Business 11: Marketing Strategies - STP Analysis and Examples

This report delves into the core concepts of Segmentation, Targeting, and Positioning (STP) as fundamental marketing strategies. It begins by defining market segmentation, the process of dividing a broad consumer market into subsets of consumers based on shared characteristics, needs, and behaviors. Targeting, the subsequent step, involves selecting specific market segments to focus marketing efforts on, tailoring strategies to meet the preferences of the chosen group. Positioning, the final stage, focuses on creating a distinct and favorable image of a product or brand in the minds of consumers. The report explores various approaches to segmentation, including demographic, behavioral, and benefit-based segmentation, and discusses factors influencing target market selection, such as market size, growth rate, and competitive landscape. Furthermore, it examines different positioning strategies, including operational excellence, customer intimacy, and technological leadership. The report then presents case studies of companies like Southwest Airlines, McDonald's, and IBM, illustrating how these businesses have successfully implemented STP strategies to achieve competitive advantage and enhance business performance. The report underscores the importance of understanding market dynamics, consumer needs, and competitive positioning to create effective marketing strategies and drive business success.

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BUSINESS: SEGMENTATION, TARGETING AND POSITIONING MARKETING
STRATEGIES
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Introduction
The global competitiveness in the modern corporate world has led to increased concerns
to many firms to develop effective marketing strategies in a move to gain a competitive
advantage in the market by helping or focusing on satisfying consumer needs. Positioning and
segmentation is, therefore, a distinct part of any company marketing strategy and provide the
company with practical tools that enable them to focus their efforts in enhancing customer
satisfaction by meeting their needs in a way that is superior to their competitors (Hooley 2012, p.
183). The effectiveness of business strategies is dependent on its ability to adopt effective
marketing strategies that can successfully enhance the company’s’ brand performance in the
market. To develop these strategies, the management team, as well as the marketing department,
has to have a clear understanding of their markets, the needs and demands of their customers as
well as the marketing strategies employed by their competitors (Solomon, Dahl, White,
Zaichkowsky, & Polegato 2014, p. 4). One effective strategy to achieve this is through market
segmentation, targeting and positioning strategy and concepts. This essay, therefore, seeks to
provide an understanding of the above concepts and how different companies have adopted the
ideas to improve their marketing performances and gain a competitive advantage in the current
market.
Literature review of Market Segmentation, Targeting, and Positioning (STP)
Many companies in enhancing the existing marketing strategies have embraced the
market segmentation, targeting, and positioning strategy. The company or firms marketer has the
responsibility to create awareness of their brand and products amongst their consumers.
Differentiation of the marketing strategies is essential to ensure adequate product and brand

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promotional activities guided by the different individual needs and demands (Armstrong, Kotler,
Harker, & Brennan 2015, p. 15). Market segmentation can, therefore, be defined as the process
of creating small market groups or segments within the broader market with the aim of bringing
together the consumers or similar brands or those with same requirements, needs, and interests.
Targeting is the second step after an organization has developed its market segments and
involves the processes of devising various marketing strategies as well as brand promotional
schemes in accordance to the tastes and preferences or consumption behavior of the customers.
On the other hand market positioning is the last stage of STP cycle and involves the process of
creating an image of the company products of promoting the brand image in the minds of
consumers (Cantallops & Salvi 2014, p. 46). Market positioning plays an essential role in
helping the organization create a perception of the product in the minds of the company target
audience. The marketing concepts aim to improve the companies to serve specific customer
needs in the market.
Segmentation process involves finding out the existing consumers and their different
needs in the market. Its primary aim to identify what changed consumers need from the market
as most companies believe that specializing in meeting the needs of one group of consumers over
another as the best strategy to enhance business profitability. For example, the auto industry or
market is characterized by different consumers with some consumers more interested with the
roominess and safety features of their automobiles while another group of customer segment
may be concerned with the performance and speed of the machines (Lantos 2015, p. 36). In most
cases, the company may not concentrate on meeting the demands of all groups or market
segments but focusing their efforts on satisfying the requirements of a particular customer or

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consumer segments. To achieve specific customers’ needs market segmentation can be analyzed
from three different perspectives. The first way of meeting customer needs will be through the
use of differentiated strategy whereby the firms seek to develop market segmentation by treating
all the consumers equally without any efforts to focus on a particular market segment. Secondly,
market segmentation can also be achieved through a robust strategy where the firm seeks to
focus on one of the many existing consumer segments while leaving the other sections to their
competitors (Cross et al. 2015, p. 535). A company may choose to focus on developing a market
segment to offer low-cost goods which enables them to attract consumers who are price sensitive
and those by which the consumption behaviors are price sensitive. Lastly, the company can also
adopt a differentiated strategy where the focus is majorly on a particular group or market
segments, and most firms seek to focus on sectors which they gain maximum profitability.
Due to the existence of different variable influencing market segmentation, there is a
need for the organization or business marketers to determine which variables will be most useful
according to the organizational objectives in distinguishing a different group of consumers.
Therefore segmentation can efficiently be achieved in an organization by focusing on the
understanding of the various demographic variable, different consumer behaviors as well as by
understanding the benefits sought by the consumers from consuming a particular brand or even
purchasing good and services from one specific company (Priem et al. 2017, p. 7). A company
can, therefore, develop a market segmentation by identifying the needs of individual consumers
in a given locality or region. It can also seek to build market segmentation by classifying
consumer needs by their consumption behaviors. Lastly, most consumers consume specific
products or acquire a particular service based on the benefits the product or service offers to

