Segmentation, Targeting, and Positioning: A Key to Competitive Advantage

The provided content discusses the importance of segmentation, targeting, and positioning (STP) in an organization to gain a competitive edge. It highlights the role of market research in identifying segments and understanding customer perceptions. The article also emphasizes the significance of creating a positioning proposition using marketing mix elements such as product, price, place, promotion, people, process, and physical evidence. Additionally, it identifies potential issues with positioning, including lack of customer research, inadequate resources, and confused or doubtful positions. Finally, the content touches on re-positioning challenges and de-positioning strategies to stay competitive in a rapidly changing market.

Running Head: SEGMENTATION, TARGETING AND POSITIONING
UNDERSTANDING SEGMENTATION, TARGETING AND POSITIONING
[Document subtitle]

SEGMENTATION, TARGETING AND POSITIONING 1
Abstract
Segmentation, targeting and positioning make a process of three stages. Firstly, the kinds of
customers are determined. Secondly, the best products are served to the customers. Lastly, the
market segmentation is implemented. The report will show the various sections which will help
in understanding the meaning of a market, levels of segmentations, criteria for segments,
advantages of segmentation, strategies and implications of the target market, identification of
segments, positioning of a brand, elements of marketing mix, problems in re-positioning and the
challenges faced by the organization in de-positioning.

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Contents
Introduction.................................................................................................................................................3
1. Aspects of Segmentation, Targeting and Positioning...........................................................................3
1.1 Meaning of a market..................................................................................................................4
1.2 Deciding the levels for segmentation and mapping a market.................................................4
1.3 Bases of segmentation in markets.............................................................................................5
1.4 Criteria for segments.................................................................................................................6
1.5 Advantages of segmentation......................................................................................................7
2. Applying Aspects of Segmentation, Targeting and Positioning............................................................8
2.1 Implications and strategies for the target market...................................................................8
2.2 Identification of segments..........................................................................................................9
2.3 System for assisting targeting...................................................................................................9
3. Issues Relating to Segmentation, Targeting and Positioning.............................................................10
3.1 Positioning in context of brand value of an organization......................................................10
3.2 Usage of marketing mix elements...........................................................................................11
3.3 Problems in positioning...........................................................................................................11
3.4 Challenges of re-positioning....................................................................................................12
3.5 De-positioning the competitors...............................................................................................12
Conclusion.................................................................................................................................................13
REFERENCES..............................................................................................................................................14
Introduction

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Market segmentation is one of the most significant strategic concepts given by the marketing
discipline to every type of organization. Market segmentation is a procedure in which the buyers
are differentiated according to the range’s variable which adjudicates the characteristics of the
market. The process of segmentation further includes targeting and positioning. Targeting is the
procedure of finding the attractive segments from the stage of segmentation. Positioning is the
stage of business oriented where the organizations impose the competitive edge and position
themselves in the minds of the consumer. STP is a marketing tool which helps the marketers to
attract, grow, differentiate, etc. for their products in the market. Segmentation, targeting and
positioning model is one of the most common model of marketing (Hollensen, S. 2015). The
STP model helps in developing communication plans of marketing which helps the marketers in
prioritizing the propositions in order to develop the meaningful messages to fascinate the
audience. This model focuses more on the audience rather than the products. Segmentation,
targeting, and positioning is also applicable to digital marketing. As it helps in creating more
meaningful messages for the audience. Segmentation, targeting, and positioning focuses on the
effectiveness and selects the segments for the organization to develop the marketing mix and
strategy for positioning the product.
1. Aspects of Segmentation, Targeting and Positioning
With the help of segmentation, the organizations can target the clients effectively and efficiently
to build a brand and creating a position in the market. The organizations have to understand the
strategy of segmentation before implementing it. Further, the sections will help in understanding
the segmentation strategy which will help in increasing profitability and business value.
1.1 Meaning of a market

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A market is defined as a set of two types of buyers i.e. actual and potential. The market consists
the buyers with different needs and behavior of buying the products. To understand the meaning
of the market, it is important for organizations to be more efficient and effective in the
management of their business, various activities of marketing and the attainment of objectives.
Outlining a market means understanding the various characteristics which help in making a
market unique and different from the other markets. After defining the market, the organizations
have to measure the size, and its quality then estimates the potential and then check the desired
changes like growth, buying behavior, etc. (Kotler et al, 2015)
1.2 Deciding the levels for segmentation and mapping a market
Market mapping includes the analysis of various groups of customer and helps in establishing an
understanding of the various trends of the market to create a view of unique needs. This helps in
understanding that how the market actually works. An important stage in the mapping of a
market is to find who takes the decision among the alternatives. Mapping helps in defining the
distribution and the chain of value-added among the users and suppliers of various goods and
services. Market mapping includes three components i.e. the final users, channel and the
suppliers.
There are some levels through which a market can be segmented and are as follows:

