Stp Analysissegmentation Targeting Positioning.pptm

8/12/2019 Stp Analysissegmentation Targeting Positioning.pptm

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STP Analysis:-The traditional view of the business process, is not going to workin economies where people face abundant choices. There, the MassMarketis actually splintering into numerous micro markets, each with itsown wants, perceptions, preferences, and buying criteria. The smartcompetitor must design and deliver offerings for well-defined target markets.This realization inspired a new view of business processes that placesmarketing at the beginning of planning. Instead of emphasizing makingand selling, companies now see themselves as part of a value deliveryprocess.

The value creation and delivery sequence can be divided into

three phases. The first phase, choosing the value, represents thehomework marketing must do before any product exists. The marketingstaff must segment the market, select the appropriate market target, anddevelop the offerings value positioning. The formula Segmentation,Targeting, Positioning (STP) is the essence of strategic marketing. Oncethe business unit has chosen the value, the second phase is providing the

value. Marketing must determine specific product features, prices, anddistribution.The task in the third phase is communicating the value byutilizing the sales force, sales promotion, advertising and othercommunication toolsto announce and promote the product. Each of these

value phases has cost implications. It is also the case that the value deliveryprocess begins before there is a product and continues while it is being

developed and after it becomes available. Ex:-Nike, Toyota, etc. prices go up.


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Concept of Market Segmentation:-A Market Segmentconsists of agroup of customers who share a similar set of needs and wants. Themarketerstask is to identify them and decide which one(s) to target.Segment marketing offers key benefits over mass marketing. A

flexible market offeringconsists of two parts: - a naked solutioncontaining the product and service elements that all segmentmembers value, and discretionary options that some segmentmembers value. Each option might offer carry an additional charge.Ex:- Automobile companies in India offer different versions of the

same model with different features. Similarly in the case of Airlinesor Railways.

We can characterize market segments in different ways.One way is to identify preference segments. Homogeneous

preferences exist when all consumers have roughly the samepreferences; the market shows no natural segments. At the otherextreme, consumers in diffused preferences vary greatly in theirpreferences. If several brands are in the market, they are likely toposition themselves throughout the space and show real differencesto match differences in consumer preference. Finally, clustered

preferences result when natural market segments emerge from

groups of consumers with shared preferences.


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One of the major geographical segmentation variablesrelevant for marketers in South Asia is the division of markets intorural and urban areas, as they differ on a number of importantparameters such as literacy levels, income, spending power andavailability of infrastructuresuch as electricity, telephone network, androads as well as social and cultural orientations of people that affect themarket potential, and buying patterns and habits. The size of the

geographical markets is an important consideration while decidingthe concentration of marketing efforts.

The market potential values of Indias towns were calculated

on the five indicators such as number of consumers, the means theseconsumers have, their consumption behavior, awareness levels andthe availability of marketing support infrastructure. The findings

were that 16% of towns (out of 784 towns with a population of over 50,000people which account for 77% of the urban population) account for 80% ofthe market-potential value. These patterns suggest the need to prioritize

the geographical focus of marketing efforts.

Issues relating to logistics for serving the diverse geographicalmarket segments also need attention from marketers. Many companies usesophisticated models and software to plan physical distribution and todevelop route plans for their sales people to efficiently serve widegeographical markets.


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Geographical markets also vary in their product requirements.Ex:- Air Coolers and Air Conditioners. Food habits. Etc.

2. Demographic Segmentation:- We divide the market into groups on the

basis of variables such as age, family size, family life cycle, gender,income, occupation, education, religion, race, generation,nationality and social class.Demographic variables are highly popular

with the marketers as they are often associated with consumer needs andwants and they are easy to measure.

a. Age and Life-Cycle Stage:-Consumer wants and abilities change with age.Hence, age and life-cycle stages are important variables to define segments.

Johnson &Johnsonsbaby products , which are highly popular in almost allthe South Asian countries, are classic examples of products for infants andchildren. Television channels in India indicate segmentation based on age

and life cycle.b. Life Stage:-Persons in the same part of the life cycle may differ in their lifestage. Life stage defines a personsmajor concern, such as getting married,deciding to buy a home, sending the child to the school, taking care ofolder family members, marrying off their children, planning for retirement,and so on. These life stages presents opportunities for marketers who can

help people cope with their major concerns.


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c. Gender:- Men & women have different attitudes and behave differently,based partly on genetic makeup and partly on socialization.

A research study examining how men and women shop found that men

often need to be invited to touch a product, whereas women are likely topick it up without prompting. Men often like to read product information;women may relate to a product on a more personal level.

