Segmentation, Targeting and Positioning

By: aakinyem@deakin.edu.au

WordPress username: aakinyem

 

THE STP PROCESS

Marketing concepts are important tools for getting a pragmatic and innovative result in the field of marketing or exchange of information between organizations and their customers. STP represents the main emphasis for assessing markets and understanding consumer behavior (Van Ginkel and Lin 2009).

The concept of market segmentation was first perceived and introduced into literature by Wendell Smith (1956), emphasizing it as a better alternative to mass marketing (Foedermayr and Diamantopoulos 2008). Also following, is the idea of targeting and positioning all working in an integrative process used to create product value and achieve marketing strategic aims. Market segmentation, targeting and positioning are very important tools for creating marketing strategies (Yang 2012).

 

Segmentation

Market segmentation can be described as an action used to divide a collectivity into homogeneous groups or fragments based on one or more criteria (Claudie et al 2008) According to Diamantopulos et al 2014, homogeneous attributes are customer’s nature of exhibiting similar buying behavior. A market segment has been defined as a group of present or potential customers all having some common characteristics. (Foedermayr and Diamantopoulos 2008)

 

Toyota for example as a leading car manufacturer has a segment that is focused on middle high income earners as is the roll out of their Camry, Parado Land Cruiser. And for the high income class people they have the Toyota Altis Sport Model and the Toyota Fortuner. Toyota has a remarkable ability to move from one part of car section to another from production of sedan sport cars, buses or station wagons manual or automatic gearing.

 

Market segmentation can help organizations to serve customers more efficiently and effectively with higher profits (Yang 2012) Market segment can come in the grouping of:

• Gender
• Age
• Family stage life-cycle
• Education
• Income
• Ethnicity
• Wealth and Time

Segmentation can be done in a managerial top down idealization or a customer based bottom up approach.

Targeting

It is unlikely that an organization will be able to serve all the market segments (Baker cited in Yang 2012). Targeting serves to effectively market (campaign efforts) to concerned consumers by eliminating others (Garberson 2015).  Targeting involves evaluating market segments and deciding which segment one will like to serve or pursue (Yang 2012) Targeting implies the process of creating marketing mix for usage by one or more segments that was identified during segmentation (Claudie et al 2008).

Two important factors to put into consideration when targeting is attractiveness and compatibility with company (Claudie et al 2008). Nancy Garberson, owner of Marketing and Communication Inc., and a University Marketing Professor teaches that the best way to target intended group is to first conduct some research, get information from consumers and compare with your assumptions, then finally perform a SWOT analysis for improvement.

In the music industry, songs range from different segments all to the appeal of varying groups of people. Young people generally are well targeted by Hip Hop, RnB, Rock and other high energy music in that niche. Older people may want more relaxed, country music, slows, or gospel or something spiritual…?

Positioning

Positioning involves the way a company’s marketing activities are perceived by the end customers with regards to marketing strategies used by the competitors (Claudie et al 2008).  Positioning has to do with escalating a brand image so as to get them fixed in the minds of potential customers. (Garberson 2015). Positioning stands to place products in the mind of prospects.

McDonald in the United States, operating in a very multicultural environment, has used a special strategic STP that targets specific ethnic groups offering foods that are appealing to each ethnic segment. This initiative is among many other tool that has positioned the company and makes McDonald an inevitable brand in the global competitive market place.

 

References

Claudiu, CŞ, Ionel, D & Tudor, IF 2008, ‘SEGMENTATION, TARGETING AND POSITIONING OF THE SUPPLIERS. BASIS ELEMENT IN STRATEGIC PLANNING ON BUSINESS TO BUSINESS MARKET IN ROMANIA’, Annals of the University of Oradea, Economic Science Series, vol. 17, no. 4, pp. 790-5.

 Diamantopoulos, A, Ring, A, Schlegelmilch, BB & Doberer, E 2014, ‘Drivers of Export Segmentation Effectiveness and Their Impact on Export Performance’, Journal of International Marketing, vol. 22, no. 1, pp. 39-61.

 Foedermayr, E & Diamantopoulos, A 2008, ‘Exploring the Construct of Segmentation Effectiveness: Insights from International Companies and Experts’, Journal of Strategic Marketing, vol. 16, no. 2, pp. 129-56.

 Garberson, N 2015, ‘Positioning your message for success’, Corridor Business Journal, vol. 11, no. 44, p. 28.

 Yang, F 2012, Marketing Strategies for Foreign Universities in China: A Case Study of the University of Nottingham, Ningbo, North American Business Press Inc., 21566186, Case Study,<http://ezproxy.deakin.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=85143742&site=ehost-live&scope=site>.