MKTM028: STP Analysis - Segmentation, Targeting, and Positioning

This essay provides a comprehensive analysis of the Segmentation, Targeting, and Positioning (STP) model in strategic marketing. It begins by outlining the core principles of STP, emphasizing its role in helping businesses meet customer needs and achieve a competitive advantage. The essay reviews relevant academic literature to support the theoretical foundations of STP and discusses the effectiveness and limitations of this approach. Furthermore, the essay provides practical applications of the STP model through case studies of Starbucks, Jaguar, and Samsung, illustrating how these companies utilize segmentation, targeting, and positioning to achieve their marketing objectives. Finally, the essay offers recommendations for businesses seeking to implement STP effectively, covering various aspects of segmentation, targeting, and positioning to enhance overall marketing performance.

12/28/2018
Running Head: MARKETING 0

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Executive Summary
This report outlines various STP approaches and theories that help a firm to achieve a
competitive advantage in an industry. With the help of effective segmentation, an
organization can meet consumer expectations and thus deliver benefits in terms of value of
product. It splits buyers into groups having identical needs and so to best utilize firms finite
resources with the help of buyer based marketing
In this report, various literature reviews are been done with states the effectiveness of the STP
model in today business life cycle. In addition, with the help of three companies of different
industry, STP applications are also being presented so as to view the practical aspect of this
approach. These three companies are Starbucks, Jaguar and Samsung. In last, several
recommendations are also being suggested in order to help any business organization in the
process of segmentation, targeting and positioning.

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Contents
1 Introduction...........................................................................................................................3
2 Segmentation, Targeting and Positioning (STP) approaches...........................................3
2.1 Use of the STP strategy in organisations......................................................................4
2.2 Effectiveness of the STP model.....................................................................................5
2.3 Limitations of the STP concept.....................................................................................6
3 Application of STP................................................................................................................7
3.1 Starbucks STP................................................................................................................7
3.2 Jaguar STP.....................................................................................................................9
3.3 Samsung STP..................................................................................................................9
4 Recommendations and Conclusion....................................................................................11
5 References............................................................................................................................12

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1 Introduction
In this globalised world, all the market of different countries is interconnected and this makes
the planning of marketing strategy difficult for various business organisations. For any
business enterprise, it is important to meets the customer needs effectively with the help of
strategically segmenting the market. This not only builds the foundation of decision-making
process but also helps the organization to recognise their potential customers so that to
deliver the respective benefits.
The first section of the report states different approaches and significance of Segmentation,
Targeting and Positioning. This second phase of this assignment gives better insight into this
model with the help of application on various companies in a respective industry. In last,
several necessary recommendations are also presented to align with the above concept and
applications.
2 Segmentation, Targeting and Positioning (STP) approaches
In strategic marketing, the principle of segmentation, targeting and positioning helps in
delivering various key benefits that help the organization to meet the customer needs,
marketing of communication plans and enhance the ability of the markets to select crucial
prepositions (Ferrell et al, 2010).
Source: (Ferrell et al, 2010)

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2.1 Use of the STP strategy in organisations
The focus of segmentation strategy is on meeting the changing needs of different customers
ranging through incomes, preferences, demographics, and may more. The organization also
faces various issues in this process of segmentation, which has a direct impact on the
marketing strategy of management in relation with product, price, place and promotion
(Haigh and Hoffman, 2012). Further, this also influences customer satisfaction. In this area,
there had been done several kinds of research and so various literature is present to help the
managers in the attainment of respective objectives and goals.
For making the customer loyal towards the brand, an organization needs to position its brand
in the market by framing and moulding the consumer preference. They need to focus on the
core requirement of the customer. For instance, if a customer is very hungry, he will not
consider which restaurant needed to be chosen for the purpose of eating food.
According to Morgan, Vorhies and Mason (2009), an organization needs to divide the market
in the same way as they divide the customer needs in various aspects. This will include
recognising the individual segment needs in align with the targeted profile to deliver
respective product benefits. This process will help the business enterprise to maintain a
competitive position in the industry by meeting out those respective preferences.
Constantinides and Zinck Stagno (2011) also defined market segmentation procedure to be a
nominal strategic marketing tool. By using this tool, an enterprise can be benefitted in various
ways through designing of strategic marketing drivers that meet the customer expectations
and deliver them true value in the form of products.

