Strategic Management: Segmentation, Targeting and Positioning

STRATEGIC MANAGEMENT 1
STRATEGIC MANAGEMENT
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STRATEGIC MANAGEMENT 2
Table of contents
Introduction................................................................................................2
Segmentation, targeting and positioning................................................................4
Segmentation...............................................................................................5
Targeting ......................................................................................................9
Positioning...................................................................................................9
Organizational uses of STP (segmentation, targeting and positioning) .............................10
Recommendation for applying STP..........................................................................13
Conclusion.................................................................................................14
References ................................................................................................16

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Introduction
Marketing field has developed over the last decades as a result of dynamic changes of
aspects, characteristics and arising needs of the environment (Kotler et al., 2010). From 1950 to
1970, manufacturing sectors were doing very well thus being more productive compared to other
sectors. During that period marketing was used as a tool to generate demand for manufactured
products (Kotler, 2015). This traditional marketing was also known as 4P’s which explain the
process, from developing a product, coming up with the price, how to offer promotion and
finally coming up with the place where the product will be distributed to. Therefore, this
traditional marketing was based according to the marketing mix as explained by McCarthy
(1998). Due to the oil crisis of 1973 (Alpanda and Peralta-Alva, 2010), it enhanced discipline of
marketing strategies this was a result of improvement of technology (through innovations) and
environmental changes as a result of globalization. As a result of maintaining marketing
discipline as the traditional model mass marketing of products was not enough (Hooley et al.,
2012). The companies came up with a conclusion that each and every customer has different
characteristics, needs and objectives as they purchase the product. Therefore, it was not
beneficial to companies to offer a similar product to customers according to the existing super
competitive market (Weinstein, 2004).
Marketing emerged from the ingenious management of product model to a
strategic model concerning the customers and the brand instead of the products (Nijssen,
2017). As a result of that shifting in focus, they decided to come up with concepts such as
segmentation, targeting and positioning to help them gain a competitive advantage over
their competitors since in modern way of marketing it acts as a distinct part (Hooley et al.,
2012). Segmentation is the action of dividing the diverse markets into segments of

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homogenous customers by use of specific features called bases (Kotler, Keller and
Armstrong, 2012). Targeting is the process of estimating and evaluating the divided
segments for one to select the most favourable ones. Lastly, positioning involves knowing
how the customers view the company and its competitors so that they can come up with an
effective and efficient positioning strategy (Kotler, Keller and Armstrong, 2012).
At first, the aim of this paper is to explain the review and evaluation of segmentation,
targeting and positioning (STP). Secondly, it will consist of illustrations of those concepts
depending on different organisations and industries according to its objective, capabilities,
finances and resources. lastly, it will consist of present generic recommendations applicable by
several companies that need to apply the concepts of STP.
Segmentation, Targeting and Positioning
In modern marketing strategies segmentation, targeting and positioning are popular
in the marketing process since it enables an organization to enjoy marketing advantage
over their rivals by dividing the wide market to smaller unique market segments (Lilien
and Grewal, 2012). Smith (1956) explained the origin of STP for managing both the
customers and the product claiming that it is of great importance when the companies
emulate this strategy. STP is currently the main used strategy in marketing but its
implementation, becomes a challenge to the organization (Dibb et al., 2012) since it tends
to be too extensive, inconsistency and research inconclusive. The cost of implementation
is very high (Weinstein, 2004), availability of data is also a problem (Simkin, 2008), the
need to hire skilled workers (Dibb, 2010) and finally experienced operational challenges
(Clarke and Freytag, 2008). Appropriate approaches and methodologies should be applied
to solve all these problems to make the process productive.