLE introduced Maggi brand in INDIA in 1982.With the launch of Maggi noodles, NUL created a new food category in Indian packaged food market.Over in India, Maggi became a popular snack food product.In fact, "Maggi" has become a generalized name for instant noodles in India and Malaysia.

MAGGI INDIA

Segmentation

• Segmented the market on the basis of lifestyle and eating habits of the Indian consumer.

• Focus mainly on age and appetite of the urban families.

Target

• Target audience are kids YouthWorking women

• It helps mothers with the promise of fast to cook and good to eat snacks.

‘convenience savvy time misers’

Position

• Positioned their product with the well known slogan

• “2minute noodles” • “taste bhi health bhi”• “Easy to cook, good to eat”• Positioned their product asto get fast relief from hunger.

Apple Iphone

Segment Stylish and smart touch phonesTarget Group Urban young from middle and upper class

PositioningDevice which is helps in communication and also serves as an entertainment device