6 Market Segmentation, Positioning, & the Value Proposition

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

STP Marketing & the Evolution of Marketing Strategy Target Market: A sub-group of a larger market chosen as the focal point for a marketing or advertising campaign. Positioning: Designing & representing a brand in a way that is distinct in the consumer’s mind. Positioning Strategy: Selecting key themes to communicate to a target market. Marketing Strategy: Evolves as a result of 1-3

Beyond STP—Regular Assessment 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. 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) Break the market into smaller, more homogenous segments Specifically target discrete market segments Position the brand to appeal to the targeted segments

Identifying Target Segments: Market Segmentation Geography Demographics Psychographics Lifestyles Commitment Levels Benefits Usage Patterns

Segmenting by Usage & Commitment Advertising & promotion targeted to: Heavy users Nonusers Brand-loyal users Switchers/Variety seekers Emergent Consumers

Demographic Segmentation Age Gender Race Marital Status Income Education Occupation

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?

Geographic Segmentation

Psychographics & Lifestyle Segmentation Activities Lifestyle Opinions Lifestyle segmentation provides insight into consumer’s motivations Interests

Passenger Safety vs speed? 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?

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 Benefits Relative Price Functional Emotional Self-expressive

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