Week #4 – STDP and the Western United States

This week I wrapped up a vehicle development trip with a few prototype vehicles that had me traveling from Los Angeles to Las Vegas, via Big Bear, CA and Death Valley National Park.  It occurred to me that Las Vegas is a marketing mecca of sorts.  It’s a city in the middle of the desert, and its sole purpose is as a resort destination.  I picked up a pamphlet, and the city officially markets itself as “The Entertainment Capital of the World”, and as “Sin City”.  It’s amazing what the marketing efforts have done to create a world-wide reputation for the city and the businesses that are located there.

But back to STDP – this process is new for me, so I appreciated the readings and video on applying segmentation and targeting a specific faction for a product or service.  I believe the concept of creating a persona is a very powerful tool, and at General Motors we do this for each vehicle (I just didn’t know what we were actually doing until I read the material this week!).  We routinely describe a target customer for a vehicle, along with their typical demographic attributes, interests, hobbies, and preferences.

Segmentation allows a company to break up the market as a whole, and concentrate on the target market it believes it can generate the most interest with (read, sales).  Marketing media can then be specifically tailored to that target market, which helps develop consumer awareness, perceived value for the product, and, if you’re lucky, facilitate consumer obsession with your product.  A company must carefully consider which segment(s) it wants to target by looking at the potential fit between each segment and the company’s overall goals, mission, financial priorities, and capabilities.

Once a segment(s) is chosen, a company must decide how to position itself as a way to differentiate the product or service from those of competitors.  A company’s position must be exemplified by its marketing mix, in order to effectively define that position in the minds of the target customers.

As I just finished traveling through the western United States, let us consider hamburger restaurants - specifically, McDonald’s, In-N-Out Burger, and Red Robin.  All three were within walking distance of my hotel in Los Angeles, but they are quite different from one another.  McDonald’s offers convenient and fast service, a historically well-known and rather large menu, and drive-thru service.  In-N-Out Burger offers a small menu (only 3 different hamburgers, fries, and drinks), an emphasis on quality and taste with never-frozen patties that are locally made and cooked to order, a touch of a 50’s-style dining experience, and drive-thru service as well.  Finally, Red Robin strives to serve “gourmet burgers”, has an extensive menu, and offers sit-down, waiter service only. 

Each of these restaurants attempts to serve a different target segment(s), and consequently, they have positioned themselves accordingly with their approaches to food, service, and quality/taste.  McDonald’s is aiming for the customer who wants fast service, and a quick dining experience.  In-N-Out Burger serves the customer who wants a no-frills, great-tasting, quality burger, with relatively fast service (hence the name).  Finally, Red Robin appeals to the customer who wants to sit down to enjoy a customized, specialty burger.  All three succeed because they have differentiated themselves by positioning their restaurant differently in the minds of customers, and each has created value for their restaurant's “brand”.

As we continue onward, I look forward to learning more about how to market these positioning differences to the customer, and how to create a marketing mix strategy that will create perceived value with the customer.