Strategic Marketing Assignment: Segmentation, Targeting & Positioning
“...positioning and segmentation are distinct parts of the strategy process and provide
us with some extremely powerful tools; but ultimately they are linked by the central
issue of focusing on satisfying customer’s needs in ways that are superior to
competitors” (Hooley et al, 2017 p159)*.
*Hooley et al (2017) Marketing Strategy & Competitive Positioning. 6th ed. Harlow Pearson.
By reference to academic literature evaluate, and critique, the concepts of Segmentation, Targeting & Positioning (STP) including a consideration of implementation issues.
With supporting evidence, use appropriate examples from different industries (plural) to exemplify how different organisations (plural) have applied STP, to demonstrate your learning and application of this topic.
Indicate how any company could apply the concepts around STP, making generic
recommendations for best practice.
You are required to produce a report that should have:
- a sound theoretical and conceptual perspective, containing evidence of critical debate with reference to appropriate academic literature (at least 10 academic journal articles)
- sound examination of STP and its application in industry, with evidence, showing effective practical understanding
- generic management recommendations.
It is evident in the strategic marketing assignment that STP strategy is an important part of marketing and helps in deciding the segmented or potential customers that the organization can target over time. STP stands for segmenting, targeting and positioning. STP supports the marketers of the company to develop and deliver correct message to the segmented market and potential audience of the product so that they can attract their attention and create beneficial outcomes for the business (Khan 2013). A business is able to achieve their targeted customers if they are able to develop good marketing strategy and this is included in STP that is segmenting the market into different categories, targeting the customers with those attributes and positioning or placing itself in the market. Camilleri (2018) with regards to the case scenario of strategic marketing assignment has stated that segmentation-targeting-positioning forms the basis for the business marketing strategy and helps the brands to coordinate their product or service ideas with the potential customers and brand locations. Positioning is considered as a segmentation commitment that helps in breaking down the large market into a concentrated set of segment and makes organization derive efficient organizational outcomes.
The report on strategic marketing assignmentcritically analyzes the notion of segmentation, targeting and positioning in a business environment along with its implementation issues. Further, the project explored in the strategic marketing assignment uses examples of organizations from different industries that has applied STP and make generic recommendation for best practices in the organization.
Critical Evaluation on STP
Marketing segmentation, targeting and positioning is an approach that states that the mass market is made up of different groups with different preferences and needs. STP attempts to analyze these needs and segment the market accordingly so that they can conduct the direct marketing activities towards the potential segments. Balážiová (n.d.) has stated that STP helps the marketers to efficiently satisfy the customers in the market more efficiently compared to the competitors. This is because through setting up a segmenting strategy the brand is able to position in the market in a way that can be appealing to the targeted segments. As Jan and Victor (2019) implies that positioning is a segmentation commitment to concentrate one part of the market or certain segments. This information provided in the strategic marketing assignmentshows that segmenting and targeting the market is important because it assists in meeting the needs of the customers and satisfies them with correct product. It is seen in the strategic marketing assignmentthat different segments of customers have conflicting needs and their satisfaction is high exclusive. For example the needs of older customer are to be a part of quiet cruise or restaurant, while younger customers prefer loud music and rock based shows. Thus, building an environment that meet all features and requirement is difficult and costly for the organization at an unreasonable level. This shows that being committed to segmenting the market improves the performance of the organization based on cost management and increased sales.
On the other hand, the strategic marketing assignmentconsiders the words ofLynn (2011)that it is highly challenging for the businesses to set up a segmenting strategy that they want to target and ignore other segments. This is because it needs careful consideration when understanding the segment that can be a potential customer for the business and ignore the others that do not form the potential customers. Moreover, setting up a segmentation strategy is not an easy process to implement. There are one or more way to segment the market that makes application of STP difficult. One may implement one segmentation strategy for its target market or a differentiated strategy for different market segment. Thus, choosing the segments that makes the most sense to the business and contribute effectively to business profit becomes a challenge. This requires a high analytical skills and ideas of various statistics and variables. Thus, with lack of expertise and knowledge it becomes highly difficult for the businesses to implement the STP strategy. However, Ceil (2017) has pointed out that segmenting and targeting the market becomes an easy affair when the segmented groupings consist of customers that are similar to one another. Moreover, the customer group that is chosen for the STP strategy should be the one that is responsive and appealing to the potential market. STP strategy examined in the strategic marketing assignment is highly advantageous because it helps in easily measuring the size and accessibility of the market, helps in justifying the targeting efforts and allows to uniquely reaching the potential customers through different marketing channels. Further, segmentation and targeting the market restrict the customer size from diminishing over time and make it relatively stable.
Kurniawan et al. (2018) has stated that STP strategy is important consideration for the business because it helps in determining the pricing strategy, which directly impacts business performance. Consumers that determine the choice of the product also have specific consideration for prices. This shows that determining a specific customer segment makes it easy for the companies to understand the prices they prefer and set a pricing strategy according to those preferences. There are two important elements noted herein strategic marketing assignment that are considered when determining prices such as internal factors and external environmental factors. Thus, STP is the internal marketing objective that the company set based on external customer preferences. Containing STP in marketing mix allow the businesses to align these two factors and determining the pricing strategy.
