COULD BETTER APPLIED SEGMENTATION, TARGETING AND POSITIONING (STP) HAVE SAVED DICK SMITH ELECTRONICS?

People, blurred by their movement, walk past the front of a Dick Smith store, with the Dick Smith logo above the door.

Dick Smith Electronics will have closed all 393 of its Australian and New Zealand stores by April 30th 2016. Unable to recover from $390million worth of debt, where did such an iconic Australian brand go wrong? Much of the media point the finger at private equity firm Anchorage Capital partners, who bought the company from Woolworths for $90million and 18 months later suspiciously listed the company to the value of $520million. However, in an overcrowded and slumping market, has marketing been overlooked as a suspect in the demise of one of Australia’s oldest electronics stores?

If we apply STP (Segmentation, Targeting and Positioning), a well-recognised method of strategic marketing, it appears the marketing team at Dick Smith Electronics may have disregarded some market and company insights that could have led to a different outcome. Sadly for Dick Smith Electronics, there are some lessons in marketing we can take away from their mistakes.

WHAT IS SEGMENTATION, TARGETING AND POSITIONING?
Divided into three steps, STP it is an in-depth analysis of the current state of the market and the company. The results are then used as a foundation for the brand’s strategic marketing and positioning, but ‘its real value lies in its ability to create profitable business opportunities from similar market situations’ (Bossidy, in Weinstein 2004) – something Dick Smith Electronics was unable to achieve.

SEGMENTATION
According to Doyle (1994, in Proctor 2000), ‘five factors govern the attractiveness of a segment; segment size, segment growth, profitability of the segment, current and potential competition, and capabilities of the business’. Had Dick Smith Electronics done their homework they would have discovered that due to declining consumer confidence and an upsurge in online shopping, not only were their own profits falling, but those of fellow competitors were too. Had they revised their segmentation they may have concluded that the segment was no longer profitable, that their offering was no longer relevant in the current market due to recently added competition and a change in buyer’s needs, and that the small segment that was still in need of their service was being served by several other competitors who were delivering the same service but better. This demonstrates Tony Proctor’s argument that there is a greater need for segmentation strategies during the maturity stage of a product, because buyer’s needs have changed (Proctor, 2000).

TARGETING
Unleash Your Smith
was the final campaign Dick Smith adopted to ‘strengthen their position as the go-to destination for premium products that help all Aussies and their families create amazing things with the help of technology’ (B & T Magazine, 2015). The campaign celebrated the 40 year history of Dick Smith Electronics, targeting innovative Aussie families. Once a target market has been determined, ‘your marketing efforts will remain focused on a particular group of people, ultimately improving your campaign’s success’ (Garberson, 2015). According to shoppers reviews however, while the marketing campaign communicated to a specific segment, they did not offer the products or service this targeted market was after once they were in the store. One consumer referred to Dick Smith as “the Aldi of home electronics”, another commenting “They sell crappy no name TVs, or brand name TVs you can get cheaper elsewhere”. Hardly sounds innovative or premium. This exemplifies the need for marketing, including targeting tactics, to permeate all levels of a company (Strategic Target Marketing).


Dick Smith’s Final Campaign – Unleash Your Smith (July 2015)

POSITIONING
Dick Smith’s inability to apply strategic marketing to all elements of the business is also evident in the weakness of their positioning. While the advertising campaign positioned Dick Smith in one way, other marketing channels, such as their social media channel, position the brand in another way. Their social media was solely focused on pricing and sales. Not only does this contradict their positioning as ‘premium’ communicated through their TV commercials, but also misses other opportunities to market their original positioning, which in turn would have strengthened the campaign. It is also worth noting that there were already two other significant competitors who were positioning themselves as price competitive, online electronics store Kogan, and the increasingly popular JB-Hifi.

WHAT DID DICK SMITH TEACH US?
What we can learn from the death of what was a long-standing iconic brand is that properly applied Segmentation, Targeting and Positioning plays an important role in strategic marketing. It is a process that will not serve its purpose if you ‘set-and-forget’. STP requires regular application and should infiltrate all components of the business. If Dick Smith had applied Segmentation, Targeting and Positioning effectively, perhaps things would have worked out differently.


Author unknown, B & T Magazine, (2015) http://www.bandt.com.au/marketing/dick-smith-extends-unleash-your-smith-with-new-tvc published 2 March 2015, retrieved 3 April 2016.
Garberson, N (2015). ‘Positioning Your Message for Success’, Corridor Business Journal, May 25 – 31.
Proctor, T. (2000). Strategic marketing. London: Routledge.
Weinstein, A. and Weinstein, A. (2004). Handbook of market segmentation. New York: Haworth Press.

Author: Felicity Boath 211000943

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