Marketing Assignment: Importance Of Segmentation, Targeting and Positioning Theory
Question
Task:
This assessment has been designed to allow students the opportunity to explore the underlying importance and application of marketing strategy and implementation concepts to produce recommendations for selected organisations.
“…positioning and segmentation are distinct parts of the strategy process and provide us with some extremely powerful tools; but ultimately they are linked by the central issue of focusing on satisfying customer’s needs in ways that are superior to competitors” (Hooley et al, 2017 p159)*.
*Hooley et al (2017) Marketing Strategy & Competitive Positioning. 6 th ed. Harlow Pearson. By reference to academic literature evaluate, and critique, the concepts of Segmentation, Targeting & Positioning (STP) including a consideration of implementation issues.
With supporting evidence, use appropriate examples from different industries (plural) to exemplify how different organisations (plural) have applied STP, to demonstrate your learning and application of this topic.
Indicate how any company could apply the concepts around STP, making generic recommendations for best practice.
Answer
Introduction:
The segmentation, targeting, and positioning theory are important to build a good marketing strategy. The main objective of this marketing assignment is to identify the implementation and importance of the segmentation, targeting and positioning theory. The report aims to understand the execution of the concepts to propose recommendations for different establishments. The report has been made, concerning the literature review and analysis of the STP theory, along with an inspection of implementation issues. This report indicates how different institutions apply segmentation, targeting and positioning theory with their marketing strategy to exemplify the learning and application of the topic along with supporting authentication.
A conceptualisation of the STP model
Segmentation:
The principal objective of segmentation theory is to recognise the basis for segmentation and discover the foremost characteristics of different market segments. The segmentation is divided into four types of segments: demographic, behavioural, psychographic, and geographic (Camilleri, 2018).
Demographic Segmentation:
This is nothing but a powerful marketing segmentation technique, where a company’s target market splits up according to demographic variables like age, religion, level of education, occupation, income, gender etc, which is known as demographic segmentation. For example, Saga holidays segmented their target audience by age (Corporate.saga.co.uk. 2020). Therefore, this organisation sells travelling packages to those who are below 50 years of age.
Behavioural segmentation:
Behavioral segmentation introduces a marketing process that divides customers into a division based on the consumers' behaviour. The nature of the procurement and brand loyalty, and usage level factors helps to do the behavioural segmentation (Venter, Wright and Dibb, 2015). The organisations related to the hospitality service like airlines, hotels and restaurants are the best example of behavioral segmentation. These organisations provide the best service to the consumers for retaining their customers.
Psychographic Segmentation:
Psychographic segmentation aims to divide the target audience into a group based on psychological characteristics such as social status, opinions, lifestyle, personality, interests and activities of the consumers. In this context, Coca-Cola Company segmented their clients based on their personality, values and lifestyle (Team, 2019).
Geographic segmentation:
Frequently, the organisation segmented their buyers based on the location where they live or where their shop is located. This type of audience segmentation done by the company is identified as Geographic segmentation. For example, KFC in India is satisfying their consumers' demand depending upon the location of their outlet. In south India, KFC serves different types of vegetable items, as the buyers from that area are mostly vegetarians (Kelso, 2019). Considering that, in North India, KFC offers various types of chicken products as per the market's need.
Targeting:
After doing the segmentation of the consumers, the process of targeting the audience takes a huge role in developing a marketing strategy. The company need to imagine the market segments that give the best return on expenditure. The organisation also needs to figure out which sections to target alongside recognising the consumer groups that will produce immense benefit and helps to give the maximum profit possible. There are some crucial factors, an organisation needs to consider, which are detailed below.
The company need to target the profitability appropriate to every segment. The consumer groups that mostly contribute to the organisation's bottom line should be targeted at first. Apart from this, the potential growth and the size of the consumer groups create a huge impact while targeting the audience (Agzamov, Rakhmatullaeva and Giyazova, 2021). By comparing these two variables, the company need to investigate if there is any growth possible or not. However, the organisation should be aware of the fact that any social barriers and technologies can affect the business. For evidence Louis Vuitton has created the image of luxury products that has encouraged a different target segment to purchase the limited-edition products to show their taste and royalty (Darbinyan, 2020). Therefore, the organisation has to do the political, technological and economical evaluation, and as a result, the company will have a clear vision about the target segment. These observations will initiate much better goals for the market as mentioned earlier segment.
Positioning:
Positioning explains where an organisation's product stands concerning the other companies that provide similar kinds of products and facilities in the market. An extraordinary positioning theory makes a material unique, and the consumers consider utilising it as a definite benefit comes to them. Many companies supply similar types of products and services with the same benefits, but a brand with brilliant positioning will be highlighted more, and the sale of the brand will increase (Fayvishenko, 2018). However, the implementation of positioning theory will help an organisation to overcome bad situations immediately by gaining more profit from the market. By understanding the construction of social reality, an organisation can construct sensibly to go through the norms that encourage the ends. By promoting the product and by keeping the product's price value for money, a good positioning marketing plan can be created by an organisation. Apart from this, at the end of the day, positioning in the market's location can also incredibly assist a company in achieving high revenue. For example, Nike has positioned itself in the market with high quality and high price segment and thus the target consumers are helping in developing better revenue for the brand (Kohan, 2021).