Jan and Victor (2019) have pointed out the usefulness of STP strategy stages for the business performances and achievement of corporate goals. Segmenting allows for selection of most beneficial market segment which is based on behavior, reachability, feasibility, profitability and responsiveness. Moreover, targeting the potential customers based on the decided segments allow for the creation of financial attractiveness by increasing the chances of potential demand, reduced cost and gaining competitive advantage. This is because targeting can be done in different types such as single segment concentration, careful specialization, product specialism, market specialization and full market coverage. Each of these targeting types allow to attain maximum return from investment incurred. The last stage of STP that is positioning allows for defining the concept of firm’s product or service in a way that attract targeted customers. It helps the firm to capture a place that their product or service occupy in the mind of the customers and lead to optimal outcome (Camilleri 2018). It helps in creating a differentiated market environment among the targeted customers to increase customer value.
With regards to the case scenario of strategic marketing assignment, Lynn (2011) has stated that segmenting the marketing based on different types such as geographical, demographic, behavioral, psychological and others is a challenging and insufficient phenomena unless the principal criteria is met. There are various principal criteria that needs to be met by the marketers to make it successful one such as segmented market should exist in real instead of being an imagination one. Moreover, the market should be measurable and identifiable by the marketer in terms of number and purchasing power. This criterion is difficult to implement because in most of the cases the census data is not available. The following criteria discussed within this strategic marketing assignment are to attain differentiability where the segment is distinguished from the other segments on the basis of marketing mix. Such multiple criteria make it difficult to implement segmentation strategy followed by targeting and positioning. Similar goes for positioning where choosing the most appropriate approach for positioning the product in the market becomes a huge challenge such as positioning based on price, quality, application, user, product class and competitors (DeSarbo et al. 2009). This shows that brand positioning is much wider concept than just locating the brand on a perpetual map against the competitors and criteria. This shows that even though segmentation, targeting and positioning is beneficial for the businesses, yet there are difficulties and complexities in implementation.
Application of STP in Industry
The strategy of segmentation, targeting and positioning has been applied throughout different industries and organizations operating in that sector. This application shows the practical value of STP strategy to be implemented across organization and the benefits or challenges faced.
Application of STP in Retail Sector
Retail industry is one sector that implements the segmenting, targeting and positioning strategy in their environment to make the product known to the potential customers and position itself effectively. Retail sector is a highly competitive market and application of STP strategy in marketing is important for attaining competitive advantage and attention of potential audience. One such example explored in this section of strategic marketing assignment is McDonalds, which is a leading global foodservice retailer offering food retail service to the customers and operate in a highly competitive environment of fast food brands (Makgosa and Sangodoyin 2018). McDonalds has implemented a strong and effective segmentation, targeting and positioning model to turn itself in a global giant and attain competitive advantage.
McDonalds segment it market based on all two attributes such as geographical and demographic segmentation. Based on geographic segmentation McDonalds is seen o segment its market and products based on geography or location such as McAlooTikki and McVeggie in India, Bacon and Smokehouse burger in USA and so on. Moreover, the brand segments it market according to demographic such as income, socio economic status and family size. They target families with decent income group and consisting of large number of children. Ceil(2017) stated that while targeting McDonalds is seen to target customer behavior such as baby boomers family. This is because based on this the brand is able to attain high customer by motivating the choice of children in small families. Moreover, McDonalds has recently segmented its market based on behavior as well such as targeting customer based on consumption pattern and preference for low calories food. This is done by altering its menu and adding few low calorie and healthy items. The brand is seen to implement its segmenting and targeting strategy in marketing mix such as using behavioral pricing strategy so that the product looks affordable. Similarly product strategy based on geographical segmentation.Moreover, it is seen in the strategic marketing assignment that McDonalds implement unique positioning strategy to position itself in the market and attain competitive advantage. This is done by identifying the buying preference and food taste of people in different location and create specific product for specific markets. This can be seen from the positioning map of McDonalds (appendix 1) where it lies in high quality and low priced products. This has helped McDonalds to become one of the known and recognized fast food retail brands in the world by placing itself different from its competitors and adopting STP marketing strategy close to the competitors (Sishi 2017). However, maintaining uniqueness of its positioning strategy over time has always been difficult for Cas competition rises and preferences change.
Application of STP in Airlines Industry
It is evident in the strategic marketing assignment, segmentation; targeting and positioning strategy is an important aspect of airlines industry and help in attaining long term success in a competitive environment. Kurtulmu?o?lu et al. (2018) has stated that an effective STP strategy in an airlines sector requires a strong understanding of expectations and perceptions of the passengers and implementing service features and marketing mix accordingly.