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them. Such firms will, therefore, focus on developing quality goods and services which will help
the consumers satisfy their wants.
Targeting is the second process in the STP cycle, and therefore it is developed after a
firm has achieved or established a specific market or consumer segmentation. A company or
business can seek to establish a market target by considering several factors. The first factor
would be to understand the service provider of the existing segments by other companies or
manufactures. It would be more difficult for the company to venture into a new market segment
that is already served efficiently by other companies and therefore the role of the marketers is to
identify the markets where needs have not been served well (Sawhney et al. 2017, p. 4). It is also
essential for the marketers to understand how large the market segment is and its expected
growth rate. In most cases, companies will seek to establish themselves in industries or
businesses which are rapidly growing. The last and most important factor to consider before
targeting a particular market segment would be to understand whether the companies have
strengths or capability that will assist in appealing to a specific group of consumers. For example
the firm or business may have established an excellent reputation in the market by the provision
of quality and affordable products and therefore convincing the segment to shift their loyalty to
another brand may not be easy. A good example is the Mc Donald’s Company that has
established itself in the United States as one of the best Fast Foods companies offering consistent
quality products and family friendly foods. It would be difficult to appeal the market segments
differently. The company regarding developing other market strategies can focus or target the
families in search of consistent quality products as well as the clean restaurants.

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The last process in the STP cycle is the positioning strategy or process and involves
implementing the company targeting strategy. This is very important as it helps in creating the
brand perception in the minds of the consumers. An active positioning marketing strategy can
achieve by strategically positioning themselves into three broad categories. The first positioning
strategy would be positioning themselves as operationally top firms (Wirtz & Lovelock 2017, p.
7). This means that the company will seek to focus on maintaining a substantial competitive
advantage through exceptional operational efficiency. It enables the company or business to
provide reliable services to the customers at reliable prices than those of their competitors.
Companies or firms focusing on attaining a competitive edge in the market through operational
efficiency always lay major emphasis on offering service or products at low cost. They put less
value on the customizing their services to particular groups or individual customers.
Secondly, the companies or businesses can position themselves in the market as private
customer firms by focusing on meeting the needs of individual customers very well. Therefore
the companies give less emphasis on efficiency by focusing more on what is needed by their
customers. They focus more on the business reliability and responsiveness to customer’s
demands (Qian 2017, p. 2). An excellent example of intimate customer firms may include the
IBM as well the Wal-Mart Inc. lastly a company may choose to position itself in the market as a
technologically excellent firm which means that the company can offer quality technological
products by the use of the current or the latest technology and maintaining leadership in the
industry or the market through leadership innovation. However, the strategy cannot be efficiently
compared to the operationally excellent firms. The products should, therefore, be developed or
changes are made according to the needs of the customers. Intel Company which manufactures

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computers and software components has established itself in the market as a technologically
excellent firm offering quality and up to date technological innovations globally (Gengler &
Mulvey 2017, p. 237). If the sound current positioning strategy is less attractive to customers, the
firm may choose to develop a repositioning strategy which means it will attempt to change the
existing consumer perceptions of a brand. However, this is not easy as it might be too costly to
the company implying that the company marketers should be cautious in developing their STP
marketing strategy.
Segmentation, Targeting and Positioning Analysis
Different companies have developed and implemented the STP marketing strategy to
create their own success stories. Effective implementation of the concepts plays a significant role
in enhancing business growth through increased competitive advantage and increased consumer
base by satisfying consumer needs and demands. Some of these companies include the South
West Airlines, Mc Donald’s Company and the IBM Company (Camilleri 2018, p. 72) These
companies operate in different industries and have embraced the use of segmentation, targeting
and positioning concepts to enhance their marketing strategies which in turn result in increased
business performance and profitability as well as increased consumer satisfaction with the goods
and services provided by the company.
STP Success Story of South West Airlines
Southwest Airlines Company was established in the year 1967 a forms part of the
primary United States Airlines and has its headquarters in Dallas, Texas.it is the most significant
North American low-cost carrier and has been able to employ over 55 000 employees while the