Importance of STP in the context of business
From a broader perspective STP, marketing assists in defining the target market, this assisting brands in stepping up the sales effectively. After that, the specific marketing strategy assists companies in positioning the company's products and services within the target market. By adopting the specific approach, the company is better positioned to avoid unnecessary usage of advertisement and expenditure in marketing. Applying the STP model in the business context assists in splitting the potential buyers in similar goods having the same type of needs with the assistance of buyer-based marketing (Ghahnavieh, 2018). Attracting the right consumers is very much essential for gaining supremacy in the competitive market. If a company is unable to track the correct consumers, it might struggle in the competitive sphere, even if it has a strong brand presence. The risk factors of the business can also be mitigated with the assistance of the STP model by deciding how and when the product will be marketed amongst the target audience. One of the key purposes of the STP model is to raise awareness and interest in the mind of the consumers so that they can turn into potential buyers. Successful application of the STP model also helps enhance the efficiency of the marketing by suggesting efforts towards the designated segment keeping in mind the specific characteristics of the segment. In this context, it could be mentioned that the application of the specific model assists in establishing a strong rapport with the audiences by addressing their changing needs and demands as per the industry standards (Kampamba, J., 2015). On a further note, the determination of the right consumer base also assists in retaining consumers in the competitive sphere. If the consumers become knowledgeable about the product features and if it matches their needs, then retention is bound to happen. In other words, the STP model prevents a company from investing in marketing efforts where it is not required. On an overall note, it is stated that the STP model is instrumental in determining the right consumers for the company's products.
Issues with the implementation of the STP model
It has already been discussed earlier that market segmentation is subjected to the practising and categorising of the target audience in several groups. When the market segmentation is initiated properly, it can prove to be advantageous for the companies. However, on several occasions, it is noticed that the market segmentation results in the creation of inaccurate and ineffectual solutions. If the segmentation process is not initiated properly, the targeting and positioning of the company can be affected as well. Failed segmentation of the market could have several causes, and therefore it is needful to understand the problem right away so that similar mistakes are not repeated in the future (Lopatovska, 2015). Some of the major segmentation issues encountered by companies are mentioned below:
The design issues often come into existence due to the wrong segmentation of the market and the impact of personalised bias and agendas on the results. The segmentation of the market shall be done depending on the goals. While acquiring a wider customer segment, it is essential to understand the customers who are potential buyers and the ones who cannot connect with the brands. Identifying wrong consumers can affect the successful launching of companies in the competitive market. Personal bias and prejudice can have a negative influence on the segmentation design (Hossain and Chen, 2019). Personal bias and agendas can take the initiative of affecting the market choices and selection of measures. Therefore, one should be focusing on the assumption aspect to segment and target the right audience.
Business issues often come into existence when the company starts lacking the understanding of the segmentation and its capability of attaining the specific goals. At times, companies fail to determine actionable and measured goals as well, which affects the overall segmentation, targeting and positioning process (Font and McCabe, 2017). In this context, it can be segmented that a company can be segmented in infinite ways, however, if the goal is not correct, then the vision of the company will be lost as well. Therefore, it is very much essential that businesses should be clarifying their goals properly so that the application of the STP model can be initiated effectively.
The implementation issues come into existence due to several reasons. On a primary note, the implementation could be occurring when the scheme is complicated such that the target audience are unable to understand and therefore, the implementation process seems to be challenging. This issue comes into existence when several variables are considered at a glance for segmenting the market.
Overly basic schemes is another implementation challenge, which could prove to be hazardous for segmenting the market. If the segmentation scheme is not much simplified then the target market will not be finding value in the product that needs to be marketed. Therefore, the desirable results cannot be attained by implementing the overly basic schemes.
At times, it is noticed that companies often take the initiative of making mistakes in the creation of a scheme, which is impossible to achieve. This aspect is particularly common in terms of attitudinal schemes, where the segmentation of the consumers seems to be tedious by nature.
The performance issues often come into existence when the consumers within a specific segment have certain differences. This aspect could be resulting in imprecise targeting for certain strategies and tactics like offering, product messaging and any kind of media channels. Another performance issue, which is faced while segmenting the market, is the cure-all perception issue. This problem is often created when the company is in a notion that the segmentation process will be during all of the issues. In this context, it could be mentioned that segmentation mainly assists in targeting the customers, determining marketing efforts and devising sales strategies for attainment of competitive supremacy. However, while managing the performance issues, the segmentation process will not be detailing which products to develop and not justify the reason of the consumer churning (Khoo-Lattimore and Prayag, 2015). It will also not be giving an idea of why the customers are not making the repeat purchases. Therefore, it shall be noted that no performance issues can be neutralised with proper application of the STP model also.
