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The Audience Challenge + The STP Model (Mass Market (BUT (Capacity has to…
The Audience Challenge + The STP Model
Audience Challenge:
The challenge we have as marketers on whether to serve the mass market or the individual
Marketers want to serve both: segmentation helps them find the right balance
Mass Market
The ultimate target audience
Likely to grow sales much quicker if the product appeals
Growth in sales reduces marginal costs bc there is the possibility of buying more effectively in volume
Big opportunity to grow profit margin
Not every market behaves in the same way: w/ a mass market can cover risks if a certain market or economy is on the slide
BUT
Capacity has to explode: more product, warehouses etc
Huge cash pressure + financial risk
Individuals
Can't get more niche than one person
Can meet needs very specifically: customers will be more satisfied + may pay a premium
BUT
Creates complexity bc everyone has different needs
Can't achieve economies of scale by serving markets of 1
The STP Model
1. Segmentation
: the identification of individuals/organisations w/ similar characteristics that have significant implications for determining marketing strategy
Groups of customers who have common needs
Creates different groups to target, e.g groups you will never sell to, might sell to etc
2.Targeting
: creating an offering for a specific group [through marketing mix elements] that meets their needs and preferences
Selecting which of the segments are currently most attractive
Always need to be thinking about where to go next for the sustainability of the company
4 Different Approaches:
Differentiated, Undifferentiated, Concentrated + Customised
3.Positioning
: the relative differentiation between competing products which uses marketing techniques to define the key selling points in the customer's mind
Putting the mix of things together that suits the group you're targeting, e.g price/product mix
Companies revisit this every year or so
Rich-data companies like Amazon can segment us based on what they see as our purchase potential e.g what we might want to buy
This is how we get adverts suggesting possible purchases which helps them expand sales
Concerns the
attributes
: functionality + capability that a brand offers [e.g a car's engine design] AND
how customers perceive the brand relative to competing brands
Perceptual Mapping:
A visual representation of each market, used to determine how various brands are perceived according to the key attributes valued by customers
Perceptual Mapping Example