MKTM028 Assignment 2: STP Analysis and Marketing Strategy Review

This report provides an in-depth analysis of Segmentation, Targeting, and Positioning (STP) as a critical marketing strategy. It begins by defining STP and its significance in modern business, emphasizing its role in influencing consumer behavior and building long-term customer relationships. The report explores the three stages of STP: segmentation, targeting, and positioning, detailing the variables and processes involved in each stage. It highlights the importance of data-driven decision-making and the use of STP across various company sizes and industries, including multinational corporations. The report uses Hilton Hotels as a case study, illustrating how the company applies geographic, demographic, psychographic, and behavioral segmentation. It further discusses the importance of competitor analysis, unique selling propositions, and value propositions in developing effective marketing campaigns. The report concludes by emphasizing the role of positioning in shaping brand image and enhancing customer loyalty, offering insights into how companies can effectively utilize STP to achieve their marketing objectives. The report references academic literature to support its evaluation and critique of the STP concept.

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SEGMENTATION, TARGETING and POSITIONING
In the modern day business, marketing is not only used for improving the brand image of the
company but also to influence the purchasing behaviour of the market. Companies are
running their campaigns based on their future plans so that they could make more reliable and
long term relationship with their customers. Since marketing is a long term approach hence it
must be done based on the market orientation (Tanner and Raymond, 2015). Segmentation,
targeting and positioning is one of those tools used by the companies that helps them in
making a better marketing strategy. This is a type of marketing strategy that helps a company
to improve the marketing procedures by becoming more concise on the ways customers can
be attracted. It is essential for the organisations to make sure that they have used the right
variables for marking their customer group and hence making marketing strategies
accordingly. In the process of utilising the marketing strategies it is essential that companies
do not waste their resources for groups that are not valuable for them. Analysis of the market
needs to be done on the basis of population that is present in an area. This helps the company
to focus on the products and develop it as per the demands of the specific market group (Pyo,
2015). In order to improve marketing, it is essential that company marks their own set of
groups for whom they will market their products.
STP is not the model that is restricted for the any particular size of the company but it can be
used by any company irrespective of the area they are aiming to deliver their operations in.
Multinational companies use different types of variables so as to improve their marketing
campaign. The selection of the segmentation variables must always be done by the
Multinational companies based on their idea of marketing (Kumar, et al. 2012). All the
segmentation variables must align with each other so as to do targeting of an individual more
specifically. Such type of targeting always helps an organisation to ensure that their
marketing approach remains focused towards particular type of customers. This is necessary
for increasing the sales of the company and improving the profit margins as the overall cost
of the marketing also gets affected stating the fact that company will not invest a large
amount of money on targeting other consumers.
STP acts as a precise tool that is used by the marketing unit to build an effective relation with
the consumers where both company and targeted market understands each other. This is
justified by the fact that STP helps the firms to be more competitive towards reacting to the
requirements of the individual (Phillips, 2016). Companies are utilising STP as one of their

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prime strategies and it is the role of the strategy makers to ensure that larger part of the
market gets covered based on the variables. At the same time, it must involve only those
people that will have intent to purchase their products. As the modern day marketing has to
be precise hence the fabrication of STP strategy must also be done on the basis of the basis of
data. From selection of variables in a region of operations to actually positioning the products
in the market, data plays a very much vital role. STP strategy must be used within the
organisation so as to improve the orientation of the market base. Data must be collected from
all possible credible sources. Focusing on specific market groups helps the company to make
the marketing strategies more specifically (Weinstein, 2013). For example if there are 50
people in the hall then company must be able to identify that one person who actually
requires their offering and hence target them to achieve sales. There are people from different
socio-economic backgrounds hence company must be able to identify the group for
marketing that actually can purchase these products.
As the name suggests there are basically three stages to marketing first segmentation, second
targeting and third positioning. In the first stage i.e. segmentation, company need to analyse
the variables based on which they are going to make segments in the market. Segmentation
should always be done based on the profile of the market group and their willingness to be
part of the marketing (Muhamad, Melewar and Faridah Syed Alwi, 2012). Deep analysis of
the marketing is essential for having a high standard STP model. There are companies that
are actually making different marketing campaigns for different segments. The success of
these campaigns can be guaranteed when the campaign is able to reach to all the customers
whom they have segmented.
Second stage of the STP strategy is targeting where the people are targeted based on the
segmentation variables. This stage of the marketing helps the company to make sure that they
do not make marketing plan that is not worthy. The specification of the products is always
kept in mind while designing such kind of STP strategy (Hassan and Craft, 2012). This is
essential in the process of STP theory as the nature of the offerings differs and all the
products may not be able to satisfy the need of all every consumer group. To do marketing
appropriately, it is essential that company selects a consumer group that might fulfil their
market size requirements.
Third stage of this theory is the positioning strategy that is used by the organisations to
improve their image in front of the market. The positioning of the offering plays a crucial role

