Strategic Marketing Planning: Literature Review and Examples

This report provides a literature review on strategic marketing planning, emphasizing the Segmentation, Targeting, and Positioning (STP) formula. It explores the significance of strategic marketing in today's competitive business environment, detailing how companies establish marketing strategies to a...Read More

Running Head: STRATEGIC MARKETING 1
Strategic Marketing Planning: Literature
Review

STRATEGIC MARKETING 2
Introduction
In today’s competitive business environment, marketing is one of the most important
components for the growth and success of a business. It includes different marketing concepts
which help the company to attain its goals and objectives. An effective marketing strategy assists
the businesses to achieve its predetermined marketing objectives (Dixon-Ogbechi, Joseph and
Elizebeth, 2011). Effective marketing strategies and campaigns cover marketing tactics that work
in an organized way to institute a brand image, decline the sale resistance and generate desires of
customers for company’s products and services. When a company brings its products in the
marketplace, it adopts strategic marketing planning which incorporates from establishing a
mission 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 that
stands for Segmentation, Targeting and Positioning. There is a need of strategic marketing
process for each and every organization. The below essay discusses the major elements of
strategic marketing and provides the literature review on how a firm implements these aspects in
real practices. Furthermore, it includes examples of some companies which have implemented
the above aspects. In the last section, generic recommendations are given which can improve the
implementation of theoretic concepts around STP formula.
Literature Review
STP (Segmentation, Targeting and Positioning)
Today, promotion and marketing is everywhere, formally and informally, companies and
customers involve in different processes that are identified as marketing. Still, there are various
companies which are confronting various issues to communicate with potential customers in
larger market. These organizations want to focus on the customers within their competencies and
with better understanding of people (Gilligan and Wilson, 2012). To approach the potential
customers, an organization divides a large market into diverse groups of customers with similar
needs and expectations. In order to reach appropriate customer for product, the firms need to use
three major aspects of marketing i.e. Segmentation, Targeting and Positioning (STP). This
business formula plays an important role in getting right customers for its new products and

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services. An organization implements all three components Segmentation, Targeting and
positioning to align its products with the best suitable customers.
Goyat (2011) stated that every company desires to focus on potential customers as per their
competencies and customer relationship. For this, they need to divide the entire market in small
groups of customers with different needs and wants. They make efforts to know about the
demands, wants and needs of potential customers. The basic requirements of the human being
can be described like water, food, entertainment, clothing and air (Goyat, 2011). These
requirements work as their needs, while people are directed towards specific things that may
satisfy 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 created
by 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 of
categorizing a market into smaller groups with different needs, behaviors and characteristics who
may require marketing and product strategies (Weinstein, 2013). Under this process, the
company aims to place energy and marketing force on segmenting to achieve competitive edge
in 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 to
attain this focus of marketing energy (Vukasovic, 2009).
In this context, Diamantopoulos and Foedermayr (2008) stated that there are various theoretical
methods of market segmentation which are used by the companies to divide the entire market.
The major approaches are like geographic, demographic, behavioral and psychographic
segmentation. 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 considering
the customers’ behavior towards company’s products and services like consumption rate, loyalty
and purchasing decision (Foedermayr and Diamantopoulos, 2008). Furthermore, geographic
approach includes the variables like population density, climate, different regions etc.

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There are various international firms which are implementing market segmentation and gaining
several benefits. For instance, Tesco is a UK based organization that is operating its business in
food and retail industry. This company uses different approaches and characteristics to segment
the market and its potential customers. By using geographic segmentation, this firm is running its
operations in UK and other 13 countries across the world. Considering these characteristics, it
offers its products in both rural and urban areas of these nations. Additionally, it focuses on the
lower 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 a
large customer base towards its products. Apart from this company, LIdl and Aldi are the leading
supermarkets which categorize their markets on the basis of different variables that Tesco. LIdl’s
segmentation is focused on the cost effectiveness to a significant extent that Tesco. This firm
targets 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 which
includes the company making decision about market selection, on which its products and
capabilities are to be focused. As per Mahrani, Hazar and Sinarwati (2013), targeting is the
practice to select a particular market segment that is determined by the group of customers, who
share same needse and characteristics. The implementation of target market choice results what a
firm 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 like
concentrated, differentiated and undifferentiated. An organization uses undifferentiated strategy
when it offers a single product line and focuses on mass population. The examples of these
products are such as furniture, toothpaste, soft drinks, laptops etc. Under differentiated strategy,
companies produce various products with different marketing mix strategies (Kotler, 2015). For
instance, Wal-Mart is offering its low cost products to budget conscious customers and quality
products to wealthy population. Furthermore, under concentrated strategy of marketing a firm
emphasizes 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 firm
to capture the market segment for hybrid automobiles (Sowter, 2018).
In his article, Almgren (2014) mentioned that a company makes its target market decisions on
based on needs and expectations of customers, market maturity and diversity of buyers and

