Strategic Marketing Planning: Literature Review
Added on 2021-06-17
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Running Head: STRATEGIC MARKETING 1Strategic Marketing Planning: LiteratureReview
STRATEGIC MARKETING 2Introduction In today’s competitive business environment, marketing is one of the most importantcomponents for the growth and success of a business. It includes different marketing conceptswhich help the company to attain its goals and objectives. An effective marketing strategy assiststhe businesses to achieve its predetermined marketing objectives (Dixon-Ogbechi, Joseph andElizebeth, 2011). Effective marketing strategies and campaigns cover marketing tactics that workin an organized way to institute a brand image, decline the sale resistance and generate desires ofcustomers for company’s products and services. When a company brings its products in themarketplace, it adopts strategic marketing planning which incorporates from establishing amission and vision statement and developing marketing strategies to attain them. In the process of strategic marketing planning, firms utilize an effective formula i.e. STP thatstands for Segmentation, Targeting and Positioning. There is a need of strategic marketingprocess for each and every organization. The below essay discusses the major elements ofstrategic marketing and provides the literature review on how a firm implements these aspects inreal practices. Furthermore, it includes examples of some companies which have implementedthe above aspects. In the last section, generic recommendations are given which can improve theimplementation of theoretic concepts around STP formula. Literature Review STP (Segmentation, Targeting and Positioning)Today, promotion and marketing is everywhere, formally and informally, companies andcustomers involve in different processes that are identified as marketing. Still, there are variouscompanies which are confronting various issues to communicate with potential customers inlarger market. These organizations want to focus on the customers within their competencies andwith better understanding of people (Gilligan and Wilson, 2012). To approach the potentialcustomers, an organization divides a large market into diverse groups of customers with similarneeds and expectations. In order to reach appropriate customer for product, the firms need to usethree major aspects of marketing i.e. Segmentation, Targeting and Positioning (STP). Thisbusiness formula plays an important role in getting right customers for its new products and
STRATEGIC MARKETING 3services. An organization implements all three components Segmentation, Targeting andpositioning to align its products with the best suitable customers. Goyat (2011) stated that every company desires to focus on potential customers as per theircompetencies and customer relationship. For this, they need to divide the entire market in smallgroups of customers with different needs and wants. They make efforts to know about thedemands, wants and needs of potential customers. The basic requirements of the human beingcan be described like water, food, entertainment, clothing and air (Goyat, 2011). Theserequirements work as their needs, while people are directed towards specific things that maysatisfy the expectations and needs of consumers. For instance, the population in USA needs food,but they need drinks, French fries and hamburgers. It shows that wants of customers are createdby its people and society. Thus, for categorizing the whole market in homogeneous segment,organizations use “S” from STP formula that stands for Segmentation. According to Weinstein (2013) the term market segmentation was introduced by Wendell. R.Smith in 1950s. Moreover, he described that market segmentation is the mechanism ofcategorizing a market into smaller groups with different needs, behaviors and characteristics whomay require marketing and product strategies (Weinstein, 2013). Under this process, thecompany aims to place energy and marketing force on segmenting to achieve competitive edgein market. Emphasis of marketing energy is necessary for the process of market segmentation.Strategies and tactics are the major conceptual and theoretical tools that help the company toattain this focus of marketing energy (Vukasovic, 2009). In this context, Diamantopoulos and Foedermayr (2008) stated that there are various theoreticalmethods of market segmentation which are used by the companies to divide the entire market.The major approaches are like geographic, demographic, behavioral and psychographicsegmentation. The characteristics under demographic segmentation include age, income, gender,family size, occupation, religion etc. Psychographic variables are like values, attitudes, opinions,interests and activities. Under behavioral approach, the segmentation is conducted consideringthe customers’ behavior towards company’s products and services like consumption rate, loyaltyand purchasing decision (Foedermayr and Diamantopoulos, 2008). Furthermore, geographicapproach includes the variables like population density, climate, different regions etc.
STRATEGIC MARKETING 4There are various international firms which are implementing market segmentation and gainingseveral benefits. For instance, Tesco is a UK based organization that is operating its business infood and retail industry. This company uses different approaches and characteristics to segmentthe market and its potential customers. By using geographic segmentation, this firm is running itsoperations in UK and other 13 countries across the world. Considering these characteristics, itoffers its products in both rural and urban areas of these nations. Additionally, it focuses on thelower and middle income level, working people and students under demographic segmentation.Tesco is providing different cost benefits to its loyal and regular customers so that it can entice alarge customer base towards its products. Apart from this company, LIdl and Aldi are the leadingsupermarkets which categorize their markets on the basis of different variables that Tesco. LIdl’ssegmentation is focused on the cost effectiveness to a significant extent that Tesco. This firmtargets the population that is ready to adjust the quality because of higher product prices. Moreover, the second component under STP approach is “T” that stands for Targeting whichincludes the company making decision about market selection, on which its products andcapabilities are to be focused. As per Mahrani, Hazar and Sinarwati (2013), targeting is thepractice to select a particular market segment that is determined by the group of customers, whoshare same needse and characteristics. The implementation of target market choice results what afirm decides to serve the segment and potential customers (Hajar, Mahrani, and Sinarwati, 2013).In this context, Kotler (2015) stated that there are three strategies for this process likeconcentrated, differentiated and undifferentiated. An organization uses undifferentiated strategywhen it offers a single product line and focuses on mass population. The examples of theseproducts are such as furniture, toothpaste, soft drinks, laptops etc. Under differentiated strategy,companies produce various products with different marketing mix strategies (Kotler, 2015). Forinstance, Wal-Mart is offering its low cost products to budget conscious customers and qualityproducts to wealthy population. Furthermore, under concentrated strategy of marketing a firmemphasizes on market with a particular product line looking at different features like quality,price and product design. Toyota is one of the best examples of this strategy that helps the firmto capture the market segment for hybrid automobiles (Sowter, 2018). In his article, Almgren (2014) mentioned that a company makes its target market decisions onbased on needs and expectations of customers, market maturity and diversity of buyers and
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