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The evaluation of segment fascination helps in deciding the level in order to segment. The
organizations focus on the buying behavior of customers, needs of the logistics, the potential of
the profit, etc. while entering the market.
1.3 Bases of segmentation in markets
There is some basis on which the market can be segmented and are as follows (Gbadamosi et al,
2013):
 Consumer markets:
 Geographic segmentation- this includes the division of a market according to the nation,
country, region, etc. and according to this a particular marketing mix is being created.

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 Demographic Segmentation- under this people are classified according to the variables of
an objective. They are classified according to income, gender, age, etc.
 Geodemographic segmentation- under this people are differentiated based on the data of
census and the lifestyle and the households are mainly targeted.
 Psychographic segmentation- this method is used on the basis of attitude and behavior of
people towards a particular service or product. People are classified according to their
class and personality. For example, the brands of clothing.
 Behavioral segmentation- this approach is difficult to use, but it gives the success to a
great level. The areas which are used for this segmentation are occasion, sought of
benefit, etc. For example, the beauty brands.
 Industrial markets:
 Segmentation is done in this market in less apparent as compared to other examples. This
process is done where judge magic groups of the customer with comparable needs are
identified.
1.4 Criteria for segments
The managers should consider the validity and the segments fascination in order to decide
segment to be focused on. A segment will be valid if it is meritorious of creating and designing a
unique and distinct marketing mix. The managers should ask some questions to themselves
before focusing on a targeted segment like how the metrics of the market will be defined. Will
the segment deliver the maximum profitability or not, is it possible to reach the segment easily, is
the targeted segment is safe or not, etc.

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The strategic plan should be effective, identifiable, profitable, accessible and actionable in order
to be an effective tool.
The steps in analyzing the segmentation are as follows:
1.5 Advantages of segmentation
There are some advantages of segmentation which are as follows:
 Helps in identifying the customers according to profitability.
 Helps in avoiding the market of unprofitability.
 Helps in building positive relationships with te customers by satisfying their needs.
 Helps in improving the customer services.
 Helps in using the resources optimized.
 Helps in achieving a competitive advantage.
 Helps in reducing the cost and maximizes the profit potential.

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2. Applying Aspects of Segmentation, Targeting and Positioning
This section will help in understanding which group of customers should be focused in order to
get the high return on investment and what are the strategies required in order to target the
market (Malcolm MacDonald 2011).
2.1 Implications and strategies for the target market
The managers follows one of the given three strategies for the target market which are as
follows:
 Undifferentiated marketing-
This approach is used when there is a single product, and the organization wants to attract
maximum customers and make them buy the product, and this is also known as mass marketing.
 Concentrated marketing-
This approach includes the creation and development of a product which is tailored for a
particular segment.
 Differentiated marketing-
This approach is used when a company wants to develop various versions of the product aiming
at a different segment of the market.
There are some criteria which can be used in order to finalize the targeted segment which is as
follows:
 Segment size and growth-
Under this, the sales, profitability and growth rate can be analyzed.
 Segment structural attractiveness-

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This helps in identifying the various activities of the competitors. As it is very important to
analyze because substitute products are also available in the market in order to fascinate the
customers. So it is very important to monitor the activities of competitors.
 Company objectives and resources-
The organizations should be clear about the objectives of the company and the resources which
are available because this will help in gaining the business value and the profitability which will
help in sustaining the competitive edge. The organization should be clear that how they are
different from the competitors.
2.2 Identification of segments
Market research helps in identifying the segments which are to be targeted. There are some
sources which help the organizations in order to identify the segments (Pavlou et al, 2015). For
example, reports of the market, journals of the industry, statistics which are given by the
government, websites of the company, various documents of the market research, etc.
The researches can be done by the organizations in order to understand the perceptions of the
customer. The researches can also be done to gather the information about the competitors like
their present position, their market size, amount of money they spent, etc.
2.3 System for assisting targeting
There is a table which will show that how the segments can be appraised with the various range
of the criteria. Firstly, identify the basis for evaluation then provide them a weight according to
the criteria. This can be added up to 1.0. Further, the basis is developed in order to quantify the
segment. The criteria are scored out of ten. The table will show the maximum score is 50. Then