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competitors’ strengths. This aspect of STP has several benefits such as it enables the companies
to focus on specific demands and needs of targeted people. After understanding the expectations
and needs under market segmentation, marketers make decisions on target market under this
component (Almgren, 2014). In each and every case, it is very difficult to select the target
market. Sometimes, there will be requirement conduct elaborative market research that it targets
to cater. It can be understood by considering the example of over the counter painkillers like
there are two types of drugs that are competing in pharmaceutical sector. From them, one is
produced as Aspirin and other is produced as Acetaminophen. Aspirin is impactful to some
diseases but it has side effects like stomach problems. Thus, this is very significant for firms to
produce the drugs to examine the segments that fit properly for its goods and services (Sheth,
and Sisodia, 2015).
The end part of STP approach is “P” which stands for positioning that is the most effective
strategy of an organization. It allows the customers to develop an image of its products and
services in customers’ minds over competitors’ products (Akpoyomare, Adeosun and Ganiyu,
2013). It shows how the products and services of a firm will be seen by targeted customers in
comparison to its competing brands. According to Kotler (2007) after choosing market segment,
it is necessary to determine what place to achieve in the customers’ minds. Via product
positioning, the firms can address the world that company’s products are exclusive and unique.
For instance, the hotels can do their positioning considering the different service features such as
bars, ballrooms, restaurant areas and meeting rooms (Kotler, 2007). To position it positively,
hotels make focus on different areas like services, human resources, brand image, location and
physical distribution. In order to gain significant growth and development in an industry, a strong
positioning strategy helps the firm to adopt an identifiable marketing strategy.
In this context, Dudovskiy (2017) stated that product positioning involves applying different
elements of marketing mix so that it can entice targeted audiences in a good manner. There are
various types of positioning like functional positioning, symbolic positioning, multi-segment and
price positioning. To offer its products and services, Tesco Plc. adopts functional positioning for
to position in the marketplace. It is the process which is concerned to enhanced quality and
functionalities of firm’s products (Dudovskiy, 2017). This company offers premium products by

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implementing this type of positioning. It can be analyzed that products of Tesco through
functional positioning are more expensive than other products.
Karadeniz (2009) described that symbolic positioning is used based on the values, objectives and
expectations of targeted population. Tesco also uses this positioning for its Fair Trade of food
and retail market. Furthermore, IKEA is a global firm that uses all the marketing aspects of STP.
This is the best example to understand the implementation of STP formula in practice
(Karadeniz, 2009). IKEA focuses on the customers by considering different segmentation
characteristics like demographic (males, females and the people over 23 years old), behavioral
segmentation (cost-conscious, regular users and loyal) and geographic characteristics (UK,
Australia, Russia, Europe and America). In order to position its products among targeted
customers, IKEA utilizes mono-segment positioning. Through this, it makes the appeal to the
expectations and wants of a single segment that is very concerned about money and wants to get
additional value for money. In this way, different firms use this marketing formula in different
manner (Dudovskiy, 2016). They are gaining various benefits by using different components of
STP formula.
However, these components are beneficial for the company and they assist the organization to
attract more customers, but still there are some disadvantages and limitations of STP. These
limitations are given in the below paragraph:
Limitations of STP
As mentioned above, STP (Segmentation, Targeting and Positioning) plays a vital role in the
marketing process of an organization. When it comes to analyze critically, it is necessary to
describe the limitations and demerits of used concepts. Sometimes, it can be noticed that
marketing segmentation and targeting process is very costly for the organization. Firms may
confront various issues as they need to formulate the marketing mix strategies for different
market segments (Wells, et al, 2010). For these firms, mass population is more inexpensive than
an extensive product range. Additionally, these companies face different costs such as increased
advertising and promotional expenses, inventory costs, administrative expenses, promotional
campaign expenses etc. Moreover, it is essential to conduct in-depth evaluation of market and

