positioning or stp

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Hello... And welcome back!! The last session gave us an insight on segmenting the market, targeting the buyer and positioning the product basis parameters such as geography, age, life stage, lifestyle, personality traits, usage occasions and buyer readiness.

Brand names have an impact on the buyer and on his or her decision to buy a particular product, especially

those brands that implement effective marketing strategies. Good brands keep in mind all of its segment

of buyers and targets each segment accordingly. One of the most often used and effective tool or

framework for brands to be able to focus on the right customers is the 4Ps model. Marketing managers

work hard to create the right marketing mix of 4Ps which stand for Product, Price, Place & Promotion. Let

us now go through the 4Ps model & much more.


In session 2 we looked at the 3 main steps of the marketing plan, namely Segmentation, Targeting and Positioning or STP. Segmentation is the process of dividing a diverse market into a number of smaller, similar, sub‐markets. Targeting involves evaluating the various segments and deciding how many and which ones to target. And positioning is the process of occupying a meaningful and distinctive space in the mind of your target consumers relative to competition. The means by which marketing managers achieve their positioning strategy is the marketing mix or the 4Ps, namely:

1. Product 2. Price 3. Place and 4. Promotion

In this session, we will look in greater detail at each of these elements of the marketing mix and understand how they work individually and together in helping a company achieve its desired position in the minds of target consumers.

1. The first P is the Product. Take the case of Nike. The company makes markets many things for sports enthusiasts from shoes to clothes.


Nike therefore has an appropriate great product mix that is relevant to its target consumers. Its products are of high quality and provide functional utility. Besides its tangible products, Nike also offers its target consumer’s intangible services such as the Nike+ app that enables consumers to track their sporting activity and even receive coaching from the best trainers in the world.

In sum, the product can be either a Tangible good or an intangible service. The various aspects of the product that marketing managers must make decision about include its brand name, features, design, warranty, value and product variety.


2. The second P is Price. Nike products are higher priced as the company Targets customers who typically seek higher quality, aspirational products. Because Nike products have higher quality, its Target consumers are willing to pay a premium for its shoes and jerseys.

In general, price is the amount that a customer pays for the product or service offered by the company. Finding the right pricing is crucial as it determines the company's ability to generate profits. Marketers should set a price that complements the other elements of the marketing mix.

When setting the price, the marketer must keep three things in mind:

● First is the Customer’s perceived value: the benefit that the customer expects to receive from buying and consuming the product. The perceived value directly affects the price that the customer is willing to pay for the product. Companies that use this method are said to follow a value‐based pricing strategy.

● Second are the prices of competitors’ products. Before making their final purchase, customers are likely to compare the prices of the products that are similar in terms of the benefits they offer. Businesses that set price based on competitive prices are said to follow a competition‐based pricing strategy.

● Third is the cost of revenue generation. To earn a profit, the selling price of the product must be higher than the total cost of developing, manufacturing, distributing and selling the product. Companies that use cost to determine price are said to follow a cost‐based or cost‐plus pricing strategy.

3. The third P is Place. Nike products, for example, are sold in both Online and offline multi‐brand stores as well as in exclusive Nike stores across the globe. Nike sells its products to about 20,000 retail accounts in the U.S. and in almost 200 other countries in the world.


In international markets, Nike sells its products through independent distributors, licensees and subsidiaries. Nike also sells its products online, on its own website and through other online retailers like Jabong or Snapdeal.

Place refers to the point of sale of the product or service where you deliver value to the customers. A major aim of a good distribution or 'Place' strategy is to make it convenient for your end customers to buy your product. However, the role of the place is not just restricted to creating proximity for customers to buy the products, but it is also to ensure that key information about the product reaches customers in the right manner. Moreover, place does not have to be a physical retail store. It can for instance be a virtual Marketplace, like an online platform or website.

Some companies also use direct selling approaches: they send their salespeople to customers’ homes or offices to meet and sell products and services to them directly. Other companies sell over the phone, Using Telemarketing. Still others sell through catalogues and mail order and some also sell in joint ventures with other similar products or services.

4. Promotion is the fourth P in the marketing mix.

Promotion covers all methods of communication that a marketer may use to provide information about the product to different consumer segments. Nike uses several promotional techniques to attract its customers. It uses brand ambassadors like well‐known basketball Players or other athletes to endorse its products. It creates innovative ads that are dramatic and aspirational. It maintains a strong brand image


through sponsorships and sports events. Even its tagline “Just do it” is carefully chosen to inspire and send a powerful motivational message to consumers.

For any product or service, Sending a consistent message to target consumers is an integral part of achieving its marketing and business goals. And good communication is a two‐way process: apart from informing customers about products and services, it should also involve collection of feedback from customers themselves.

Promotion comprises various elements including:

● Advertising: which you see all around you on TV, newspapers and magazines ads, social media and mobile‐based messaging.

● Public relations: which covers press releases and Articles by journalists in various media channels.

● Sales promotion, which includes all the discount offers or the free samples that consumers may receive in stores or in their homes in the mail.

● Direct-marketing, namely e‐mails or text messages about different brands and their benefits.

● And personal selling, when the salespeople interact face to face with consumers and inform and persuade them about


So, are you looking for customers for your products? Instead, you should find products for your customers.

That almost seems like the mantra for marketing. Nike was a great example to learn about the 4Ps concept

of marketing mix as it offers both tangible products as well as intangible services for sports enthusiasts and

the niche mass.

They used the Four Ps—the Product, Price, Place and Promotion—to do so. First, starting with the product, they came up with a new model called the Firebird that was sporty and meant for younger customers. Then they chose an appropriate price to make this model Affordable. Third, they worked out with dealers to ensure that this car was displayed and available to their target customers at the right place.

