What do you understand form Segmentation, Targeting and Positioning (STP) strategies?

What do you understand form Segmentation, Targeting and Positioning (STP) strategies? What are its merits and demerits for the marketing?

Market segmentation - Market segmentation may be defined, as the division of a market into groups of segments having similar wants. But wants must be interpreted very broadly, in terms far broader than product characteristics only. Segments may differ also in their needs for information, reassurance, technical support, promotion, and a host of other 'non-product' benefits that are part of their purchase. They may also differ in their capacity to pay for these differences.
Economists view a product as differentiated if some buyers to similarly pieced rival brands prefer it on the ground of differences in the following:
• Physical aspects of product
• Services offered
• Convenience in using or buying the product
• Image projected
If you analyse the above view put forward by economists you will reach the conclusion that all segmentation except segmentation involving price alone entails differentiation. But it does not mean that the two are same. For segmentation involves more than that what is achieved through product differentiation. In market segmentation the aim is not merely to divide the market into sub-classes based on product differentiation but to distinguish want categories that correspond to the distinct demands of various groups in the market.
So we can say that in product differentiation the marketer produces two or more products that are different in terms of features, styles, quality, size and so on. The objective here is to offer variety to buyers rather than to appeal to different market segments.
Merits and Demerits for the Marketers First, we will highlight the benefits from segmentation and these are:
• Segmentation helps a company to exploit its market better by selecting market niches (suitable segments) that are compatible with its resources
• Segmentation helps in focusing strategies more sharply on target groups
• Segmentation is more likely to result in instilling customer 'loyalty' since the firm's offering is better matched to those in the segment.
Doubts about effectiveness of segmentation
The discussion that follows concentrates on the doubts, which have been expressed on the effectiveness of segmentation
Are segments mutually exclusive groups?
Remember, segments are not mutually exclusive customer groups. What we are exactly grouping is 'anticipated order' from buyers, not buyers themselves. To assume that he or she is in one segment and one segment only, is to assume that the circumstances are so constant that use-functions and generated functions remain fixed. What we are really

trying to emphasise is that the same consumer may appear under different descriptions for different segments.
/ To illustrate: Forhans and Colgate toothpastes differ and seem aimed at different
segments, but the same people may buy both of these. The fact that the same people buy
both of these products does not in itself imply the absence of meaningful segments.
Products in different segments of the market may be bought by the same buyer for
different family members or for different occasions, or just for variety etc.
Is segmentation merely on the basis of different product forms?
It is not right to say that segmentation is merely done on the basis of different product forms. Although this is what usually happens. But segmentation can be on other bases as well like distribution, price, promoted image, etc. When insignificant differences exist between brands
What happens in situation where markets are not heavily segmented or where the differences between products are marginal
Benefit segmentation
In benefit segmentation you segment the market on the basis of what people say or the
benefits they seek from the product.
Yankelovich applied benefits segmentation to the purchase of watches. He found that
buyers bought for lowest price (23%), durability and general product quality (46%),
and as symbols of some important occasion (31 %).
One of the most successful benefit segmentation was reported by Russell Haley who
coined the phrase benefit segmentation. According to him the oral hygiene (toothpaste)
market can be divided into four distinct benefit segments depending on which of the
following in sought:
• Flavour and product appearance
• Brightness of teeth
• Decay prevention
• Low price.
Once we have categorized those in the market on the basis of the benefits they seek, they can be identified by what they are (demographic characteristics) and what they do (behaviorist and psychographics characteristics). For example, in the Russell Haley study the brightness of teeth seekers were young people in their teens with a personality disposed towards high sociability and an active life style. Similarly, decay prevention seekers had large families, were heavy toothpaste users, and were conservative. Each segment also favoured certain brands. Thus, benefit segmentation requires:
• Determining the major benefits that people look for in the product class, like intrinsic preference, for example, taste, level of performance, snob appeal, price, reputation etc.
• The kinds of people who look for each benefit, and
• The major brands that deliver each benefit.