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the score gets multiplied by the weight which helps in arriving the total score of a segment. The
priority for the target will be based on the totals which are given at the below in the table.
CRITERIA WEIGHT
Degree of competition 0.2
Competitive adv. 0.1
Growth rate 0.1
Customers 0.2
0.6
SEGMENT
A B C
SCORE WEIGHT SCORE WEIGHT SCORE WEIGHT
5 1 2 0.4 5 1
3 0.3 5 0.5 8 0.8
2 0.8 3 1.2 3 1.2
6 0.6 2 0.2 2 0.2
16 2.7 12 2.3 18 3.2
3. Issues Relating to Segmentation, Targeting, and Positioning
Positioning is the method through which product is determined by the consumers on the basis of
attributes. It is very important to understand the consumer’s perception. The process of
positioning is very important for an organization in order to achieve a competitive advantage.
3.1 Positioning in context of brand value of an organization
While developing a product, the marketers try to understand the attributes and their importance
in order to devise the advantage of positioning. It is very important to know the views of the
customers. The perceptual map is developed in order to abetment visualize opportunities of a
brand. It also helps in understanding the present positions of the competitors (Hassan et al,
2012). The price and the quality are the two important characteristics which are used in the
development of a perceptual map.

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3.2 Usage of marketing mixes elements
The elements of marketing mix which helps in creating a positioning proposition are as follows
(Huang et al, 2014):
 Product- the attributes of the product.
 Price- level of the price of the proposition.
 Place- the distribution channel which is used for the product.
 Promotion- the tools of communication and selling are used.
 People- people’s quality who are employed.
 Process- the process of a business which effects the product’s perception.
 Physical evidence- it includes the representation of a product’s quality.
3.3 Problems in positioning
The problems in positioning are as follows:
 Lack of customer research and the insights of a market.
 Lack of funds and the various resources.

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 The problem of under positioning as the customer is not clear about the product.
 The problem of over positioning as the buyers have a narrow image about the product.
 The problem of confused positioning as the claims might be created about the brand and
product.
 The problem of doubtful positioning as the position might not be clear in the minds of the
buyer.
3.4 Challenges of re-positioning
The market keeps on changing according to the various situation and the events, and the
organization has to re-position their brands accordingly. An organization decides to re-position
when the earlier position went wrong if there is tough competition, the inadequate response from
the customers, etc.
There are some challenges in re-positioning are as follows:
 The cost which will incur in re-positioning.
 Understanding the applicable new position.
 The position of the present competitors.
3.5 De-positioning the competitors
De-positioning is about bringing change in the beliefs and attributes of the product in the market.
It can be gained by understanding the proposition of the competitors and the responses of the
customers. The social media and communication are used for the de-positioning (Dalgic et al,
2015). The other marketing resources like virtual and physical are another ways to reach the

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competitive de-positioning. De-positioning means targeting the fascinating segments of the
market, tracing the competition, etc.
Conclusion
The report contains the role and importance of segmentation, targeting and positioning in an
organization. The report is divided into various sections which helps in understanding the
meaning of a market, levels of segmentations, criteria for segments, advantages of segmentation,
strategies and implications of the target market, identification of segments, positioning of a
brand, elements of marketing mix, problems in re-positioning and the challenges faced by the
organization in de-positioning.

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Gbadamosi, A., Bathgate, I., & Nwankwo, S. (Eds.). (2013). Principles of Marketing: A Value-
Based Approach. Palgrave Macmillan.
Hassan, S. S., & Craft, S. (2012). Examining world market segmentation and brand positioning
strategies. Journal of Consumer marketing, 29(5), 344-356.
Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.
Huang, R., & Sarigöllü, E. (2014). How brand awareness relates to a market outcome, brand
equity, and the marketing mix. In Fashion Branding and Consumer Behaviors (pp. 113-132).
Springer New York.
Kotler, P., Burton, S., Deans, K., Brown, L., & Armstrong, G. (2015).Marketing. Pearson Higher
Education AU.
Malcolm MacDonald (2011) Marketing Plans: How to Prepare Them, How to Use Them: John
Wiley & Sons; 7th edition 978-0470669976
Pavlou, P. A., & Stewart, D. W. (2015). Interactive Advertising: A New Conceptual Framework
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Millennium (pp. 218-222). Springer International Publishing.