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Chapter 6
Market
Segmentation,
Positioning,
and the Value
Proposition
Copyright © 2006 Thomson Business and Economics.
All rights reserved.
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.
• Marketing Strategy: Evolves as a result of 1-3
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–2
Beyond STP–Regular Assessment
• Reassess segmentation strategy:
– A detailed examination of the current target segment
to develop new and better ways of meeting its needs,
or a need to change the target and 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.
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–3
The STP Marketing Process
(Segmenting, Targeting, Positioning)
1. Break the market into smaller, more
homogenous segments
2. Specifically target discrete market
segments
3. Position the brand to appeal to the
targeted segments
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–4
Identifying Target Segments:
Market Segmentation
Geography
Demographics
Psychographics
Lifestyles
Commitment
Levels
Benefits
Usage Patterns
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–5
Segmenting by Usage and
Commitment
• Advertising and promotion targeted to:
– Heavy users
– Nonusers
– Brand-loyal users
– Switchers/Variety seekers
– Emergent Consumers
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–6
Demographic Segmentation
•
•
•
•
•
•
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Age
Gender
Race
Marital Status
Income
Education
Occupation
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–7
Which demographic segment is targeted
by this advertising campaign?
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–8
What is the target demographic for this
advertising campaign?
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–9
Geographic Segmentation
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–10
Psychographics and Lifestyle
Segmentation
Opinions
Lifestyle
Interests
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Activities
Lifestyle segmentation
provides insight into
consumers’ motivations
6–11
Benefit Segmentation
Prestige?
Passenger
Safety?
Fuel Economy?
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–12
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
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–13
Prioritizing Target Segments
• Examine your ability to deliver value to the
segments and costs of new capabilities—
distinct competencies of the firm
– Research segment size, growth potential and
usage frequency
– Assay the competitive environment
– Find a niche you can scratch
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–14
Effective Positioning….
• …is based on the substance of the
brand’s values.
• …is consistent over time.
• …is both simple AND distinctive.
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–15
Fundamental Positioning Themes
• Benefit Positioning
• User Positioning
• Competitive Positioning
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–16
Do you think this ad for Panasonic is emphasizing
benefit, user or competitive positioning?
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–17
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.
Copyright © 2006 Thomson Business and Economics. All rights reserved.
6–18
Capturing the Value Proposition
Functional
Emotional
Self-expressive
Benefits
V
A
L
U
E
Copyright © 2006 Thomson Business and Economics. All rights reserved.
Relative Price
6–19