Finally, as part of promotion, they came up with two ad campaigns. One was called, “We build excitement,” and showed their target customers driving their new cars on the freeway.


The second campaign was called, “From the country that invented rock and roll.” By associating their cars with rock and roll they were able to identify the appropriate image they wanted to attract young people, and also to differentiate their American cars from Japanese and European competitors that were targeting the same segment.

The four elements of the marketing mix, while distinct, also interact with each other in important ways. For instance, high quality products often go together with high prices, exclusive distribution and high-quality exclusive promotion.

When designing and adjusting their marketing mix, marketing managers need to take these interdependencies into account. They need to ensure that the four Ps are complementary and aligned and together send a clear, consistent message that achieves the desired position for the product in the minds of target consumers.


Take the case of Nike again. The company targets consumers who value high quality aspiration sporting products. To achieve a favourable position for its products in the minds of its target consumers relative to competitors such as Adidas and Reebok, Nike managers needs to think about the 4Ps in an integrated manner.

First, the products need to be Designed to offer all the features that consumers are seeking from them, and the quality of these products needs to be high. Second, the Price needs to reflect this high quality. Third, the products need to be distributed to consumers in higher quality, even exclusive outlets with good service. And finally, the products need to be Promoted by well‐known athletes in an inspiring way in quality media outlets. Choosing all four marketing mix elements in such a way that they together send a consistent, powerful message to consumers about Nike’s value proposition ensures that Nike builds a strong brand and is commercially successful over the long run.

In recent years, three more Ps have been added to the original 4. These are People, Process and Physical evidence. These additional Ps are particularly relevant to the marketing of services.

The fifth P of the marketing mix is People. Very often, customers come into contact with salespeople or service personnel acting on behalf of the company. These encounters are important to the perceptions that customers then develop about the firm’s quality, reliability, credibility and so on. Indeed, many customers will not separate the company’s products or services from the staff who provide them.


The success of any service business, in particular, depends on the people within the business who are responsible for delivering the service. It is therefore crucial to hire and train the right people to deliver superior service to clients.

Take the example of Starbucks. Starbucks believes in the concept of “We’re not employees ‐ we're partners”. It also believes that “Happy customers start with happy staff”. Therefore, Starbucks spends a lot of time and efforts in Training its staff. All its people go through coffee making, servicing, tasting, and communication training. Every Starbucks employee knows his or her role in the broader scheme of things and how to present the brand’s values to consumers.

Similarly, Chaayos also believes in the happiness of its People. Its employees are trained to know how to enhance the customer experience. Chaayos wants its customers to have a home‐like experience when they enter a café; it wants them to be able to discover their “meri wali chai” or “my type of tea”.


The sixth P is Process. Process is the way in which a product or service is delivered to the end customer. Many customers no longer simply buy a product or service; rather they invest in an entire experience that starts from the moment they consider making a purchase until they actually buy and consume the product. As a result, the process of delivering the product or service, and the behaviour of those who deliver it, are crucial to customer satisfaction.

Starbucks pays great attention to the entire buying process, from the moment consumers enter an outlet to when they order and then Receive a drink. This attention to the process applies both in the analog as well as the digital world. Traditionally, consumers would enter a physical Starbucks cafe, order a drink at the counter, pay for it and receive the hot drink straight from the counter himself.

In 2011 Starbucks launched an update for its mobile apps that allowed customers to find the nearest Starbucks location and create customized coffee drinks, pay via mobile phone and enter the outlet solely to pick up the drink.

This constant process optimization is an integral part of the Starbucks marketing mix and has helped them build a dominant position in the minds of consumers. Chaayos too has focussed on making the buying process as simple and convenient as possible. Like Starbucks, Chaayos has a mobile app that allows customers to locate the nearest outlets, place orders through their smartphones and have their teas delivered at their doorstep.


The seventh P is Physical Evidence. Since services are intangible in nature, companies attempt to introduce tangible elements to enhance the experience of customers. Such tangible elements can reduce uncertainty for customers by helping them ‘see’ what they are buying. A doctor’s office reception or a law firm’s website could be those tangible elements that help customers develop a view about the quality of the services they are about to buy.

Wherever you enter a Starbucks outlet, you will find a clean and friendly environment, with cozy chairs, Sofas, Tables, book shelves, a bright showcase of alluring pastries, menus with tempting pictures and so on. You will see Smiling and welcoming staff in smart uniforms with the Starbucks logo, and hear music that complements the atmosphere of the cafe making it the “place to be.”

Similarly, Chaayos has created a homely ambience and a relaxed setting for its customers. The interior design of the café conveys the ideas about tea: the glasses read “I love my tea”; the lamps are made of tea glasses and so on. All of this enhances the experience of being in the café.

So, all in all, in this session you learned about how marketers implement the positioning strategy through the concept of 4P. To recap the major points, you first understood how firms like Nike put together a mix of high - quality products with great functional utility to satisfy the needs of their customers.

Second, you learned how firms try to position their customers with the prices in accordance with the


services they offer. Through Nike’s example you saw how stressing on the quality made the brand charge the customer a premium price for its products. This further helped Nike to scale up their profit margins.

Next, you learned about the 3rd P or place, being an important part for any business to reach to their customers. As an example, you saw how Nike’s online and offline presence madeh it possible to reach customers globally and therefore, establish themselves as a truly global brand.

Next, you learned how promotion can help create awareness of the products to further boost sales. Again using Nike’s example, you saw how collaborating with relevant celebrities and popular events gave a different meaning to its products.

Finally, you learned how the interactions of some of these Ps can lead to an automatic choice of the remaining Ps. Like in the example of Nike, penetration into global markets, shoes of supreme quality promoted by sportspersons translated in a business sense to higher prices.

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positioning or stp

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