Recommendations
In relevance of the above-discussed issue, certain recommendations will be proposed so that the companies do not experience any issues in identifying the correct audiences for their products. In the competitive sphere, the issues need to be resolved right away so that the product or services of the company can easily reach the intended target audience.
It has been determined earlier that the segmentation process is often hampered on several occasions due to wrong identification of the goals. For resolving the specific issue, the companies should focus on identification of SMART goals. The identification of the specific type of goal will be ensuring that the goals is measurable, specific, highly achievable, time-bounded and realistic in the sense. Specifying the marketing goals will assist in the right identification of the consumers as per product offering.
It has also been determined in the issue identification section that at times companies develop either an impossible scheme or overly basic schemes for segmenting the market. For resolving the specific issue, application of the discriminate analysis and decision tree technique can prove to be effective for conducting realistic segmentation, targeting and positioning. The application of the specific techniques assists in the intervention of key phases that assists in interpreting a step-wise decision making process by analysing a situation from several angles and perspectives.
For alleviating the challenge related to the identification of the wrong segment, companies can include the decision influencers in the process for segmenting the target market properly. The decision influencers have a vast knowledge of the industry standards and trends, depending on which the altering attitudes of the consumers can be determined, while segmenting the market.
The use of personal agendas and bias shall be avoided for segmenting and targeting the market effectively. Therefore, the marketers shall be thinking from a neutral perspective instead of prioritising personalised prejudice. In other words, the marketers shall be determining the target audience as per audience interest.
While managing the issues related to segment differences, the companies should take active participation in segmenting existing sub groups with the assistance of additional perspectives and variables. The application of the specific process will be effective in proper market segmentation. For handling the all-cure perception issue, the companies should be improving other business operation areas instead of only managing the segmentation process.
Conclusion
While summarising, it could be mentioned that the application of the STP model is crucial for determining the right consumers. The model is crucial for ensuring successful product launch in the competitive market. Some of the issues related to the interpretation of the model are performance issues, business issues, and design and implementation issues. Based on the issues suitable recommendations has been proposed as well so that companies can avoid similar mistakes in future.
References
Agzamov, A.T., Rakhmatullaeva, F.M. and Giyazova, N.B., 2021, June. Marketing strategy for the competitiveness of modern enterprises. In E-Conference Globe (pp. 1-3).
Camilleri, M.A., 2018. Market segmentation, targeting and positioning. In Travel marketing, tourism economics and the airline product (pp. 69-83). Springer, Cham.
Corporate.saga.co.uk. 2020. Saga plc | Saga Corporate Website. [online] Available at:
Darbinyan, M., 2020. Positioning strategies of Louis Vuitton and Gucci.. [online] The Social Grabber. Available at:
Fayvishenko, D., 2018. Formation of brand positioning strategy. Baltic Journal of Economic Studies, 4(2), pp.245-248.
Font, X. and McCabe, S., 2017. Sustainability and marketing in tourism: Its contexts, paradoxes, approaches, challenges and potential. Journal of sustainable tourism, 25(7), pp.869-883. Font, X. and McCabe, S., 2017. Sustainability and marketing in tourism: Its contexts, paradoxes, approaches, challenges and potential. Marketing assignmentJournal of sustainable tourism, 25(7), pp.869-883.
Ghahnavieh, A.E., 2018. The influence of marketing factors on the marketing strategic planning in SNOWA corporation. Business and Management Studies, 4(4), pp.52-61.
Hossain, M.D. and Chen, D., 2019. Segmentation for Object-Based Image Analysis (OBIA): A review of algorithms and challenges from remote sensing perspective. ISPRS Journal of Photogrammetry and Remote Sensing, 150, pp.115-134.
Kampamba, J., 2015. An Analysis of the Potential Target Market through the Application of the STP Principle/Model. Mediterranean Journal of Social Sciences, 6(4), pp.324-324.
Kelso, A., 2019. KFC Invites Fans Along For Its Crazy Marketing Ride. [online] Forbes. Available at:
Khoo-Lattimore, C., and Prayag, G. 2015. The girlfriend getaway market: Segmenting accommodation and service preferences. International Journal of Hospitality Management, 45, 99-108.
Kohan, S., 2021. Customer Engagement Drives Nike Profits Up 16%. [online] Forbes. Available at:
Lopatovska, O. 2015. Operational And Strategic Positioning Of Enterprises In The Target Market. Issue, 2, 176-180.
Team, T., 2019. Understanding Coca-Cola's Business Model And Performance Across Key Operating Markets. [online] Forbes. Available at:
Venter, P., Wright, A. and Dibb, S., 2015. Performing market segmentation: a performative perspective. Journal of Marketing Management, 31(1-2), pp.62-83.
