CHAPTER II LITERATURE REVIEW

Transcription

1 CHAPTER II LITERATURE REVIEW In general, the theoretical framework of this thesis uses the basic theory of marketing on segmentation, targeting, and positioning, more commonly known as STP. STP is a basic concept that ideally should be mastered by every marketer, but is often neglected in practice Segmentation, Targeting and Positioning Segmentation, Targeting and Positioning (STP) is the most critical basis for every strategy in the marketing of product and strategy. The right STP can help a company formulate an effective tactical marketing (marketing mix) strategy. On the other hand, an improper STP can cause a company to lose direction in formulating its tactical strategy. Meanwhile, for an existing product/brand like MIX which has already been in the market for five years, a more thorough analysis of STP can be instrumental in evaluating the direction of its growth. It answers questions such as: is the direction of the brand or product on track, or does it indicate the need for revitalization or redefining of direction (through re-segmentation, re-targeting, or re-positioning). 11

2 Segmentation Segmentation is an identification of subset of buyers within a market who share similar sets of needs and wants. Segmentation aims to match groups of purchasers (called segment ) with the same set of needs and wants. Segmentation is important for a Company, because enables the Company to be more focus in allocating its resources. By dividing the market into segments, the Company will obtain a clear outlook in determining which segment will be served, viewing the map of competition, and determining the Company s current market position (Kotler, Kartajaya, Huan dan Liu, 2003). According to Kotler and Keller (2006) market segments can be defined in many different ways, such as through: - Geographic: nations, states, regions, cities, or neighborhoods - Demographic: age, family size, gender, income, occupation, education, religion, nationality, social class - Psychographic: psychological/personal traits, lifestyle, or values. - Behavioral segmentation: knowledge of, attitude toward, use of, or response to a product. In segmenting the market, a Company needs to consider the effectiveness of the segmentation. Requirements of an effective segmentation (Kotler, 2003) are:

3 13 - Measurable. The market segment should help the Company in measuring the potential market, consumer s buying power, and the Company s resources allocation. - Substantial. The market segment should be big and profitable to be served. - Accessible. The market segment should be reachable and serviceable. - Differentiable. The market segment has to be clearly distinguishable. - Actionable. The market segment should be accessible and serviceable with the existing Company s resources Targeting After identifying the market segment opportunities, the Company should evaluate those segments in order to decide which segment will be the target. Targeting is the process of selecting the market segments that are most attractive for the Company. In evaluating different market segments, Company needs to consider two factors: a. The segment s overall attractiveness. The Company needs to analyze the attractiveness characteristic of the potential segment in general, such as: size of the segment, potential growth, competitive rivalry within segment, how much profit the

4 14 segment will deliver, etc. The Company needs to be sure that the target segment is big and profitable enough. b. Company s objectives and resources. Company needs to consider of investing in the targeted market is reasonable enough by taking into account the Company s long term objectives and resources. Because some attractive segments may not fit together with the Company s long-run objectives or the Company may lack one or more necessary competencies to offer superior value Positioning Positioning is the act of designing the Company s offering and image to occupy a distinctive place in the mind of the target market (Kotler and Keller, 2006). A good brand positioning helps guide marketing strategy by clarifying the brand s essence, what goals it helps the consumer achieve, and how it does so in a unique way. The result of positioning is the successful creation of a customer-focused value proposition, a cogent reason why the target market should buy the product. According to Kotler, Kartajaya, Huan and Liu (2003), there are four criteria in determining a Company s positioning:

5 15 a) Customers analysis A positioning should be able to describe the value for consumers because a positioning describes a superior value so it becomes an important factor that could affect the consumer s buying decisions. b) Company s capability analysis A positioning needs to reflect the Company s strength and competitive advantage. c) Competitors analysis A positioning has to be unique therefore it would be easier to differentiate among competitors. d) A change in business environmental analysis A positioning has to be relevant with the changes in the business environment. Basically, positioning is about embedding a perception, identity and personality into the consumer s mind. If the positioning changes frequently, it will create confusion on the consumer s mind and the consumer s focus of Company s offer will be fading. Therefore to embed a strong positioning, the Company needs to be consistent. According to Marketing Insight: Value Disciplines Positioning, when deciding on a positioning requires determining a frame of reference by identifying the target market and the competition, and identifying the ideal Points-of-Parity and Points-of-Difference brand association. Points-of-Parity (POP) are associations that are not necessarily unique to the brand, but may in fact be shared with other brands. To achieve POP on

6 16 particular attribute or benefit, a sufficient number of consumers must believe that the brand is good enough on that dimension. The brand does not literally have to be seen as equal to competitors, but consumers must feel that the brand does well enough on that particular attribute or benefit. Points-of-Difference (POD) are attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand. With POD, the brand must demonstrate clear superiority. There are two important considerations in choosing POD, they are: consumers must find the POD desirable and that firm has the capability to deliver on the POD. There are three key consumer desirability criteria for PODs: 1. Relevance. Target consumers must find the POD personally relevant and important. 2. Distinctiveness. Target consumers must find the POD distinctive and superior. 3. Believability. Target consumers must find the POD believable and credible. A brand must offer a compelling reason for choosing it over the other options. And there are three key deliverability criteria: 1. Feasibility. The firm must be able to actually create the POD. The product design and marketing offering must support the desired association.

7 17 2. Communicability. Consumers must be given a compelling reason and understandable rationale as to why the brand can deliver the desired benefit. 3. Sustainability. The POD must be sustainable over time Consumer Insights According to David Taylor (Taylor, D,. 2000), consumer insight is an understanding and in-depth evaluation concerning the consumer that allows for new opportunities to be discovered and exploited by a company. These in-depth understanding can be regarding: 1. Needs and wants of the consumers 2. The purchasing motivation of the consumers 3. The consumer s purchasing decision process 4. The consumer behavior Consumer insights can then be used to build a behavioral segmentation which according to Kotler is a grouping of stakeholders based on their knowledge of, attitude toward, use, and response toward a certain product. Consumer insights can also more deeply explain hidden needs, hidden motivation, and the aspirations of the consumer or potential consumer, which can then be used as important considerations in the formulation of the company s marketing strategy.

8 18 In order to obtain elicit consumer insight, exploratory research using data collection methods of in-depth interviews or focus group discussions and ethnography can be used. These methods allow the company to obtain information beyond those visible on the surface.