British Airways is one of the known names in the airlines sector that is seen to implement a multi segment marketing strategy by offering different kinds of service packages to its different customer segments. The airways are seen to target it market based on four levels such as economy, premium economy, executive and first class. British airways is seen to segment its market based on demographic that is income and based on this it introduced pricing strategy such as premium and economic pricing. This has helped them to appeal a wider range of demographic. Moreover, the airways are also seen to implement multi-segmentation strategy based on psychographic variables that is customers traveling both for business and leisure needs. Segmentation is also done based on geographical area such as UK and Europe (Mokaya et al. 2017). Based on its segmentation strategy developed in the strategic marketing assignment it is seen that British Airways has implemented its four package system to target different market segment with personalized behavior. This has helped the airways to attract a much diverse set of customers over time. Based on positioning strategy of airways it is seen that the airways has always position itself as a high quality and premium brand. It has always avoided positioning itself as a cheapest flight brand like other airlines do to attract customers. The major focus of the British Airways is to position itself as a high quality and premium brand for long term growth and success. The positioning strategy of British Airways is also seen through the positioning map (appendix 2). The above example of two different industries mentioned in the strategic marketing assignment that is retail and airlines that clearly shows the importance and application of STP in two known companies in that sector and the way STP has been a part of their success.
Generic Management Recommendations
From the above analysis of STP provided in the strategic marketing assignment and its effectiveness and the challenges associated with the implementation of this marketing strategy in the organizations. Certain recommendations need to be followed to apply STP effectively in organizations by minimizing the challenges.
Firstly, it is recommended herein strategic marketing assignment that the organizations should consider the type of segmentation they want to target the customers. This makes further targeting and positioning strategy easy. For example, behavioral segmentation allowsunderstanding the customer behavior to be targeted and then position itself based on that behavior.
Secondly, in the present context of strategic marketing assignment, it is recommended that the companies should conduct extensive research of its competitors and customers before planning its segmentation, targeting and positioning strategy. This is because it is only through effective knowledge or customers and competitors a company can create a concentrated or differentiated STP strategy.
Lastly, it is recommended in the strategic marketing assignmentthat the companies should follow a planned procedure for forming its STP strategy over time. This is because STP strategy formation is a highly complex phenomenon and requires consideration of different criteria and attributes and planning allow for such careful consideration.
From the above analysis on strategic marketing assignment it can be concluded that STP is a complex process to be adopted by every business to differentiate groups that are homogenous in nature based on their different needs and expectations. The businesses adopt STP to create segments that can justify their product creation and improve their overall appeal to the target audience. It is an important aspect to address the customers with different needs and expectations and matching the product or service with the needs. However, it is complex to implement STP and attain leveraging market from the segmenting and targeting strategy that the business forms. The usefulness and effectiveness of STP can be seen from the two known companies of two different industries such as McDonalds and British Airways where their success can be seen from their careful formation of their segmentation, targeting and positioning strategy. As concluded in the strategic marketing assignment,it has helped them to attain competitive advantage over its competitors by positioning similar product in the market in a creative and differentiated way.
Balážiová, O.P.I., INSTAGRAM AS A SOURCE OF NEW REALITY: ANALYSIS OF DIGITAL INSTAMARKETING CONTENT USED BY MCDONALDS. Strategic marketing assignmentMEGATRENDS AND MEDIA, p.106.
Camilleri, M.A., 2018. Market segmentation, targeting and positioning.In Travel marketing, tourism economics and the airline product (pp. 69-83).Springer, Cham.
Ceil, C., 2017. Service Quality and Branding Strategies at McDonalds. Available at SSRN 2984100. DeSarbo, W.S., Blanchard, S.J. and Atalay, S., 2009. A new spatial classification methodology for simultaneous segmentation, targeting, and positioning (STP analysis) for marketing research. In Review of marketing research (Vol. 5, pp. 75-103). Emerald Group Publishing Limited.
Jan, A.D.A. and Victor, D.S., 2019. Measuring the Effectiveness of Segmentation, Targeting and Positioning Strategy of L’oreal Products in Kingdom of Saudi Arabia. IJO-International Journal of Business Management, 2(09), pp.68-79.
Khan, T., 2013.STP strategy for new product launch-a work in progress. International Journal of Business and Management Invention, 2(3), pp.56-65.
Kurniawan, R., Saudi, M.H.M. and Wijaya, Z.R., 2018. The Influence of Brand Equity and STP Towards Pricing Strategy and the Impact on Decision Making. Strategic marketing assignmentInternational Journal of Engineering & Technology, 7(4.34), pp.318-326.
Kurtulmu?o?lu, F.B., Can, G.F., Pakdil, F. and Tolon, M., 2018. Does gender matter? Considering gender of service in the airline industry. Journal of Air Transport Management, 70, pp.73-82.
Lynn, M., 2011. Segmenting and targeting your market: Strategies and limitations.
Makgosa, R. and Sangodoyin, O., 2018. Retail market segmentation: the use of consumer decision-making styles, overall satisfaction and demographics. The International Review of Retail, Distribution and Consumer Research, 28(1), pp.64-91.
Mokaya, S.O., Kanyagia, P. and M’Nchebere, G.M., 2017. The effect of market positioning on organizational performance in the airlines industry in Kenya; case of Kenya airways.
Sishi, W., 2017. Effective Segmentation and Targeting of Generation-Z in the South African Retail Clothing Industry Strategic marketing assignment(Doctoral dissertation, The IIE).