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Baines Ch06

Baines Ch06

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Published by: bridget2011 on Nov 04, 2011
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Market Segmentationand Positioning
Positioning is not what you do to aproduct; it is what you do to the mindof a prospect.
Ries and Trout (1972)
Learning outcomes
After reading this chapter, you will be able to:
Describe the principles of market segmentation and the STPprocess.
Explain the characteristics and differences between marketsegmentation and product differentiation.
Explain how market segmentation can be undertaken in bothconsumer and business-to-business markets.
Describe different targeting strategies.
Explain the concept of positioning.
Illustrate how the use of perceptual maps can assist thepositioning process.
Part 2
Principles of Marketing Management
Stagecoach operates bus services across the UK.How does it know who its customers are and wherethey want to access its services? We speak to ElaineRosscraig to find out more.
Elaine Rosscraig for Stagecoach 
Stagecoach UK Bus is one of the largest bus operatorsin the UK, operating both express and local bus servicesacross the country. In addition the company operates acomprehensive network of intercity operations underthe Megabus Brand. We connect communities in over100 towns and cities in the UK, operating a fleet of around 7,000 buses. We carry over two million customersevery day on our network which stretches from Devonto the north of Inverness. So how do we identify who ourcustomers are and where they may wish to access ourservices? Well, that’s a very interesting and importantquestion.At Stagecoach we have formulated our segmentationand positioning strategy using primary research. By usingthe results of the primary research we have identifiedour key market segments, which have been compiledinto three groups, all of which are linked to bus use.These groups may be categorized as: user, lapsed user,and non-user.
 An important market to target is thenon-user segment . . . [especially thosewith] a propensity to switch.
An important target market for Stagecoach is thenon-user segment. The customers contained withinthis segment demonstrate a propensity to switch themode of transport to bus. We estimate that about 30%of existing non-bus users in the UK have a propensityto switch the mode of transport they are regularlyusing, given the appropriate incentives. In addition it isessential that Stagecoach address the perceived barriersassociated with bus travel amongst this group.Through geodemographic profiling we have furtheridentified microdemographic segments within eachof the local areas which we serve, to whom specificbarriers to bus use are an issue. This information hasformed the basis of our segmentation strategy andhow we subsequently tailor our communication witheach of these prospect customer groups.A major issue to consider is how public transport iscurrently perceived by these target segments. Publictransport in general has a negative reputation in the UK.This is the result historically of limited ongoing customercommunication, inadequate staff training, and poorcustomer relations within the industry.Customer perception of Stagecoach is linked directlyto the journey experience and customer satisfaction.In order of priority the following aspects of servicecontribute to customer satisfaction with the Stagecoachservice: reliability/punctuality, staff attitude, comfortduring the journey, cleanliness of the vehicle (interiorand exterior), space for bags/pushchairs, and value formoney.
Given the primary research findings to date andthe market segments identified, what would yourecommend Stagecoach do to target and positiontheir brand to the differing market segments toencourage switching in mode of transport and useof Stagecoach’s services?
Customer perceptions seem to be entirely driven by the journey experience
Ever wondered why marketers only target certain markets or how these marketsare identified? Think about universities for a moment: how do they identify whichstudents to communicate with about degree schemes? What criteria do they use?Do they base it on where you live, your age, your gender, or is it just about yourentrance scores? Do they market to postgraduate and undergraduate audiencesdifferently, what about international and domestic student groups—is this dif-ference important for the effective marketing of higher education services toprospective students?In this chapter, we consider the way organizations determine the markets inwhich they need to concentrate their commercial efforts. This process is referredto as
market segmentation
and is an integral part of marketing strategy, discussedin Chapter 5. After defining the principles of market segmentation this chaptercommences with an exploration of the differences between market segmentationand
product differentiation
, as this helps clarify the underlying principles of seg-mentation. Consideration is also given to the techniques and issues concerningmarket segmentation within consumer and business-to-business markets.The method by which whole markets are subdivided into different segmentsis referred to as the
STP process
. STP refers to the three activities that should beundertaken, usually sequentially, if segmentation is to be successful. These aresegmentation, targeting, and positioning, and this chapter is structured aroundthese key elements.
The STP Process
The growing use of the STP process has occurred as a direct result of the prevalenceof mature markets, the greater diversity in customer needs, and the ability toreach specialized or niche segments. As such marketers are increasingly segment-ing markets and identifying attractive segments (i.e. who to focus on and why?),in order to identify new product opportunities, develop suitable positioning andcommunications strategies (i.e. what message to communicate), and effectivelyallocate resources to key marketing activities (i.e. how much should we spendand where?). Organizations will often commission segmentation research whenthey want to re-scope their marketing strategy, investigate a declining brand,launch a new product, or restructure their pricing policy. Organizations operat-ing in highly dynamic environments seek to conduct segmentation research atregular intervals, to keep in touch with changes in the marketplace.STP refers to the three activities segmentation, targeting, and positioning(Figure 6.1).Key benefits of the STP process include:Enhancing a company’s competitive position by providing direction and focus formarketing strategies such as targeted advertising, new product development,and brand differentiation. For example, Coca-Cola identified through market
Part 2
Principles of Marketing Management

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