6
Market Segmentation,
Positioning, & the
Value Proposition
Objectives
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Explain STP Process
Segmentation Bases
Target Segment Criteria
Elements of Effective Positioning
Creating Brand Value/Equity
STP Marketing & 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 & 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
Beyond STP—Regular Assessment
1. Reassess segmentation strategy: A detailed
examination of the current target segment to develop
new & better ways of meeting its needs, or a need to
change the target & reposition the brand to a new
segment.
2. 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.
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
Identifying Target Segments:
Market Segmentation
Geography
Demographics
Psychographics
Lifestyles
Commitment
Levels
Benefits
Usage Patterns
Segmenting by Usage &
Commitment
• Advertising & promotion targeted to:
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Heavy users
Nonusers
Brand-loyal users
Switchers/Variety seekers
Emergent Consumers
Demographic Segmentation
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Age
Gender
Race
Marital Status
Income
Education
Occupation
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?
Geographic Segmentation
Psychographics & Lifestyle
Segmentation
Opinions
Lifestyle
Activities
Interests
Lifestyle segmentation
provides insight into
consumer’s motivations
Benefit Segmentation
Passenger
Safety vs
speed?
Prestige?
Fuel Economy?
Design?
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
SIC Codes
• Standard Industrial Classification (SIC)= 2,3,4-digit SIC.
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Enter a SIC CODE:Enter keyword(s):BEER
2082 Malt Beverages
2086 Bottled and Canned Soft Drinks and Carbonated Waters
3411 Metal Cans
3585 Air-Conditioning and Warm Air Heating Equipment and
Commercial and Industrial Refrigeration Equipment
5149 Groceries and Related Products, Not Elsewhere
Classified
5181 Beer and Ale
5813 Drinking Places (alcoholic Beverages)
5921 Liquor Stores
5963 Direct Selling Establishments
Prioritizing Target Segments
Examine your ability to deliver value to the
segments & costs of new capabilities—distinct
competencies of the firm
Research segment size, growth potential & usage
frequency
Assay the competitive environment
Find a niche you can scratch
Effective Positioning….
• …is based on substance of the brand’s values
• …is consistent over time
• …is both simple & distinctive
Fundamental Positioning Themes
• Benefit Positioning
• User Positioning
• Competitive Positioning
Do you think this ad for
Pepsi is emphasizing
benefit, user or
competitive positioning?
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.
Capturing the Value Proposition
Functional
Emotional
Self-expressive
Benefits
V
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Relative Price
Review/?s
1.Explain STP Process
2.Segmentation Bases
3.Target Segment Criteria
4.Elements of Effective Positioning
5.Creating Brand Value/Equity