What unique characteristics make services different form tangibles.

What unique characteristics make services different form tangibles. Explain. What are the implications of these characteristics in designing a suitable business strategy?

Service has a number of unique characteristics that make them so different from products. Some of the most commonly accepted characteristic are:
• Intangibility
• Inseparability
• Heterogeneity
• Perishable
• Ownership

In tangibility
When you buy a cake of soap, you can see , feel , touch ,smell and is to check its effectiveness in cleaning. But when you pay fees for a term in college, you are paying for the benefit of deriving knowledge and education which is delivered to you by teachers. In contrast to the soap where you can immediately check its benefits. Teaching is an intangible service. When you travel by aeroplane, the benefit, which you are deriving, is a service but it has some tangible aspects such as the particular plane in which you fly. In this case the service has both a tangible and intangible aspect as compared to teaching which has no tangible aspects at all. Figure 1 presents the tangible - intangible dominant aspect on a goods- service continuum. This continuum highlights the fact that most services are in reality a combination of product and service having both tangible and in tangible aspects. There are only a few truly pure tangible products or pure intangible services.


"Breaking Free from Product Marketing" Journal of Marketing

The distinguishing feature of a service is that its intangible aspect is dominant.
J. Bateson has described the intangible characteristic of services, which make them
distinct from products. These intangible features are:
• A service cannot be touched
• Precise standardization is not possible
• There is no ownership transfer
• A service cannot be patented
• Production and consumption are inseparable
• There are no inventories of the service
• Middlemen roles are different
The consumer is part of the production so the delivery system must go mto the marketer or the customer come to the delivery system.
Inseparability
In most cases services cannot be separated from the pefson or firm providing it. Service is provided by a person who possesses a particular skill, by using equipment to handle a tangible product (dry cleaning) or by allowing access to or use of physical infrastructure (hotel, train). A plumber has to be physically present to provide the service, the product, which can be produced in the factory today, stocked for the next two, three or more months and sold when an order is procured.
Heterogeneity
The human element is very much involved in providing and rendering services and this makes standaridisation Avery difficult task to achieve. The doctor who gave you his complete attention in your last visit may behave a little differently the next time. The new bank clerk who cashes your cheques may not be a efficient as the previous one and you have to spend more time for the same activity. This is despite the fact that rules and procedures, have been laid down to reduce the role of the human element and ensure maximum efficiency. Airlines, restaurants, banks, hotels have a large number of standardized procedures. You have to reserve a room in a hotel and this is a straightforward procedure for which all steps are clearly defined. Human contact is minimum in the computerized reservation systems, but when you go to the hotel there will be person at the reception to hand over the key of your room. The way this person interacts with you will be an important factor in your overall assessment of the service provided by the hotel. The rooms^Jthe food, the facilities may be all perfect, but it is the people interacting with you who make all the difference between a favorable and unfavorable perception of the hotel.
Perishablility
Services cannot be stored and are perishable. A car mechanic who has no cars to repair today, or spare berths on the train, unsold seats in a cinema hall represent service capacity, which is lost forever. Apart from the fact that a service not fully utilized represents a total loss, the other dimension of this pershibilty aspects is that most services may face fluctuating demand. There is a peak demand time for buses in morning and evening, certain train routes are always more heavily booked than others. This fluctuating demand pattern aggravates the pershibilty characteristic, of services.
Ownership
When you buy a product you become its owner- be it a pencil, book, shirt, refrigerator or a car. In the case of service, you may pay for its use but you never own it. By buying a ticket you can see the evening film show inn the local.cinema theater; by paying wages you can hire the services of a chauffer who will drive your car; by paying the required charges you can have a marketing research firm survey into the reasons for your products' poor sales performance, etc. In case of service, the payment is not for purchase, but only for the use or assess to or for hire of items or facilities.