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company net income as at 2017 was $ 3.488 billion. The company success story is attributed to
the effectiveness of the company business model and marketing strategies (Walters & Bekker
2017, p. 17). The company business model is aimed at providing low-cost carrier services to its
customers and to attain maximum customer satisfaction levels and has been a significant
inspiration even to other low-cost carriers globally. The company has developed a competitive
strategy that is focused on combining a high level of the employee as well as aircraft productivity
with low costs services.
Therefore based on the company low-cost carrier model the company first segmentation
is that it seeks to serve the cost and value sensitive or conscious customers in the airline industry
including the small business executives as well as those customers traveling for short distances.
The second market segmentation involves the families who are value conscious as well as the
senior citizens in the country while the last segmentation is regarding the demographic
concentration (Caiazza &Volpe 2017, p. 184). The company has however laid great emphasis on
customer service and differentiation strategy of rapid reward as a way of increasing competitive
advantage and also for maintaining customer loyalty. The company based on the low-cost
business model the company targeting strategy is aimed at targeting the small business owners,
the young adults, middle-class families as well as those traveling for short distances. The
company can, therefore, be positioned to be an operationally excellent firm.
STP Success story of Mc Donald’s Company
Mc Donald’s company is one of the largest fast-food companies in the United States and
was founded in the year 1940as a restaurant company. The company has been able to build a
reputation with its brand in the fast food market by a continuous provision of quality and family

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friendly. The company business model has been developed under the power of the company
franchisees, the suppliers as well as the employees who work together to achieve a common goal
(Jaworski 2018, p. 67). Regarding market segmentation, the company has been able to focus on
providing quality family fast foods to different groups of people conscious of the quality of foods
they take and the ability of the products to satisfy their needs. The company targeting strategy,
therefore, aims at a particular group of consumers based on their consumption behaviors. The
company thus from its success story has been positioned as a customer-intimate company.
STP Success story of IBM Company
IBM Company is an American leading computer manufacturer which was founded in the
year 1911 as computing, tabulating and recording company. The company has a significant
market share in the United States as well as abroad. The mission of the company is to deliver
high value to their customers. The company operates by offering solutions to different market
segments including; cognitive solutions, global financing, systems, comprehensive business
services, technology and cloud services. In the determination of its market segmentation, the
company has successfully employed a mix of psychographic, geographic and demographic
segment variables (Hult & Ketchen 2017, p. 23). This has enabled the company to reach out to
their customers efficiently and to increase business performance not only in the United States but
also globally. The company success has also been attributed to its ability to employ the use of
particular targeting strategy to make specific products and services more available to their
customers based on their requirements. The company has been able to hire the benefit based
positioning strategy to position itself as company or brand that creates value for their
shareholders across the company value delivery system. Therefore based on the above analysis

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the South West Airline company can be said to be operational efficient regarding their
segmentation, targeting and positioning strategy in the market (Braun et al. 2017, p. 124). On the
other hand, the Mc Donald’s Company is focused on developing customer relationships by
producing products which meet the needs of consumers and therefore it can be said to be a
customer-intimate company. The IBM Company has developed an STP strategy that is focused
on benefits to be achieved by the customers. However, some companies such as IBM can
combine various approaches by focusing on value creation as well as the benefits which the
customers will obtain from using their products.
Industries discussed and Recommendations
Different sectors describe different markets and therefore the need to develop differentiated
marketing strategies. Every industry has different consumers with different needs and thus
understanding different areas will be critical to the development of effective marketing
strategies. The first industry would be the retail industry which has experienced a rapid growth
rate in the modern corporate world. The second industry would be the technology industry which
has revolutionized the modern business world and lastly I would focus on the service sector
concerning the transport industry. From the above analysis, the service industry is majorly
focused on the quality of services provided by the company. Therefore, I recommend that every
the service sector target market should be aimed at developing intimate customer strategies to
improve the quality of services offered. Provision of unmatched quality goods and service will
give the company an increased competitive edge in the market.

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Secondly, I recommend that the technological industries should focus on developing marketing
strategies by adopting the technical excellence positioning strategy. This will help the company
improve innovative solutions and increase competitive advantage.
Lastly, based on the importance of value creation to customers in every business, the retail
industry that has become very competitive in the modern corporate world should adopt the
operational excellent positioning strategy as it will help the company in providing reliable and
cost-effective services on the market and contribute to increased business growth.

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List of references
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: a.n introduction.
Pearson Education.pp. 12-19.
Braun, C., Hadwich, K. and Bruhn, M., 2017. How do different types of customer engagement
affect important relationship marketing outcomes? An empirical analysis. Journal of Customer
Behaviour, 16(2), pp.111-144.
Caiazza, R. and Volpe, T., 2017. Innovation and its diffusion: process, actors and actions.
Technology Analysis & Strategic Management, 29(2), pp.181-189.
Camilleri, M.A., 2018. Market Segmentation, Targeting and Positioning. In Travel Marketing,
Tourism Economics and the Airline Product (pp. 69-83). Springer, Cham.
Cantallops, A.S. and Salvi, F., 2014. New consumer behavior: A review of research on eWOM
and hotels. International Journal of Hospitality Management, 36, pp.41-51.
Cross, J, Belich, T, and Rudelius, W, 2015, How marketing managers use market segmentation:
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Gengler, C.E. and Mulvey, M, 2017, “Planning pre-launch positioning: Segmentation via
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Hooley, J, 2012, Marketing Strategy & Competitive Positioning. 5th ed. Harlow.pp. 180-196.
Hult, G. and Ketchen, D, 2017, Disruptive marketing strategy. AMS Review, 7(1-2), pp.20-25.

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