Gender differentiation has long been applied to productcategories such as clothing, hairstyling, cosmetics and magazines. Someproducts have been positioned as more masculine or feminine. Park

Avenue now known as Parks, the brand of ready-made apparel fromRaymond is positioned as a masculine brand, whereas the companyintroduced a range of womens apparel under the brand Be. Shoppingbehavior of men and women also vary. Men prefer to drive motorcycles

whereas for women there are specific brands of scooters, like Hero HondasPleasure, HondasActiva etc.

But itsnot enough to tout a product as masculine or feminine.Hyper-Segmentation is now occurring within both male and femalepersonal care segments.

Media have emerged to make gender targeting easier. A largenumber of womens magazines in various language make it easy for

marketers to reach the target customers more easily and vise versa.


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c. Income:- Income segmentation is a long-standing practice ina variety of products and services.Income determines the abilityof consumers to participate in the market exchange and hence this isa basic segmentation variable. However, income does not always

predict the best consumers for a given product. Even, if twoconsumers have similar income levels, each may own different typesand brands of products based on a host of factors such as lifestyle,attitudes, and values. Given the nature of income distribution inIndia and South Asia, opportunities exist for companies to serve therequirements of different income classes.

Ex:-the target segments of Surf and Nirma.


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d. Generation:-Each generation is profoundly influenced by thetimes in which it grows up the music, movies, politics, anddefining events of that period. Demographers call these

generational groups cohorts. Members share the same major

cultural, political, and economic experiences and have similaroutlooks and values. The younger generations play significant roles,not only as consumers, but also as initiators and influencers ofbuying decisions. A study reveals that 63% of the children in the agegroup of 8 to 14 years, are involved in purchase decisions for a widerange of product categories such as clothes, televisions, andautomobiles.

Different generational cohorts also influence each others. For

instance, parents are getting influenced by what demographers arecalling a Boom- Boom effect. The same products that appeal to 21

year olds are appealing to youth obsessed baby boomers.


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e. Social Class:-Social class has a strong influence on preferencesin cars, clothing, home furnishings, leisure activities, readinghabits, and retailers, and many companies design productsand services for specific social classes.

The concept of social class in India is influenced by the castesystem. This is a very unique system peculiar to India. The castesystem prevalent in India sometimes even transcends the incomelevel. As a consequence, market segmentation schemes become a

very complex process. This complexity of the Indian market hasprompted the development of Socioeconomicclassificationor asa viable method to segment markets.

Consumption behavior in India is found to be influenced by thesocioeconomic factors governed by the personseducational as well

as occupation.Ex:- Senior level executives with higher educational

qualifications exhibit different purchase preferences and habitscompared to a person with a similar income level, but a differentoccupation and lower education level.


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3. Psychographic Segmentation:- Psychographics is the science ofusing psychology and demographics for better understanding of theconsumers.In psychographic segmentation buyers are divided intodifferent groups on the basis of psychological / personality

traits, lifestyle, or values. People within the same demographicgroup can exhibit very different psychographic profiles. Values andlife styles significantly affect product and brand choice of consumers.

Religion has a significant influence on values and lifestyles. Thestrict norms that consumers follow with respect to food habits oreven dress codes can be representative examples in this regard. Ex:-

A significant number of people in India are vegetarian.

And these things are so strong that McDonaldshas to change itsmenu for the first time when they started their operation in India.The market for wristwatches provides another illustration ofsegmentation based on lifestyle parameters. Titan watches have a

wide range of sub brands within their Titan range such as Edge,Regalia, Nebula, and Raga, to appeal to different lifestylesegments. The companys range of watches under the Fasttrackbrand appeals to the youth segment. The company has another valuefor money brand, Sonata,targeted at people who want to own

good looking watches at affordable prices.


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4. Behavioral Segmentation:-In behavioral segmentation, marketersdivide buyers into groups on the basis of their knowledge of, attitudetoward, use of or response to a product.

a. Decision Roles:- People play five roles in a buying decision:-Initiator, Influencer, Decider, Buyer and User.Recognition of thedifferent buying roles and specification of the people who play theseroles for specific products and services are vital for marketers.

This is especially useful for designing the communication

strategy. Ex:- In pharmaceutical products, doctors prescribemedicines and the pharmaceutical companies influence doctorsprescription behavior by providing technical information about theproducts; patientsrelatives buy medicines and the patient uses theproduct. Men choose their shaving equipments and women their

cosmetics. Women, play a significant influencing and deciding rolefor kitchen appliances.

b. Behavioral Variables:-Many marketers believe behavioral variablesoccasions, benefits, user status, usage rate, buyer readinessstage, loyalty status, and attitude are the best starting pointsfor constructing market segments.