A service is purchased or the benefits it provides. If we closely examine the reasons why
products are purchased, we find that they are brought not because of their physical/tangible features but because they provide certain intangible benefits and satisfaction.
Detergent powder provides the primary benefit of cleanliness, air -conditioner provides the benefit of a cool, comfortable environment, a mixer —cum-grinder provides convenience. The only difference between products and services is that in the latter the intangible component is greater than in the former. Thus, services can be treated as a special kind of product.
From a marketing view- point the same concepts and techniques are applicable for both products and services. The successful marketing of both requires market research, product design. Product planning and development, pricing, promotion and distribution. However, for marketing of services and the manner in which they impinge on the marketing strategy.

Challenges in designing marketing mix strategics for a small sized car.

Discuss the challenges in designing marketing mix strategics for a small sized car priced at Rs. 1 Lac for the Indian market.

Marketing strategy means the game plan that the marketer will use in attaining the objectives of the business. In other words, it represents the broad marketing thrusts that will be used
Ford icon cars
Ford icon produces items like Zen, Maruti800, and Alto. Ford was allotted to the pinjore unit in view of its location in the natural market zone for cars.
To supplement ford icon production, a second car assembly line for 45 HP and59HP cars has been in operation.
Overall Marketing Objectives and strategy A marketing objective
1) Directional Mission: Diversification of its product range to provide cushion for cyclical variation in the machi9ne tool market.
2) Goals: Specific goals in the next years for cars are:
a) Sales in term of number and value of cars
b) Sustained growth in volume per annum. B Product Strategy
From assembling cars from CKD (completely knocked down) imported components, to fully indigenising its manufacture over a span of five to seven years through planned and systematic reduction of imported content. Later to acquire design capabilities for developing cars of different HP.
The production of cars began at Japan and later design capabilities were acquired and 35 HP and 45 HP cars were developed. The 59 HP cars is an advanced stage of indigenization —
To develop research and development center for prototype assembly, engine testing, sub¬systems testing, test farms and tracks to stimulate the toughest field conditions.
C competitive Strategy
• To have the widest range of cars and variants on its regular production schedules as a differential advantage vis-a Vis its competitors.
• Anticipations about sales that ford will take away from different well-established
manufacturers in the field including increase in market share.
Since the competitors are expected to respond through appropriate competitive strategies the company plans to develop and maintain its .technological and widest range superiority. D Segmentation Strategy
1) Customer Targets
a) Marketing efforts will be directed at haryana, Punjab, U.p., Bihar, Rajas than, M.P and other states in the westenvand southern parts of the country.
b) Variants like Zen, alto, wagon-R, will be development and marketed to suit different types of needs of farmers.
E Support strategies
The key elements in ford icon's marketing support programme are as follows:
1) Participation in exhibitions is one important method that will be used to promote the sale of ford icon cars.
2) Price strategies
3) Distribution and service.

Meaning and scope of marketing function

Discuss the meaning and scope of marketing function. How does it influence/affect the exchange process. Illustrate with suitable examples.

Answer:
"Marketing is the performance of business activities that directs the flow of goods and services from producer to consumer or user."

This definition is undoubtedly an improvement on describing marketing as selling as it shows that marketing does encompass other activities besides selling.

Schematically, this definition can be reproduced as shown below:

PRODUCER Product ----------------------- CONSUMER Need
/
. /
. /
. /
. /
. Marketing activities

This is very common idea among many people, for example, inadvertising agencies, as they normally are required to advertise to sella product, which already exists. Similarly, salesman are also given'products' and asked to sell them. Therefore, to them marketing often,starts with a product.

