STP Strategy in Marketing: Applications and Effectiveness in Different Industries

This essay explores the Segmentation, Targeting, and Positioning (STP) strategy in marketing and its applications in the hospitality, automobile, and footwear industries. It discusses the effectiveness of the STP model and its limitations. The essay provides examples of how companies like Coca Cola, Apple, and Volkswagen use STP to target customers and position their products. It concludes with recommendations for implementing STP in different industries.

Running Head: Strategic Marketing
Strategic Marketing
Essay
System04104
12/24/2018

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Executive Summary
STP is termed as the most popular term in modern days of marketing strategies. STP strategy
helps different business organisations to prioritise their customers in different group. Further
divided them into different segments on the basis of their needs and priorities, then delivers,
and develop the personalised and relevant message related to the product. This essay
comprises the real industry examples where STP model used to attract the customer and
retain them as a loyal customer of the business organisation.
This essay comprises practical applications of STP model and its usefulness in modern
marketing. In the first part of this essay, the basic concept of STP strategy has been discussed
and further three practical use of STP in different industry have been discussed. In the end of
this essay, a short recommendations and conclusion which is based on the analysis of STP in
different industries.

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Table of Contents
Executive Summary...............................................................................................................................1
1. Introduction...................................................................................................................................3
2. STP as a Marketing strategy...........................................................................................................3
2.1 Segmentation.........................................................................................................................3
2.2 Targeting................................................................................................................................4
2.3 Positioning.............................................................................................................................4
3. STP strategy applications in three industries.................................................................................5
3.1 Hospitality industry.....................................................................................................................5
3.2 Automobile industry....................................................................................................................6
3.3 Footwear industry........................................................................................................................6
4. Recommendations and Conclusion................................................................................................7
References.............................................................................................................................................8

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1. Introduction
Today the Segmentation, Targeting, and Positioning (STP) is a famous applied marketing
models that that is used by numbers of companies. The STP model is one of the crucial tool
in new product development and also important in creating marketing communication plans.
The STP model strategy help marketers to prioritise their customers in different group of
customers and divided them into different segments based on their needs and priorities and
then delivers and develop the personalised and relevant message related to the product
(Proctor, 2014).
2. STP as a Marketing strategy (Literature review)
Adding STP in the marketing strategies and plan improves the performance of the company.
The three important components of STP strategies are (1) Segmentation (2) Targeting (3)
Positioning. According to Sarah White (2014), STP is just like a fuel additive that is designed
to accelerate the engine performance (marketing performance), fuel efficiency (proper
utilisation of resources), and go further (as measured by ROI) (White, 2014). The three
components of STP can be used be different company for particular product launch and
marketing program. Segmentation is based on the concept that not every customer has same
need or requirements. Not all customers are same. Thus, every marketers tries to divide the
market in different segments that consists with ‘homogenous’ customers. In other words,
marketing segmentation is the tool of choice that helps in dividing the identifying customers
in target groups, and offer them best possible offerings to market to these groups. According
to McDonald, segmentation is a group of customers having similar needs and requirements
(Slater, Hult, and Olson, 2010).
Segmentation
McDonalds and Dunbar also defined that segmentation is a process of splitting customers
within a market into different groups or segments, within customers have same requirements
and needs and they are satisfied with special offerings for them (Devrix.com, 2018).
Segmentation of customers can be based on four criteria such as demographic segmentation
(age, gender, or sex etc.), behavioural segmentation (status, attitude, buying pattern, loyalty,
and buyer’s readiness etc.), psychographic segmentation (satisfaction level, thinking, and
perception etc.), and geographic segmentation (city, country, or any other location etc.).