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Source: (Taken Smith, 2012)
Targeting of the market is the next process where the management needs to select a specific
market place order to serve and offering of various products. By acknowledging the targeted
groups, the business organization may use single or combination of marketing strategies and
tools. After targeting, the next phased comes is positioning where the decision needs to be
made in relation with targeted segments to pitch a brand or a specific product. Positioning of
a product can be defined in terms of customer perception where maximum potential benefit
needs to be delivered with the help of selling USP (Kumar, Rahman, Kazmi and Goyal,
2012).
2.2 Effectiveness of the STP model
When an organization rationally segments their target customers, they will get better
opportunities in different areas with delivering of satisfaction to the potential market
segment. It will also satisfy the following criteria such as –

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 Group Identity – The top target groups are identical inside segments and diverse
across groups.
 Methodical Behavior – Segments needs to respond likewise to a specified marketing
approach.
 Efficiency Potential – feasibility and cost of reaching a segment based on market
settings.
In addition, effective targeting helps in development of better goals and objectives to the
different section of the market. For this approach, management uses PEST approach, as this
help in evading various circumstances and assumptions in relation with the target
segmentation so have to develop better strategies.
On the other hand, positioning helps the organization to create a point of difference through
the help of specific characteristics of a product and also with the different attributes of the
product sharing with other brands in the market. This is also called creating Points of Parity.
Utilizing the STP model is one of the most crucial procedures that can help in the growth and
development of the business (Fuiller and Matzler, 2008). With this model, a business can be
taken out to the next level in both the industry and market and thus offers greater process
effectiveness with better product positioning.
2.3 Limitations of the STP concept
For the growth, diversification and expansion of the enterprise in the global market, STP
proved to be a vital tool, however it is limited by various prevailing economic trends. The rise
of globalisation open the market place for various organization, however, these also possess
various challenges on the management in creating effective segmentation and positioning
strategy. In addition, rise in the various e-commerce channels also increase the bargaining
power of customers and these customers have a significant influence on the position and
targeting strategy of the organization (Rehman and Saba, 2011).
On the other hand, with the changing demands, expectations and needs of the customers, the
process of segmentation is getting outdates very rapidly. Moreover, now a customer is
belonging to more than one segment and the management finds it’s very challenging to

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recognise which is the profitable segment. This all leads to losing of various opportunities
from the perspectives of business.
3 Application of STP
STP approach is crucial for every organization irrespective of industry, geographical areas
and global economic sectors. It splits buyers into groups having identical needs and so to best
utilize firms finite resources with the help of buyer based marketing. This part of the report
focuses on STP strategy applied to below mentioned company and industry so as to gain
practical implications in a competitive business environment.
3.1 Starbucks STP
There is various basis for segmenting a market and Starbucks has chosen a Socio-Economic
factor to segment their markets. Therefore, the enterprise focuses majorly upon middle
earners such as workplace administrators who require a place with good ambience and
Sta rb u cks
Jagu ar
Sa m su n g

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facilities during break-time (Lipsman et al, 2012). Market studies were accompanied to
identify the catchment area of administrators and coffee lovers so that to finalise store
locations. Using innovative measures in segmenting a market attested to be very useful in
some scenarios. Moreover, the company main targets are men and women between the ages
25-44 as it accounts for almost half of their total business. The company also emphasis on
buyer’s lifestyles as they offer a wide range of products categorised as luxury beverage drink
in most cases.
Starbucks sought to develop a strong bond with its consumers (Eventige.com, 2018). The
company mainly targeted the parents having young childrens and this proved to be positive
(Tan and Lo, 2008). Moreover, the company also raised its segments by aiming early teens
plus improving its product range in the marketplace. The company also focuses on
affordability of the services. Starbucks targets their segment groups through the growth of
technology and creative ideas. The company also develops a unique and relaxing
“experience” for the customers within the range tend to have high income and professional
careers. Starbucks target audience is laid back but driven (Kumar, 2008).
After deciding the target markets, Starbucks decides on the position, aspect needs to be
occupied in the target market. Starbucks realised public opinions, even though it will take
longer to cultivate. The company try to position themselves as a premium product in the
coffee business with creation of high standard and innovative products and delivering
superior service too (Simon, 2011). In addition, there positioning strategy is customer based
which helps them to give best customer service. It holds their competitive advantage in terms
of both employee and customer satisfaction. Below, is an example of the company using
reward tool to attract and retain more number of customer.