Meaning of Marketing Function
As an entrepreneur, when we went to start a new business, we don't have a product. In fact we will have to decide what product we should manufacture and sell.
We have first to decide what product we should select. This, we can do only if we can do only if we identify the needs which require satisfaction among human beings. Once, we have identified the needs of a group of human beings (or called market segment), we can determine the product which can help to satisfy that needs. This is a part of the marketing concept or we can say the part of modern philosophy of marketing.
Philip Kotler, an author in area of marketing defined marketing "a human activity directed at satisfying needs and wants through exchange processes."
Human Needs
The human need is a state in which a person feels deprived of
something. There are many human needs described in many
ways.
Briefly, these needs can be divided into two types.
1. Physiological needs
2. Psychological and Sociological needs.
The physiological needs consist of the need for food, clothing, shelter and even sex. Similarly, there are social needs for belonging, affection and love from others. Of course, there are.higher order psychological needs of self-actualisation.
Important to understand that there are different needs for human being on the earth. At any time some needs in a human being are dormant and unsatisfied, whereas others are active and are being satisfied. A marketing man may thus devise a product or service aimed at satisfying a certain dormant need and thus provide satisfaction to the user. This is why a man is often described as a bundle of dormant wants. The need exists buy these have to the converted into 'wants' by a marketing strategy.
In a socially competitive society, people may have unlimited wants but the ability to buy may be restricted on account of their economic background. They will, therefore, select from among those products, which give satisfaction or are needed more. Thus, when they are backed by ability to buy, the wants are converted into demand for your product. Therefore, when people decide to satisfy their needs and wants, in terms of marketing activities, exchange takes place.

On the current activities of human being, we can develop a process-oriented definition of marketing as "the process of ascertaining consumer needs, converting them into products or services, and then moving the product t or service to the final consumer or user to satisfy certain needs and wants of specific consumer segment or segments with emphasis on profitability, ensuing the optimum use of the resources available to the organisation".
In practice, often, separate departments with their own way of perform the business functions, such' as production, finance and marketing, are performed by separate departments with their own way of thinking, production is often considered the more important function as compare to marketing. This practice is, gradually losing ground and it is being recognized that unless you can sell a product, you should not manufacture it.
Production-orientation evolved because often products were designed and developed by inventors who hoped that they would sell. However, if these products fail to satisfy some needs they would never sell in the market place. Therefore, consumer oriented thinking becomes necessary for any business to survive and grow.
Normally, a salesman would like to think of his activity as a 'selling' process. Wh"en he does this, he is more cohcerned with handling over this product and receiving money in exchange. However, if he adopts the modern philosophy of treating it as a 'buying' process, his job becomes easier. This would definitely help him to start feeling and thinking of a customer. For instance, as he puts himself in the shoes of the customer and asks the question-why should I buy this article? His job will become smoother, as he will then know about the benefits and the disadvantages of the product or the service he is offering. This is an illustration of customer-oriented focus.

Scope and Appropriateness of Marketing Function
The first and foremost role is that it makes more potential aggregate demand and thus enlarges the size of the market. If we ask how does it help in the economic growth of a country. Then the answer is that through stimulation of demand, people are motivated to work harder and earn additional money to buy the various ideas, goods and services being marketed.
An additional advantage which accrues is that it accelerated the process of monetising the economy which in turn facilitates the

transfer of investible resources. (In India, about one-fourth of GNP and more than one-third of agricultural output are still non-monetised).
Another important role which marketing plays is that it helps in the discovery of entrepreneurial talent. Peter Drucker (a celebrated writer in the relevant field) makes this point very clearly when he observes that marketing is a multiplier of managers and entrepreneurs.
In the history of Indian industrial development during this century, we will find that several Indian industrialists began their business careers as distributors and wholesalers, and from the experience so gained ventured into the more risky fields of manufacturing and production activities.

Still another important contribution which marketing makes is that it helps in sustaining and improving the existing levels of employment.
The question occurs, how does it happen? Answer is that when a country advances economically it takes more and more people to distribute goods and proportionately a lesser number to make them. That is from the employment point of view production becomes relatively less significant than marketing and the related services of transportation, finance, communication, insurance, etc. which spring around it.