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in making the image for the firm. For example Apple has positioned its products as a
premium offering and hence they have made the brand image of the firm to be a luxury
brand. This is how positioning plays an essential role in changing the consumer’s perception
(Gbadamosi, 2013). If the positioning gets wrong then the probability of targeted segment not
purchasing the product increases. Positioning by the company is often done for the long term
duration and hence the selection of the positioning slogan must be done appropriately. The
target group must be attached with the type of positioning done by the company (Haski‐
Leventhal and Meijs, 2011). It is crucial that company finds a marketing message that is
capable of attracting the desired customer group. Positioning also plays a crucial role in
enhancing the loyalty of the customers in the longer duration of time.
In order to understand the use of STP strategy an illustration is made with the help of Hilton
Hotels. These groups of hotel have large numbers of units in different parts of the world. The
segmentation in the market can be done on the basis of four criteria namely demographic,
behavioural, geographic and psychographic.
Geographic segmentation includes targeting specific group of people based on their
geographic locations at international and national levels. Following this criteria company is
focusing on building hotels at the locations that are popular or highly visited. For instance in
London, Hilton hotels are located in the popular travel and business destinations such as
Aldwych, Bankside, Trafalgar Square, Canary Wharf and Tower Bridge. So in terms of
locations, they are selecting people in the urban and metropolitan cities.
Segmentation in terms demographics is done on the factors such as age, gender, social class,
life-cycle stage, lifestyle and income. Hilton targets segments that consist of middle and
senior age professionals who are having high income levels. Most of these people belong
from the upper social class. It targets the people that are leading luxury lifestyle. This is the
reason that they have chosen premium prices for their offerings.
In terms of psychographic segmentation, personality traits, values, their thinking and lifestyle
plays a much crucial role. Hilton also targets people that are ambitious and like to express
their own high status and achievements by staying in the luxurious rooms at the hotels at the
premium prices. In behavioural terms, the factors that are affecting their segmentation are
degree of loyalty, personality, benefit sought and User status. They target both loyal
customers and the people who switch due to different reasons. People who aims to lead a
luxury life and do not care much about expenses are targeted by the Hilton Hotels.

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Hilton has positioned itself in the multi-segments. Hilton Worldwide has a portfolio
consisting of 13 brands and as per the scope of service provision each of the brands is
positioned in an appropriate manner.
Brand positioning Brands
Luxury Conrad and Waldorf Astoria
Full service CURIO, Hilton Hotels and Resorts and
Double Tree
Focused service Hompton, Hilton Garden Inn and Tru
Lifestyle Canopy
Vacation Ownership Hilton Grand Vacations
All suites Embassy Suites, Homeswood Suites and
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Since the demand of their customer groups keeps changing and they have to segment people
on the basis of common characteristics and needs hence companies need to be alert about
their requirements.
Researchers suggests that segmentation is basis of constructing a sustainable competitive
advantage that relies on factors such as cost benefits, differentiation in the products or any
specific focus strategy. It is always suggested to use less numbers of groups that has been
selected after using ten or more variables of segmentation (Epetimehin, 2011). These
variables shall be evaluated on the basis of their capability to mark segments for which
different strategies has been made. Once the segmentation has been described, it becomes
easier for the marketers to analyse which segment gives them the highest opportunity for their
business to be successful and hence make offers for their specific targeted segment. Some of
things that a company looks into are competitor’s segmentation, product related parameters,
price sensitivity, loyalty etc. Why competitor’s analysis is necessary is answered by the fact
that no firm can win their battle without discriminating their offerings from others (Khan,
2013). Companies shall represent their big distinctive idea in the mind to their targeted
customers.
Positioning acts as an act of defining the firm’s offering and image to occupy a distinctive
place in the minds of the people. This is the reason why companies are trying to focus heavily
on their marketing strategy related to their target segment (Lim and Bendle, 2012). This is

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one of the major bases for designing of the marketing mix which again has a major role in
increasing the effectiveness and attractiveness of marketing campaign. While making
positioning communication, a company must rely upon their strengths and hence shall focus
on the area that why consumer shall make a purchase of the products offered by the company.
This becomes extremely crucial in the environment where competition has become cut throat.
It has become essential for the companies to highlight the fact that why a consumer shall
make purchase of their products when compared with that of their competitors. By
identification of the Unique selling proposition and making of the positioning map based on
the knowledge about how each segment perceives the offerings of the company like their
products and services as well as the brand itself (Li and Green, 2011). It is crucial for the
company to find out what is the best option to position the offerings of the company.
After evaluation of the demands and requirements of each of each of the segmented group, it
must be highlighted that how that offering is going to resolve the issues of the people better
than that of their competitors. After such evaluation, value preposition has to be created
which can explain the way in which it resolves the identified issues (Jaman, 2012). On the
basis of this data, company can design their campaign of marketing which is able to showcase
this value preposition in a manner that the targeted audience will appreciate. It’s not just
value preposition but what tools they are using for their promotion also plays a vital role in
targeting the company. For instance, suppose there is a tourism company ‘Ablos’ that offers
services in eco-adventure tour and hence it would be beneficial for them to target people with
the help of social media sites. This is because people whom the company will target are
highly available on the social media sites. Most of the people who go on vacations usually
check the people review on these sites. Social media acts an effective platform where
promotions can be done using different multimedia tools (Riefler, Diamantopoulos and
Siguaw, 2012). The segmentation of the market should also be done on the social media sites
but the privacy of the data must be maintained. The likes and dislikes made the people can be
criteria for knowing their mood towards any particular product. Customer’s choice plays a
very essential role in defining the STP strategy for the company.
In order to make the strategy more effective, positioning shall be done consistently especially
when any brand has already made their place in the people’s mind. Researchers suggest this
with an example of ‘Avis’. This company used their positioning statement as “Avis is the
Number two in renting a car, so why go with us? We try harder”. This slogan helped them in
gaining attentive and hence was effective. Company did mistake by changing it to slightly

