why was coke zero made?
- “real men” didn’t want diet drinks
- segment of men who wanted low calorie beverage
- successful new product launch
what is stp?
- core business process
- segmentation, targeting, positioning: decision process
- to identify and select grps of potential customers:
– organizations, buying centers, individuals - (S): whose needs within groups are similar and whose needs between groups are different
- (T): who can be reached profitably
- (P): with a focused marketing program
what are segmentation bases?
geographic:
- country, province, city, urban, rural, climate, continent, region (atlantic, central, western canada)
demographic:
- age, gender, income, education, occupation, ethnic background, religion, family life cycle, etc.
psychographic:
- lifestyles, values, personality, self concept
behavioural:
- benefits sought, usage rates, user status, loyalty
what is geographic segmentation?
- divide market into sep geogrpahic units
- countries, regions, provinces, cities, neighbourhoods, climate
- develop appropriate marketing programs
- ex. sobeys/loblaws stores carry diff products
what is the stp approach?
segmentation:
- phase 1: segment market using basis variables
- phase 2: describe market segments identified using variables that help the firm understand how to serve customers
targeting:
- phase 3: evaluate the attractiveness of each segment using variables that quantify demand levels/opportunities associated w/ each segment
- phase 4: select 1+ target segments to serve on basis of profit potential and fit w/ firm’s corporate strategy
- phase 5: find and reach targeted customers and prospects within targeted segment in a variety of ways
what is behavioural segmentation?
- benefit segmentation
– groups consumers based on the benefits they derive from products/services
– rbc divides customers into 5 primary benefit grps; youth, nexus, borrowers/builders, wealth accumulators, wealth preservers - loyalty segmentation
– strategy of investing in retention and loyalty initiaitives to retain firm’s most profitable customers
– air canada super elite card - usage rate: heavy users, regular users, light users, occasional users (ex. rogers internet, cell phone plans)
- user status: current users, ex-users, potential users
what is demographic segmentation
- most common method
- divide market into grps based on:
– gender (gillete uses different tv advertising time)
– age (kellog’s fruit loops, rice krispies for kids, special k and all bran for adults)
– ethnic grp
– family lifecycle stage
– household type
– income (car makers)
– other, ex. occupation, education, religion - census excellent source of segmentation data
- not always useful (ex. jogging suits/athletic shoes)
- nike assumed that activewear would be purchased only by young, active people
- fitness and health trend and com - appeals to all
- stereotyping can lead to poor stp strategies
what is psychographic segmentation?
how consumers describe themselves:
- self values: life goal (self respect, fulfillment, a sense of belonging)
- self concept: image people have of themselves (ex. loreal uses the tagline “because i’m worth it”)
- lifestyles: how we live lives to achieve goals (ex. lululemon was quickly built on a healthy, balanced, fun filled lifestyle)
how many segments of customers do you see? (scatter plot)
- see how many clusters of dots there are
what is managing segmentation for marketing analytics
- define segmentation problem
- identify data needs
- conduct market research
- build segmentation database
- define market segments
- describe market segments
- implement results
what is criteria for effective segmentation?
i. size and growth
1. size - market potential, current market penetration
2. growth - growth forecasts of adopting new tech
ii. structural characteristics
3. competition - barriers to entry, barriers to exit, position of competitors, ability to retaliate
4. segment saturation - gaps in the market
5. protectability - patentability of products, barriers to entry
6. environment risk - economic, political, and tech change
iii. product-market fit
7. fit - coherence with comp’s strengths/image
8. relationships with other segments - synergy, cost interactions, image transfers, cannibalization
9. profitability - entry costs, margin levels, return on investment
what is a target market?
group of people/orgs for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that grp, resulting in mutually satisfying exchanges
what are targeting strategies?
- undifferentiated targeting strategy, or mass marketing
- multisegment (differentiated) targeting strategy
- concentrated (niche) targeting strategy
- micromarketing
what is mass or undifferentiated segmentation strategy?
- everyone might be considered as a potential user
- not common strategy
- ex. neighbourhood bakery
advantages:
- potential savings on prod/marketing costs
disadvantages:
- unimaginative product offerings
- company more susceptible to competition
what is micromarketing?
- one to one marketing
- an extreme form of segmentation that tailors a product/service to suit an individual customer’s wants or needs
- ex. nike’s online make-your-own-shoe
advantages:
- delivers highly customized service
- high customer engagement/retention
- increasing revenue thru loyalty
disadvantages:
- high costs
what is multisegment (differentiated) segmentation strategy?
- a firm targets several market segments with a different offering for each
- ex. adidas reebok (athletic shoes), rockport (comfortable shoes), taylormade-adidas golf lines
advantages:
- greater financial success
- economies of scale in producing/marketing
disadvantages:
- high costs
- cannibalization
what is a concentrated (niche) segmentation strategy?
a marketing strategy of selecting a single primary target market and focusing all energies on providing a product to fit that market’s needs
advantages:
- concentrates resources
- can better meet needs of a narrowly defined segment
- allows some small firms to better compete with larger firms
- provides strong positioning
disadvantages:
- segments too small/changing
- large competitors may more effectively market to niche segment