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I. Occasions:- Greeting card brands such as Archies and Hallmarkmake cards for different occasions. The Amul brand of chocolates ispromoted as agift for someone you love. A number of durables areheavily promoted during the festive occasions. Monaco biscuits

come with suggestions for toppings so that biscuits can be served assnacks at parties, or when guests come home.

II. Benefits:-Buyers are classified according to the benefits they seek.

Many product categories offer different products targeted at peoplewho seek different sets of benefits. Ex:- Shampoos, offer benefitssuch as basic cleaning of hair, conditioning effects, medicinalproperties, and suitability to hair types. Brands such as Clinic, Head& Shoulders, Sunsilk offer different variants addressed to diverse

benefit segments.Since benefits that consumers seek from the same product or

service category varies, this segmentation approach is a very usefultool in identifying market opportunities and for deciding the valueproposition that can be offered.


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III. User Status:-Every product has its nonusers, ex-users, potentialusers, first time users and regular users. Ex:- Blood bankscannot rely only on regular donors to supply blood; they must alsorecruit new first time donors and contact ex donors, each with a

different marketing strategy. The key to attracting potential users, oreven possibly nonusers, is understanding the reasons they are notusing. i.e. to find out that do they have deeply held attitudes, beliefs,or behaviors or just lack knowledge of the product or brand benefitsand usage?

Included in the potential user group are consumers who willbecome users in connection with some life stage or life event. Ex:-Mothers to be are potential users who will turn into heavy users

of the infant and child products.

Market share leaders tend to focus on attracting potentialusers because they have the most to gain.Smaller firms focus on

trying to attract current users away from the market leader.


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IV. Usage Rate:-Markets can be segmented into light, medium andheavy product users.Heavy users are often a small percentage ofthe market but account for a high percentage of total consumption.Ex:-In the mobile phone service market, heavy users account for a

significant proportion of the revenue earned by the service providersand hence mobile service providers target this segment by givingspecial packages or offers to retain their patronage.

V. Buyer Readiness Stage:- Some people are unaware of theproduct, some are aware, some are informed, some are interested,some desire the product and some intend to buy. To helpcharacterize how many people are at different stages and how wellthey have converted people from one stage to another, some

marketers employ a marketing funnel.The relative numbers of consumers at different stages make

a big difference in designing the marketing program.


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VI. Loyalty Status:- Marketers usually envision four groups based onbrand loyalty status:-

Hard

Core Loyals:-Consumers who buy only one brand all thetime.

Split Loyals:-Consumers who are loyal to two or three brands.

Shifting Loyals:- Consumers who shift loyalty from one brand toanother.

Switchers:-Consumers who show no loyalty to any brand.

A company can learn a great deal by analyzing the degreesof brand loyalty. Hard core loyals can help identify the

productsstrengths; Split loyals can show the firm which brands aremost competitive with its own; and by looking at customers who areshifting away from its brand, the company can learn about itsmarketing weaknesses and attempt to correct them.


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VII.Attitude:- Five attitudes about products are :- enthusiastic,positive, indifferent, negative, and hostile. Door to doorworkers in a political campaign use voter attitude to determine howmuch time to spend with that voter. They thank enthusiastic voters

and remind them to vote; they reinforce those who are positivelydisposed; they try to win the votes of indifferent voters; they spendno time trying to change the attitudes of negative and hostile voters.

Combining different behavioral bases can help to provide a

more comprehensive and cohesive view of a market and itssegments.

c. The Conversion Model:- The Conversion Model measures thestrength of consumers psychological commitment to brands

and their openness to change. To determine how easily aconsumer can be converted to another choice, the model assessescommitment based on factors such as consumer attitudes toward,and satisfaction with current brand choices in a category and theimportance of the decision to select a brand in the category.


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The model segments users of a brand into four groups based on strength ofcommitment, from low to high, as follows:-

I. Convertible(most likely to defect).

II. Shallow(uncommitted to the brand and could switch some are actively

considering alternatives).III. Average(also committed to the brand they are using, but not as strongly

they are unlikely to switch brands in the short term).

IV. Entrenched(strongly committed to the brand they are currently using they are highly unlikely to switch brands in the foreseeable future).

The model also classifies nonusers of a brand into four other groupsbased on their balance of disposition and openness to trying thebrand, from low to high, as follows:-

I. Strongly Unavailable (unlikely to switch to the brand their preferencelies strongly with their current brands).

II. Weakly Unavailable(not available to the brand because their preferencelies with their current brand, although not strongly).

