Market Segmentation, Positioning, and the Value Proposition

Chapter 6

Ch 6: Segmenting Markets 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.

2. Positioning: Designing and 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.

Ch 6: Segmenting Markets 3

The STP Marketing Process(Segmenting, Targeting, Positioning)

1. Break the market into smaller, more homogenous segments

2. Specifically target the discrete market segments

3. Position the product or service to appeal to the targeted segments

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?

Identifying Target Segments: Market Segmentation

Demographics

Geography

Psychographics

Lifestyles

Benefits

Commitment Levels

Usage Patterns

Ch 6: Segmenting Markets 6

Segmenting by Usage and Commitment

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

Ch 6: Segmenting Markets 7

Demographic Segmentation

1. Age

2. Gender

3. Race

4. Marital Status

5. Income

6. Education

7. Occupation

Ch 6: Segmenting Markets 8

Geographic Segmentation

Ch 6: Segmenting Markets 9

Psychographics and Lifestyle Segmentation

Ch 6: Segmenting Markets 10

Activities

Interests

OpinionsLifestyle

Lifestyle segmentation provides insight into consumer’s motivations

Benefit Segmentation

Ch 6: Segmenting Markets 11

Passenger Safety?

Prestige?

Fuel Economy?

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

Ch 6: Segmenting Markets 12

STP Marketing is used in the business-to-business

market as well as the consumer market

STP Marketing is used in the business-to-business

market as well as the consumer market

Prioritizing Target Segments

Examine your ability to deliver value to the segments and costs of new capabilities

Research segment size, growth potential and usage frequency

Assay the competitive environment

Find a niche you can scratch

Ch 6: Segmenting Markets 14

Effective Positioning

• Is based on substance of the brand’s values

• Reflects internal values and structure of the firm’s market orientation

• Is consistent over time

• Is both memorable AND distinctive

Ch 6: Segmenting Markets 15

Fundamental Positioning Themes

• Benefit Positioning

• User Positioning

• Competitive Positioning

Ch 6: Segmenting Markets 16

Do you think this ad for Ryka shoes is

emphasizing benefit, user or competitive

positioning?

Do you think this ad for Ryka shoes is

emphasizing benefit, user or competitive

positioning?

Repositioning

Ch 6: Segmenting Markets 18

• 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

Ch 6: Segmenting Markets 19

VVAALLUUEE

BenefitsBenefits

Relative PriceRelative Price

FunctionalEmotional

Self-expressive