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poor positioning statement i.e. “Avis is going to be the No. 1”. When company changes
anything just for change it might result in an altered manner. The changed positioning
communication must be able to touch the base of reality.
In order to make the STP strategy successful, company needs to apply the given nine steps. In
order to make the marketing campaign effective first company must define the market for
which they want to do business (Yudelson, 2012). Essentiality of this step is understood by
the fact that firm must know that for which kind of market they will bring their offerings. A
precise and accurate definition of the market helps the company to reach the consumers with
area specific plans. For example if ‘Pepsi’ applies segmentation they instead of defining the
market they would unlikely to give a look to overall beverage market. Instead of it they will
use the segmentation like sugar free cola in the East European region. This helps the
company to construct strategies according to the demands of the people in this area hence
different variables related to this area could be used. In the second step, company must divide
the bigger segmented group into a smaller segment. These smaller groups should include all
the people having similar type of behaviour or demands (Venter, Wright and Dibb, 2015). In
the third step, company must analyse the segments for viability. In this type of segmentation,
market must evaluate the segment based on the given criteria for ensuring that they remain
useable and logical. There are certain checklists of variables such as whether the
segmentation is reachable or not, do they have diverse groups of need or the fact that whether
they are large enough or not to satisfy the need of their future plans.
Fourth step in the process of making effective STP is to design profiles for segment. Once the
viable market segment gets defined then segmentation profiling needs to be generated. In this
process detailed and elaborated form of definition about the consumers is created. It assists
the company in defining their demographics, way of shopping, preferences, behaviour and
other things. Smaller nick names are often assigned to the segmented group so as to indicate
them appropriate in their mode of communication. Generation X or Y and Baby Boomers are
the two widely used nicknames in marketing. Step five in the process suggests analysing the
attractiveness of each market segment. Based on the data available about the market and
findings about the customers will help in adding to the defined segments such as brand
loyalty, price sensitivity, growth rate and segment size and others (Proctor, 2014). Using this
information, firms will be able to evaluate each of these segments based on their overall
attractiveness. There are different types of scoring models which can be utilised for this task.
This may result in numerical and qualitative scores for each market segment.

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Step six suggests choosing the target market. Selection of the most suitable target market
should always be done by evaluating the data that has been collected. There are various
elements that have to be considered while selecting a target market such as organisational
strategies, competitive rivalry, attractiveness of segments, its ability to compete etc. These are
essential for ensuring appropriateness of the targeted market. In step seven positioning
strategies has to be developed where the firm must be able to understand the most appropriate
manner in which firm can best compete with their rivals (Lotenberg, Schechter and Strand,
2011). Strategies will align towards how companies can gain higher profits in the market
where larger companies have huge market base. Taking market share from bigger firms can
only be done when customers perceives their products to be superior, unique and provides a
different set of values to the consumers.
Eighth step recommends creating and implementing marketing mix on the basis of the above
seven steps. Positioning strategy plays a very special role in designing of the marketing mix.
Company should develop and design offerings at prices that are suitable to the consumers
they have selected. Use of effective promotional campaign can be beneficial for the company.
Step nine suggests company to review the performance of the strategy. Several parameters
must be used for calculating the firm’s success. Review of the performance shall be done on
regular basis so as to reassess their view about the market and hence shall sight for
opportunities (Nijssen, 2017). It will help the firm in re-constructing their marketing
campaign on the basis of last performance review.
Segmentation and positioning is difficult for the products in which continuous and very fast
innovations are going on (Haverila, 2013). For example, mobile phones where continuous
innovation is going at much faster rate. Researchers suggest that STP model is effective when
people targeted get attached with the type of positioning done by the company. In conclusion,
it can be said that the offerings of the company must be able to resolve the issues related to
their life for which they have purchased the products. It is suggested that companies use
targeting as their primary approach to gain success in the market. Segmentation must be done
to build a long term relation with their clients.

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