III. Ambivalent(as attracted to the brand as they are to their current brands).

IV. Available(most likely to be acquired in the short run).


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Segmentation of Business Markets:- The Business Market canalso be segmented with some of the same variables we use inconsumer markets, such as geography, benefits sought, andusage rate, but at the same time business marketers also use

other variables like operating variables and personalcharacteristics of the buyers.

Some major questions are to be answered in determining the

segments and customers the business marketers want to serve.

Ex:- A rubber tire company for instance can sell tires tomanufacturers of automobiles, trucks, farm tractors, or aircraft.

Within a chosen target industry, a company can further segment bycompany size. The company might set up separate operations forselling to large and small customers.


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These questions can be as follows:-

Demographic:-

Industry:Which industries should we serve? Company Size:What size companies should we serve?

Location:What geographical areas should we serve?

Operating Variables:-

Technology:What customer technologies should we focus on?

User or Nonuser Status: Should we serve heavy users, medium

users, light users or nonusers? Customer Capabilities:Should we serve customers needing many

or few services?


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Purchasing Approaches:-

Purchasing function Organization:Should we serve companieswith highly centralized or decentralized purchasing organization?

Power Structure:Should we serve companies that are engineering

dominated, financially dominated, and so on? Nature of Existing Relationship:Should we serve companies with

which we have strong relationship or simply go after the mostdesirable companies?

General Purchasing Policies: Should we serve companies thatprefer leasing? Service contract? Systems purchases? Sealed bidding?

Purchasing Criteria: Should we serve companies that are seekingquality? Service? Price?

Situational Factors:-

Urgency: Should we serve companies that need quick and suddendelivery or service?

Specific Application:Should we focus on certain application of ourproduct rather than all applications?

Size or Order:Should we focus on large or small orders?


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Personal Characteristics:-

Buyer Seller Similarity:Should we serve companies whose people andvalues are similar to ours?

Attitude Toward Risk: Should we serve risk taking or risk avoiding

customers? Loyalty:- Should we serve companies that show high loyalty to their

suppliers?

Within a given target industry and customer size, a company cansegment further by purchase criteria. Ex:-Govt. laboratories need lowprices and service contracts for scientific equipment; university laboratoriesneed equipment that requires little service; and industrial laboratoriesneed equipment that is highly reliable and accurate.

Business marketers generally identify segments through asequential process. Ex:- Consider an aluminum company. The company

first undertook macro-segmentation. It looked at which end usemarket to serve: automobile, residential, or beverage containers. It has tochoose the best customer size and chose large customers. The secondstage consisted of micro-segmentation. The company distinguished

among customers buying on price, service, or quality.


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Effective Segmentation Criteria:-To be useful, market segmentsmust rate favorably on five key criteria:-

I. Measurable:-The size, purchasing power, and characteristics of thesegments can be measured.

II. Substantial:- The segments are large and profitable enough toserve. A segment should be the largest possible homogeneous group

worth going after with a tailored marketing program. It would not

pay, for ex:- for an automobile manufacturer to develop cars forpeople who are less than four feet tall.

III. Accessible:-The segments can be effectively reached and served.

IV. Differentiable:-The segments are conceptually distinguishable and

respond differently to different marketing mix elements andprograms. If married and unmarried women respond similarly to asale on perfume, they do not constitute separate segments.

V. Actionable:-Effective programs can be formulated for attracting andserving the segments.


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Additional Considerations:- Two other considerations should also beconsidered in evaluating and selecting segments. These are:-

1. Segment By Segment Invasion Plans:-A company would be wise toenter one segment at a time and the competitors must not know to what

segment(s) the firm will move into next.A companys invasion plans can be thwarted when it confronts

blocked markets. The invader must then figure out a way to break in, whichusually calls for a megamarketing approach Megamarketing is thestrategic coordination of economic, psychological, political, and

public relations skills, to gain the cooperation of a number of parties

in order to enter or operate in a given market. Ex:-Entry of Pepsico inIndia.

2. Ethical Choice Of Market Targets:- Some consumers may resist beinglabeled. Ex:-Elderly consumers who dontfeel their age, may not appreciateproducts that identify them as old.

Marketers can also generate public controversy. The public is concernedwhen marketers take unfair advantage of vulnerable groups (such aschildren) or disadvantaged groups (such as inner city poor people) orpromote potentially harmful products. Ex:-Toy companies, Child productsand chocolates through celebrities etc.


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Target Market Identification:- Target marketing includes threeactivities:-Market segmentation, Market targeting and MarketPositioning. We can target markets at four levels:- Segments,

Niches, Local Areas, and Individuals.

