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© 2009 South-Western, a part of Cengage Learning

Chapter 6

Market Segmentation,

Positioning, and the

Value Proposition

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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. (NOT illegal or unethical!)

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.

4. Marketing Strategy: Evolves as a result of 1-3

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Beyond STP—Regular Assessment

1. Reassess segmentation strategy: Exam the current target segment to develop new and

better ways of meeting its needs. Change the target and reposition the brand to a new

segment.

2. Pursue product differentiation strategy: Emphasize or create differences in brands to

distinguish them from competitors. Advertising plays a critical role because the consumer

will have to be convinced that the difference is meaningful.

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Identifying Target Segments: Market Segmentation

Demographics

Geography

Psychographics

Lifestyles

Benefits

Commitment Levels

Usage Patterns

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The STP Marketing Process(Segmenting, Targeting, Positioning)

1. Break the broad market into smaller, more homogenous segments

2. Specifically target discrete market segments

3. Position the brand to appeal to the targeted segments

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Segmenting by Usage and Commitment

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

– Point of entry marketing strategy

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Demographic Segmentation

Age Gender Race Marital Status Income Education Occupation

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How would you describe the

demographic segment targeted by this

advertising campaign?

How would you describe the

demographic segment targeted by this

advertising campaign?

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Ad in Context Example

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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?

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Ad in Context Example

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Geographic Segmentation

Country Region State City Neighborhood Geo-demographic

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Psychographics and Lifestyle Segmentation

Activities

Interests

OpinionsLifestyle

Lifestyle segmentation provides insight into consumer’s motivations

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Benefit Segmentation

Safety?Prestige?

Fuel Economy?PPT 6-12

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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

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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.

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Ad in Context Example

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Prioritizing Target Segments

1. Examine your ability to deliver value to the segments and costs of new capabilities—distinct competencies of the firm

2. Research segment size, growth potential and usage frequency

3. Assay the competitive environment

4. Find a niche you can scratch

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Effective Positioning

Deliver on the brand promise

There is magic in consistency

Make the positioning different and simple for consumers to understand

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Fundamental Positioning Themes

Benefit Positioning

User Positioning

Competitive Positioning

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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?

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Ad in Context Example

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Repositioning

Used to revive an ailing brand or fix a lackluster new market entry

Advertising themes and positioning can be trendy and become outdated

The challenge: Changing perceptions of a brand forged over years of advertising.

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Capturing the Value Proposition

VVAALLUUEE

BenefitsBenefits

Relative PriceRelative Price

FunctionalEmotional

Self-expressive

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