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Positioning
A positioning statements is normally defines the value proposition of products to the target
customers. In other words, positioning is the process of identifying the selected group of
customers, passes a relevant message to aware them about the particular product, and turns
them in prospect buyers. Therefore, they attract towards the product for purchasing in future.
The promotional tools also help the company to establish itself as a popular brand in the mind
of customers and positioning their products as loyal and best products in the market.
Targeting
Targeting can be defined as selected groups of customers that are targeted by marketers to
serve them with the specific offerings and products. Customers tend to move one segment to
another segment in large numbers at a quick succession. Targeting customers mainly based
on two dimensions- company capacity and segmentation attractiveness. Apple is best known
for their attractive ads (both electronic and in print media) and target their customers through
relevant message that is very clear and crisp (Latif, Özge, Örs, and Gürdal, 2012).
2.1 Use of the STP Strategy in Organisations
Coca Cola is the best example of practicing market segmentation. Coca Cola created various
divisions for various market places in worldwide. Company give lot of autonomy to each
division to perform the operation globally. Even now a days they segmented their products
according to the relationships such as they offer different product separately of a soft drink
(Coke) for mother, father, friends, or brother. They tried to target each customer who loves
beverage such as soft drinks like Coke (Walsh and Dowding, 2012). The Coca Cola
Company is also doing ads for different group of people for different products. Normally they
target youth and children between 10-25 years old people (Banutu-Gomez, 2012). I-Pads of
Apple is mainly launched for music lovers and now i-phones for people, who passionate
about the brand mobile phones.
2.2 Effectiveness of the STP model
Apple Inc. is best known for their STP strategy and specially for positioning of their products
in global market (Varadarajan, 2010). Even though, the products of Apple are too costly and
facing a strong competition with Samsung, Xio-Mi, Oppo, and some other Chinese mobile
companies, it is able to positioning their products in upper middle class and upper class
people. Apple positioning their products as a brand that is focuses on innovative technology

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including both hardware and software with latest security features in their laptops for those
professionals, and students who need computations work.
2.3 Weakness/limitations of STP Model
STP marketing only suits those organisations who know their customers and strategies the
STP model accordingly. Thus, STP marketing strategy is only helpful when if new
differences between identical groups of consumers actually exist, if those differences
determine the consumers' choices, and if those segments are large or rich enough to justify
targeting. If we consider targeting, this is only based on several key issues that have been
based on segment size, segment growth, price, bargaining power, entry barriers etc. and
without these factors; no organisation can target their customers. Selecting appropriate target
customers and market is the crucial factor of STP because the next strategy, which is
‘positioning’ is totally based on segmentation and targeting of customers.
3. STP strategy applications in three industries
Marketing segment usually involves dividing the targeting population in the form of country
wise and customer wise. This helps the industry to find out the suitable market for the
industry.
3.1 Hospitality industry
The hospitality industry is currently one of the most growing industry in the world and its
speeds of growing have left all other industries far behind. Due to globalization, this industry
from past few years has become very competitive industry due to the presence of a large
number of companies in the same market (Khan, 2013). Hence, this industry is really in need
of focused STP strategy in order to remain sustainable in this throat cutting competition
(Verma, 2014). In the case of hospitality sector, the first stage is the planning procedure
which includes organized strategy pattern, modification in terms of service and using
business excellence. It has been seen that there are some hotels which utilize niche approach
and there are some which adopt the strategy of differentiation. Hilton hotel applies the
identification of those variables, which can set up the base for this process, and some of the
variables are demographical, psycho-graphical, and geographical and also there is a
possibility of product-based variables (Rahman, 2016). In some specific cases, Holbeck Ghyll
hotel also make use of studying external situations, which consist of customer behaviour, the
connection between vision and mission along with a quantitative approach. Hilton hotel

