1. 1 ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 1 Market Segmentation, Positioning, and the Value Proposition 6 1 ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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. 4.Positioning Strategy: Selecting key themes to communicate to a target market. 5.This sequence is referred to as STP: Segmentation, Targeting, Positioning 6 2

3. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The STP Marketing Process (Segmenting, Targeting, Positioning) Break the broad market into smaller, more homogenous segments Specifically target discrete market segments Position the brand to appeal to the targeted segments 6 3

4. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Beyond STP— Regular Assessment Reassess segmentation strategy: Examine 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. 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. 6 4

5. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Identifying Target Segments: Market Segmentation 6 5Geography Psychographics Benefits CommitmentLevels UsagePatterns Usage Patterns Demographics Lifestyles Social Class

6. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Segmenting by Usage and Commitment Advertising and promotion targeted to: Heavy users Nonusers Brand-loyal users Switchers/Variety seekers Emergent Consumers –Point-of-entry marketing strategy 6 6

7. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Demographic Segmentation Age Gender Race Marital Status Income Education Occupation 6 7

8. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Geographic Segmentation Country Region State City Neighborhood Geodemographic 6 10

9. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Psychographics and Lifestyle Segmentation Lifestyle segmentation relies on insights from consumer’s AIO. 6 11 Opinions Lifestyle Activities Interests

10. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Benefit Segmentation 6 12 ©Courtesy of Roxio, Inc. Convenience? Security? Pleasure?

11. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Business-to-Business Markets Effectively segmented by: Usage rates Geographic location NAICS-North American Industry Classification System (formerly, SIC) Stage in the purchase process: first time vs. experienced buyers Benefits desired 6 13

12. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Prioritizing Target Segments 1. Examine your ability to deliver value to the segments and the costs of new capabilities What are the 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 6 15

13. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Essentials for Effective Positioning Strategies Deliver on the brand promise There is magic in consistency Make the positioning different and simple for consumers to understand 6 16

14. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Fundamental Positioning Themes Benefit Positioning –Functional –Emotional –Self-Expressive User Positioning Competitive Positioning Can create a “hybrid” of above 6 17

15. 15 ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 17 Do you think this ad for Pur Water Filters is emphasizing benefit, user, or competitive positioning? Courtesy, Procter & Gamble

16. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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. 6 19

17. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Capturing Your Strategy in the “Value Proposition” VALUE: 6 20 = VALUE Benefits Relative Price Functional Self-expressive Emotional $$$$

18. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Putting it All Together Identify and Profile Target Segments Consolidate the Value Proposition for the Brand Select the mix of promotional tools for persuasion 6 21