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targeted audiences as there are various firms which are unable and failed in positioning and
targeting process (Janiszewska and Insch, 2012).
Nokia is the best example to understand the situation of failure under STP formula
implementation. The company is failed to target its potential customers and creating a positive
perception of its products and services. It was unable to capture the minds of customers. The
marketers at Nokia did not understand their own value proposition and promoted the mobile
phones providing longer battery life. It faced the failure it did not consider the needs and
demands of customers. It failed to understand that today’s generation is looking for
entertainment. It was the primary cause behind company’s downfall. It indicates that Nokia did
not conduct a deep analysis of market and targeted customers (Doz and Wilson, 2017). Thus, it
can be stated that targeting the most appropriate market is very significant under the process of
STP implementation. By evaluating the customers and overall market, it is crucial to analyze the
competing brands in the same sector. It needs to make sure that its products are innovative and
attractive.
Furthermore, one of the major disadvantages of market segmentation is that when there will be
changes in the customer characteristics and variables, then company’s investment on STP
become useless. If a firm adopts different market segmentation processes, it requires
implementing effective marketing strategies and programs accordingly (Pal Singh, 2014). It can
increase the administrative expenses of that firm. In this way, it shows that the main
disadvantages or limitations of STP are the requirement of deep market research and
expensiveness.
Generic Recommendations
In today’s competitive business scenario, every company is making efforts to develop successful
marketing by the effective implementation of STP. This formula is an important part of
marketing process since organizations began to identify the significance of having control over
their brand image. It is also an effective way of affecting customer perception and buying
decisions as well as to meet the corporate objectives (Scott, Martin, and Schouten, 2014).
Making operative marketing efforts will be very profitable for the companies in this competitive
era. It is essential for the companies that people know about the value of goods and services and

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create an optimistic opinion about firm’s products. It will enhance revenues and sales of firm’s
offerings. To the above stated examples, this is hereby recommended that Tesco should improve
segmentation and it should adopt pricing positioning. The entity can implement this type of
positioning strategy to the range of products like widescreen LCD TV. This can help the
company to attract its audiences who are conscious about the prices as compared to other
components of marketing mix.
Considering the significance of STP, the organization should try to recognize the most precious
market segment. It should adopt a systematic procedure in which it should conduct an in-depth
research about the competitors by using articles, websites, journals etc. In the second step, the
firm should gather the data about different demographic characteristics such as it needs to know
how much funds the potential customers have (Mcdonald, 2016). It is significant component of
the customers and overall market. The companies should analyze the variables and factors of the
customers that will help them to entice a large customer base towards its services and products.
Thus, the companies should make additional focus on its STP implementation and develop the
strategies effectively. In the above essay, it is mentioned that Nokia Corporate is failed to
implement STP approach effectively. So, it can be recommended that the organization can
improve its targeting by upgrading the specifications of its mobile phones. It should add new and
more innovative features in its mobile phones and select the most appropriate market for its
products. There is an example of IKEA that is implementing all the marketing aspects
effectively. Also, this company should enlarge its segmentation to the psychographic
characteristics and target the people according to their lifestyle and attitudes. It will help it to
expand its marketing area in the retail sector (McCamley and Gilmore, 2018). Furthermore, all
the organizations should develop an in-depth marketing analysis to know about the expectations
and demands of people so that they can produce goods and services. After that, they should
target the customers for whom it has manufactured its products. By looking at these suggestions,
firms will be able to enhance its strategic planning in modest atmosphere. It will enable the
companies to attain more and more competitive edge against competing brands in perspective
industry.

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Conclusion
Segmentation and targeting a market is a complex process with different characteristics to
consider. The organizations make good efforts to implement these processes in practice. In the
limelight of the above essay, it can be concluded that Segmentation, targeting and positioning is
a significant under the process of strategic marketing planning. When a company brings its
products in the marketplace, it creates its marketing process by using segmentation and targeting.
This essay evaluates all the important marketing aspects and their implementation to different
firms. It includes the opinions of different authors in the form of literature review. These authors
have stated both advantages and disadvantages of STP implementation for a company. The essay
found that using STP formula is beneficial for strategic management of the company, but it has
some limitations or disadvantages that can resist the firms from its successful implementation.
From the literature review part, it can be concluded that demographic characteristics are the most
dominant variables of market segmentation as most of the company use these variables. There
are several variables like changes and trends in the market, prices and market conditions which
have large impact on market segmentation process.

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