1. Segment Marketing:-A Market Segment consists of a group ofcustomers who share a similar set of needs and wants. Themarketerstask is to identify them and decide which one(s) totarget. Segment marketing offers key benefits over mass marketing.The company can offer better design, price, disclose and deliver the

product or service and also can fine-tune the marketing program andactivities to better reflect competitorsmarketing.

Business to business marketing suggests that the marketersshould offer flexible market offerings to all members of asegment. A flexible market offering consists of two parts: - anaked solution containing the product and service elements that allsegment members value, and discretionary options that somesegment members value. Each option might offer carry an additionalcharge. Ex:-Automobile companies in India offer different versionsof the same model with different features. Similarly in the case of

Airlines or Railways.


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We can characterize market segments in different ways.One way is to identify preference segments. Homogeneous

preferences exist when all consumers have roughly the samepreferences; the market shows no natural segments. At the other

extreme, consumers in diffused preferences vary greatly in theirpreferences. If several brands are in the market, they are likely toposition themselves throughout the space and show real differencesto match differences in consumer preference. Finally, clustered

preferences result when natural market segments emerge fromgroups of consumers with shared preferences.

2. Niche Marketing:- A niche is a more narrowly defined customergroup seeking a distinctive mix of benefits. Marketers usuallyidentify niches by dividing a segment into a subsegment. Ex:-Ezee,from Godrej, is a fabric-washing product for woolen clothes. Becauseof its mildness, customers use this detergent to wash delicate clothesthat could get damaged if harsh and strong detergents are usedinstead. Crack Cream, Neem toothpaste, etc.

Several television channels today are niche focused. Ex:-Aastha and QTV, that focus on religion and spirituality. STARCricket, directed exclusively at cricket lovers in South Asia.


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Niche marketers aim to understand their customers needsso well that the customers willingly pay a premium. Ex:-

Ayurvedic products and all-natural products usually command apremium.

As marketing efficiency increases, niches that wereseemingly too small may become more profitable. Ex:- whenevery apparel company in India was classifying womens clothinginto L, XL and XXL sizes, it was Revolution Clothing Pvt. Ltd. that

pioneered the concept of plussized fashion in India. The idea notonly forced the established players to follow suit, but also gavewomen pride and self confidence, while helping Revolution notchup millions in revenue.

The low cost of setting up shop on the internet has led to many

small business start ups aimed at niches. These firms have realizedthat the best recipe for internet success is to choose a hard to findproduct that customers dontneed to see and touch.


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3. Local Marketing:- Target marketing is leading to marketingprograms tailored to the needs and wants of local customergroups. In trading areas, neighborhoods, even individual stores.Many banks in India have specialized branches that exclusively cater

to the to the corporate customers and some branches to the NRIcustomers.

There are some InCitycourier companies in many cities thatspecialize in delivering mail and packets on the same day within a

specified geographical area, usually within the city. The movieSpiderman 3 was released in India in five different languages,including Bhojpuri and owing to such local marketing, the moviebroke a number of collection records for a foreign movie released inIndia.

Local marketing reflects a growing trend called grassrootsmarketing, as the marketing activities concentrate on getting asclose and personally relevant to the individual customers as possible.Ex:- Big giants like Nike also initially targeted customers throughgrassroots marketing such as by sponsoring local school teams.


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4. Individual Marketing:- The ultimate level of segmentation andtargeting leads to Segment in One,CustomizedMarketingorOne to One Marketing. Now a days, customers are takingmore individual initiative in determining what and how to buy.

Customerization combines operationally driven masscustomization with customized marketing in a way that empowersconsumers to design the product and service offering of their choice.

The firm no longer requires prior information about the customer,nor does the firm need to own manufacturing. The firm provides aplatform and tools and rentsout to customers the means to designtheir own products.A company is customerized when it is able torespond to individual customers by customizing its products,

services, and messages on a one-to-one basis.


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Customization is certainly not the cup of tea for every company. Itmay be very difficult to implement for complex products such asautomobiles. Exception is BMW. Customization can also raise thecost of the goods by more than the customer is willing to pay. Some

customers dont know what they want until they see the actualproducts. At the same time they also cannot cancel the order afterthe company has started to work on the product. More over thesetype of products may be hard to repair and have a little resale value.

In spite of this, customization has worked well for some of theproduct. Ex:- Paint companies Asian Paints, Nerolac, Jenson &Necholson, and Berger Paints, follow the mass-customizationstrategy in paint retailing which is pretty successful.

Stp Analysissegmentation Targeting Positioning.pptm

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