Marketing: Segmentation - Targeting - Positioning

Marketing: Segmentation - Targeting -
Positioning
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Contents
1. Introduction................................................................................................................................................................ 3
2. Marketing Planning Process and STP Model............................................................................................................ 4
3. Segmentation............................................................................................................................................................ 5
3.1 Ways to segment the market............................................................................................................................... 5
3.1.1 Demographic Segmentation........................................................................................................................ 5
3.1.2 Geographic Segmentation.......................................................................................................................... 5
3.1.3 Behavioristic Segmentation......................................................................................................................... 6
3.1.4 Psychographic Segmentation..................................................................................................................... 6
3.2 Requirements of Market Segments..................................................................................................................... 6
3.3 Segmentation and customer’s attitudes.............................................................................................................. 7
4. Targeting................................................................................................................................................................... 7
4.1 Ways of Targeting............................................................................................................................................... 8
5. Positioning................................................................................................................................................................. 8
5.1 Product Positioning process................................................................................................................................ 8
5.2 Advertising slogans and Positioning.................................................................................................................... 9
6. Advantages and limitations of STP Model................................................................................................................. 9
6.1 Advantages of STP model................................................................................................................................. 10
6.1 Limitation of STP model.................................................................................................................................... 10
7. Real world examples............................................................................................................................................... 11
7.1 STP in Pizza business (Pizza hut vs. Dominos)................................................................................................ 11
7.2 STP in Automobile business (German cars vs. Korean cars)............................................................................11
8. Conclusion............................................................................................................................................................... 11
References................................................................................................................................................................... 12
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1. Introduction
The main objective of this study is to introduce an important and widely used model
of marketing strategy called STP which is all about segmentation, targeting and
positioning.
When businesses make decisions to how to develop their marketing strategy and
decide how to try to create value for customers, there are essentially two issues they
have to consider, firstly, Businesses have to choose which customers they want to
target. In other words, which customers they want to sell to. The challenge is to
segment the market, define the different parts of the market that are most attractive
and then to target the segments they want to focus on in order to have the best
chance of success. Segmentation is about is understanding the different types of
consumers look for different things in products and services.
The next question is how best to compete in that market to gain a competitive
advantage by highlighting the unique selling proposition of their products and
services. In order to serve the customers target market segment. This is called the
market
positioning. In other words, how companies can identify the right positioning
for their product in terms of the features that the targeted customers want.
Marketing is about identifying consumers' wants and needs. So why should we care
about segmentation, targeting, and positioning? It’s all about increase profitability,
increase market share, target new customers, reach a new market, and retain existing
customers.
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2. Marketing Planning Process and STP Model
The marketing planning process has four phases: analysis phase, strategy phase,
tactical phase and measurement phase.
In the analysis phase, companies focus on knowing their customers in terms of how
and why they buy the product. They will analyze the competition, and how they
compare to the company in terms of strengths and weaknesses. They analyze the
overall market, to understand its potential and where the most attractive segments of
the market are, to earn revenue.
In the strategy phase, companies use what they learned to make decisions around
segmenting the market,
targeting specific parts of those segments. And ultimately,
how they will
position their products and services to win over customers (Resnick, et al.,
2016).
In the tactical phase, companies create marketing programs to execute their
strategy. They will make decisions around their products and services, and how they
have to perform in delivering benefits to their customers. They will set prices. They will
create sales support material. And they will develop a marketing communications
campaign.
And finally, the measurement phase. As the name implies, this is the part of the
process where companies will find out if they are achieving what they expected to
achieve.
STP model starts with the analysis phase but when companies want to create a
marketing strategy, they have to perform three steps. First is segmentation, where
you break your customers into homogeneous groups. Next is targeting, where they
decide which of these segments to go after. And finally is positioning, where they
determine how they want their customers to think about the company products versus
the competition (DeSarbo, et al., 2017).
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