[MUSIC] Welcome back. Hi to you, wherever you are. Today we'll be talking about the next step in the marketing process, all right? Initially, we talked about doing an analysis of the situation, looking at the five seats. Now we go down to the value creation process. And we've talked about segmentation, targeting, and positioning. What will we talk about today? We'll talk about the different levels of market segmentation, we'll talk about how a company actually segments the market? We'll also talk about the requirements for effective segmentation. Then we'll talk about targeting, what targeting is, how do you target segments? Finally, we'll talk about positioning. What is positioning and why is positioning so crucial to the marketing process? Let's roll. Peter Drucker, he was an immigrant to the US who became really famous because of his business acumen and his research, he has been called the inventor of modern management. He believed in business as a human driven enterprise that could be both profitable and socially responsible. Drucker once said that the purpose of a business is to create a customer. The purpose of a business is to create a customer. He was right to some extent. I would say that one of the purposes of any business is to identify the customer whose need you can best satisfy. This was a concept that was further explicated on by Theodore Levit. Now, Levitt immigrated to US from Germany in 1925. He and his family settled in Ohio. He later earned a doctorate in economics and eventually joined the faculty of the Harvard Business School. In 1960, Levitt published a memorable article titled, Marketing Myopia. That was ground-breaking at the time. It was a call to companies to define themselves by their customers' needs and not by the goods they produced. No other academic had yet made such a compelling case for companies to focus their attention on customers and the benefits that they could provide them. Like Drucker, Levitt believed that businesses needed to create customers. In addition, though, he believed that companies needed to differentiate their offerings in order to keep these customers. Do you believe that businesses needed to focus on customer segments whose needs they could satisfy. And he recognizes how key identifying these segments, and differentiating your product offering was to a business' success. In Levitt's own words, if you're not thinking segments, you're not thinking. So where in the marketing process does this all fit? Let's see. What Levitt describes is an integral part of the value decision process, this idea of segmentation. And as he said, if you're not segmenting, you're not thinking. So, he was talking about the second step in the marketing process, but the major part, the first step, in the value decision process. Determining what value you provide to the consumer. What need do you satisfy? This value would be in the form of benefits that you provide. These benefits of course would satisfy the costumer's needs. As discussed earlier, this part of the value this is a process, is known as Segmentation, Targeting and Positioning, STP. STP, so, let's examine this in some more detail. STP, what is STP? I love my acronyms by the way. It really helps me and would help you remember some of the frameworks that we will be working with. STP, this involves identifying possible groups of consumers. Consumers whom you could serve. This is known as segmentation. Then determining which of these groups you can best serve as a company, that's targeting. And finally, how would you like these consumers you've chosen to serve, how would you like these consumers to think about your product or service relative to other competitors? This is your positioning. Note, why are companies making that decision about its customers, its customers it identifies and then keeps, and then also how it wants its products to be perceived by consumers, its competitors are doing the exact same thing. [LAUGH] They're going through the same process, each of them is attempting to achieve differentiation, the differentiation I've spoke about. Among a specific target segment. So, let's examine this, in 2006, and this is a very good example of segmentation, in 2006, a television network owned by Viacom, known as Spike TV, made the decision to reposition itself and target a male audience. Previously, this network had programming that was targeted to men, but also included some programming for women. And women would find the programming interesting as well. But in 2006, the channel made a more focused attempt to target a male audience, 18 to 42 years old. Like Spike TV did, companies routinely focus their effort on specific groups of consumers whose wants they believe they're in the best position to satisfy with their proposed products offerings. Spike TV creative director, a guy called Niels Schuurman, said at the time, hey, Spike is an entertainment brand dedicated to men. We are a destination that will inspire and define men to bold, action-packed original entertainment. We feel our brand positioning reflects that. And we are dedicating to helping our audience get more action. [LAUGH] He wanted his audience to get more action. Of course, this was a play on words. You can figure out the double meaning behind their tagline. I won't discuss it. So in addition to acquiring the rights to show all of the James Bond and Star Wars movies, which I love, Spike also committed to original programming such as wrestling. To coincide with the rebranding, Spike also developed the network's first original scripted drama. A series called Blade and this was based on the popular Marvel comic book and movie trilogy that you guys might have seen, starring, I believe, Wesley Snipes, if I am not mistaken. So this was an action series about a vampire who could walk into the sunlight and survive in the sunlight. A true man's series, if you'd ask me. The result programming developed, was targeted to men and it also included shows such as Manswers. You got that right, a show called Manswers. This provided answers to questions men might have. Such inane questions as if you hold in a burp, will you explode? Or questions that some of you might find more relevant, how do you get your girlfriend to watch sports on television? Spike also became well known for its Mixed Martial Arts coverage. This included live fights and also a reality series called The Ultimate Fighter. This series tracks two teams who were vying to have one person out of these two teams chosen to be an MMA fighter. So the winner of the 12 or so people whom they were tracking would receive an MMA contract, mixed martial arts contract. Spike was betting that its positioning as an action network, would play well with its new target consumer, men between 18 and 42. As Kevin Kay, he's the general manager of Spike TV, said, with action in its conventional meaning, to action on the tables in Las Vegas, to action in the Octagon. The Octagon is where people fought mixed martial arts. Guys can expect a constant stream of action programming on Spike TV. So Spike segmented the market, looked at the markets, thought it was viable, decided to target men, created a positioning, a perception in consumers' mind that they were all about action and all about men, satisfying men. So they created original programming, fighting, mixed martial arts, other movies and shows that were targeted specifically to men.