CONSUMER PROFILES

STP Process (Market Segmentation, Target Market & Positioning Strategy) 1. Segment the Consumer Market 2. Select a Target Market 3. Determine the Market Positioning Strategy

Step One: Market Segmentation Geographic Behavioral Segmentation Demographic Psychographic

Geographic Segmentation Segmented according to: Region (continent, country, province, city or even neighbourhood) Population (size and density of population, e.g., urban, suburban or rural) Climate (weather patterns common to certain geographic regions)

Demographic Segmentation Segmented according to: Age Gender Family life cycle (living with parents, single, married with/without children, divorced, widowed, etc.) Generation (Baby Boomer, Generation X, etc.) Income Level Occupation Education Level Ethnicity/Nationality/Religion Social class (upper, middle, lower)

Psychographic Segmentation Segmented according to: Activities Interests Opinions Attitudes Values Beliefs

Behavioral Segmentation Segmented according to specific customer purchasing behavior in terms of: Benefits sought Usage rate Brand loyalty User status (potential, first time, regular, etc.) Readiness to buy Occasions (holidays and other events that stimulate purchasing behaviour)

Behavioural Segmentation: Characteristics Affecting Consumer Behaviour Cultural Culture Subculture Social status Personal Age Occupation Financial situation Lifestyle Personality Social Reference groups Family roles Gender roles Psychological Motivation Perception Learning Beliefs and attitudes

Behavioural Segmentation: The Buying Process

Step Two: Target Market After the consumer market has been separated into segments, the marketer will select either a single segment or a series of segments and then proceed to “target” the segment(s). A target market is a group of buyers sharing common needs, wants or characteristics which the producer attempts to serve.

Target Market: Methods of Targeting The marketer may elect to target a single product towards a single segment in a market with many segments. For example, British Airway's Concorde was a high value product aimed specifically at business people and tourists willing to pay more for speed and luxury.

Target Market: Methods of Targeting Alternatively, the marketer may simply ignore the differences amongst the various market segments and elect to target a single product towards all segments, i.e., the entire market. This is typical in “mass marketing” where product differentiation is less important than cost considerations.

Target Market: Methods of Targeting Alternatively, in a multi-segment approach the marketer may target a variety of different segments using a series of differentiated products.

Target Market: Push vs Pull Promotional Strategy A push strategy directs marketing efforts such as sales and trade promotions towards channel members including wholesalers, retailers, agents and/or importers in order to create consumer demand for goods and services A push strategy is so named because it attempts to “push” demand down the distribution chain by taking the product directly to the consumer A pull strategy directs marketing efforts such as advertising and consumer promotions towards consumers in order to build consumer demand for goods and services A pull strategy is so named because it attempts to “pull” demand up the distribution chain by encouraging the consumer to seek out the product

Step Three: Positioning Strategy Positioning is one of the simplest and most useful tools of marketers. After segmenting a market and then targeting a particular consumer, marketers must proceed to position their product within that market.

Positioning Map Marketers must decide upon a competitive position which enables them to distinguish their products from the offerings of competitors, hence the term positioning strategy. A positioning map may aid in this process.  

Positioning Map When using a positioning map, marketers must ensure that (i) each axis represents a single product dimension or consumer dimension and (ii) the terms at each end of each axis are true opposites.   Younger buyer Sporty-looking product   Plain-looking product Older buyer

Positioning Map A variety of competing product brands may be mapped together on a positioning map which allows them to be compared and contrasted to one another.   Younger buyer Sporty-looking product (X) Brand A (X) Brand B (X) Brand C (X) Brand D    Plain-looking product Older buyer

Direct Competition Direct competitors are businesses that sell similar goods or services within the same market, e.g., Toyota and Honda within the automotive market. This definition includes companies located within the same geographic region as well as companies (such as mail order or Internet-based firms) who are able to reach one’s potential customers.

Indirect Competition Indirect competitors are businesses that sell goods or services which satisfy the same basic consumer wants or needs as one’s own firm. This much broader definition includes companies that, for example, each attempt to attract consumers’ discretionary income, e.g., restaurants, hotels, theatres, etc.

Marketing Strategies: Centralized Marketing Strategy This strategy focuses on the production, marketing and sale of goods and services in one country which are then exported to other countries “Think local, act global” Advantages include brand building, combined synergies and cost savings due to avoidance of duplication

Marketing Strategies: Decentralized Marketing Strategy This strategy takes advantage of local production facilities, distribution centres, advertising agencies, market research firms and/or retail partnerships in foreign countries in order to target specific overseas markets Companies that employ decentralized strategies may leave all advertising, sales and promotional decisions to local sales and marketing representatives “Think global, act local” Advantages include flexibility, cultural sensitivity and shipping cost savings given proximity to foreign markets