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Source: (by author)
Unique Selling Proposition: Starbucks offer membership privileges, not available with most
of the competitor.
3.2 Jaguar STP
The company has focused on demographics aspects like gender, income class, age
distribution as well as also includes psychographic factors such as personality traits and
lifestyles. For instance, the company comes out with Jaguar S-type that target younger
customer base (Baltas and Saridakis, 2009). In referring to income class, the company
launches Jaguar XF series that target luxury car market for the high net worth individuals.
This shows that the company have segmented their market on all basis i.e. demographics,
psychographics, geographic, etc. As a pioneer organization, the company have maintained a
distinct position in the industry.
In response to targeting, the company has adopted differentiated strategy. To attract the target
audience, Jaguar cars launched different Jaguar car models, suiting to different market sectors
and well as the varied needs of the customers. The company today has a model for almost
every segment in the marketplace. This tactic can create more total sales than a un-
differentiation approach but there are risks of eating away the sales and decreasing
profitability. The logo of Jaguar cars, which is Jaguar cat itself, is also one of the key
features, which attracts the target market they are targeting. The company also uses various
taglines that made the consumers believe in dynamism such as – “Born to performe”,
“Grace.Space.Space” and so on.
Jaguars also positioned themselves as a luxury brand, which provides both comforts of luxury
vehicles and speed and handling of a sports car (Kapferer and Bastien, 2009). In 2015, Jaguar
was one of the top three Automobiles brands in the world. Jaguar did not only position
themselves based on its uniqueness and pricing, but it also provides premium services to their
potential and new customers. For instance, when a newcomer comes to Jaguar, the company
directs them to the section of “WHY JAGUAR” on their website as this will makes the
customer understand about the history behind Jaguar and what differentiate themselves from
the competitors.

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3.3 Samsung STP
In terms of segmentation, they are hardly any geographic base and demographic. The
company serve people on global level and provide them a substantial attraction in terms of
guarantee. Samsung mobile segment their customers on behavioural aspects and thus targets
their prospective clients based on the benefits they look for in the mobile technology realm,
for instance, superb value and a salient design. Moreover, Samsung Mobile generally
examined trends in the market to recognise the prospects of their target market from their
products and so beat the market expectations by delivering the best features they could offer
(Lee et al, 2010).
Source: (News.samsung.com, 2016)
Samsung is targeting to people who are enjoying with a rapid pace of life but able to fit in a
modern hi-technic lifestyle. The target audience of Samsung is trendy young people who seek
for latest design and feature in a smartphone. Moreover, the company also targets
professionals and large business people who need various necessary features like camera, pen
notes, etc. Target is not only number driven but also acquiring and retaining customers
(Hughes and Fill, 2007). The target group of customers is also increasing as this group has

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more spending power in recent years compared to in the past. In addition, the diversification
in various product portfolios also helps the company to develop at a faster pace.
With the increasing competition in the smartphone industry, Samsung has positioned itself on
a distinct place with the customer perception about the brand as being unlike from the other
brands on several particular dimensions containing product attributes. These dimensions
include Samsung concept stores, wider care network, access to Samsung care line, quality
products and unique brand identity. This gives them a competitive edge over the other
rivalries in the industry and thus helps in continuous development.
4 Recommendations and Conclusion
STP is a crucial tool for every business enterprise for effectively penetrates the market based
on various aspects. To deliver the quality products and services to a customer, an
organization needs to focus on certain aspects like value proposition, unit-level goals analysis
and several management practices.
The above three industry and company are taken with an example of STP application and this
shows, how every company has distinctly positioned themselves in the marketplace. Some of
the organization is using differentiation strategy while some of focusing on high income level
customers. However, in this competitive environment and digital era, a company needs to
adopt varied number of practices in order to meet the demands of the customer and fulfil
necessary expectations. Several recommendations are given below –
 This era is moving towards digital scenario and this makes business organisations to
divide the target market into various types of homogenous groups. For instance,
division of customers based on technology, social media usage, and other
applications.
 In order to attain sustainable competitive advantage, business enterprises need to
match customer benefits into every phase of the product life cycle. For example, an
organization can adopt loyalty programmes for the purpose of engaging customers. In
addition, company also needs to identify potential threats to the company and industry
in order to formulate adequate strategy.
 The company needs to focus on each segment as recognise the unique characteristics
respectively. The company also needs to analyse emerging segments effectively with
the help of deep investigation.