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usually applies operational segmentation in which they try to find out an appropriate base for
segmentation by conducting predictable tests (Syarifuddin and Internasional, 2017). But
when it comes for targeting, this industry mainly focuses on the product specialization,
market specialization, and full market coverage. In this hospitality industry applies two-way
matrix patterns for targeting; one is segmented evaluation matrix in which it mainly
implements two-stage processes. First, it applies qualification of the segment and other it
applies attractiveness of segment and second matrix which is the matrix of directional policy
mainly focuses on market holding, size of competition and in research and development. In
case of positioning this industry applies three-way concepts, one is image creating, other is
differentiation and offering promise. In image creating, this industry makes use of analysis of
the inner environment and perceiving of customer survey (Sarker and Begum, 2013). In
differentiation, this industry tries to offer how their services and products are different from
others in the form of price and values. In value creating this industry applies low price high
tenancy as well as value for price strategy to position their image in the customer's mind.
3.2 Automobile industry
This industry maintains their STP strategy on the base of the need of target audience because
in this industry it is not worth to consider all customers on the same scale. In segmentation,
Volkswagen tries to divide their products on the base of their psychological, which is related
to emotions, and personality behaviour of the potential customer. Demographic factors which
are related to the income level age and profession, behaviour which is related to purchase
pattern, loyalty towards particular brand and geographic which is related to region, zone,
climate and nation (Novak and Stern, 2008). They further divide this portion on the base
requirement and price that a potential customer can pay like Bentley for Niche customers and
polo, beta for customers with an average economic capability which is more segregated in the
pattern of mini, compact big and large shapes. This industry also keeps their eye on the
related changing environment for automobiles which is very essential for their sustainable
growth (Munguía, Zavala, Marin, Moure-Eraso and Velazquez, 2010). In case of targeting,
JLR organization utilizes two strategies, one is single segment strategy and other is the multi-
segment strategy. In the single segment, it mainly focuses on either product concept or price
concept. While in multi-segment strategy, this industry makes use of marketing mix to target
their customers as per their preferences. In case of positioning, Mercedes works on global
level strategy creation in the form of luxury, pick up cars and complete market research on
the bad condition of the roads and their relative demands (Penghui, 2011). For Niche market

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this organization keeps their customer base on the premium luxury zones which offers the
customer a feel that they are special for the organization and hence they are being offered
their customized preferences. In case of Pickup, this organization try position their image in
the minds of potential customer by offering them a tough body with luxury interior in single
vehicle so that the long journey of the person who is driving this vehicle can feel the
comfortable during their travel.
3.3 Footwear industry
The footwear industry is also one of the growing industry in the world because it has
associated people from all segment all over the world. It is able to capture major holding in
the market due to its trendy looks and in some cases, it has emerged as a trademark for some
persons. John Lobb Company applies segmentation on the base of demographics in which
they mainly implement age and gender pattern. In psychographic and behavioural portion,
this industry focus on the purchase pattern and key motivate which triggers this purchase
along with the needs of the person (Blanchette, Brault and Powers, 2011). This industry also
implements geographical pattern for their market base in all over the world. For targeting Lee
cooper company, utilizes two types of strategies one is aggressive and other is appealing.
Aggressive marketing they use to target people who are related to sports and appealing
marketing is being utilized in case of work professionals footwear or formal footwear.
Cheaney Footwear Company tries to connect the emotional feeling of the person who is
following some famous sports athletics on the global level. In the case of positioning, Gucci
Company implements two-pattern strategy. In the first pattern, they try to connect the luxury
life of sports player with the product in case of sports segment and in case of formal, they try
to connect some of the successful corporate leaders with the product (Erdil and Çetin, 2008).
While in case of woodland footwear tries to connect with the average class people, they try to
fulfil their need for a footwear that can offer them comfortable and toughness in the same
product with in affordable price.
4. Recommendations and Conclusion
Every industry present in the global market is working on different products or services and
hence, their requirement for each industry is different. It is not wise to compete for these
industries on the same scale but one thing is common in all the industry that they all are in
need of STP strategy in order to keep themselves sustainable in this dynamic business
market. Present world is all about numbers, hence all these industries must implement data

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mining process in their STP strategy in order to keep the low level of rising in their every
business decision, and these data will also offer them the exact behaviour pattern of their
potential customer. A clear and future oriented STP strategy always helps the companies to
identify and target the potential customers. All the three industries (Automobile, hospitality,
and footwear industries) used the STP strategies in such a way that they can easily target their
potential customers and attract them towards their products after leaving impacts in their
mind through specific messages that is very relevant to their needs and requirements. The
type of strategies also does matters while companies are trying to target their customers such
as selection of aggressive strategy or strategy that is appealing to the customers. STP strategy
in hospitality industry is so essential to remain sustainable in throat cutting competition.
While we consider the automobile industry which also keeps their eye on the related
changing environment for automobiles, which is very essential for their sustainable growth
because there are large numbers of competitors that are operating their business worldwide
and targeting huge number of customers. In footwear industry, role of STP strategies are
crucial because they use both aggressive and appealing type of strategies to urge people
towards their products and create an image of the company in the mind of customers as a
brand image.

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References
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