We’ve all been in a situation in life when we are out shopping at the mall and we come across something we really like but don’t buy it because it is ridiculously over priced. Try and remember some! The iMacs, Kitchen Aid cooking devices, Luxury couches in most stand alone in-mall furniture stores, and of course, cars!
But the question we should ask ourselves is, is that product really meant for me?
This is where the concept of market segmentation, targeting and positioning comes into play. Companies selling consumer goods first segment or divide the population into smaller groups based on age, gender, income or other similar factors and get an idea of the composition of the consumers that they are exposed to. Next, the companies decide to target a particular segment of the population to sell their products to. It is crucial for the companies to select the right segment, as not every member of the market will want to buy every product a company has to offer. The final step of the puzzle is the process of positioning. Through this process, companies market themselves in different ways to gain the attention of the target market and to set themselves apart from the competition.
(Source: Marketing 91, Image by Marketing 91)
Now, let’s look at the iMacs manufactured and sold by Apple Inc. to better understand the concept of STP.
The other day, while browsing through the local electronics store, I came across an iMac priced at a whopping A$6459. I really like and want the iMac, but the price gave me a mini panic attack. Yes, it’s got Retina display. Yes, it has a state of the art graphics board and a huge amount of ram and a lot of storage space, but is a computer worth $6459? I bought a Mazda hatchback car for less than that last week.
(Source: Apple.com, Image by Apple)
Now, going back to the question I asked at the start of the blog, what I really need to ask myself is, is this for me?
Apple Inc. divides its market into segments based on income, age and whether the segments are technologically inclined or not. The company’s primary segment is the age group 25-50, the group that can afford to buy luxury consumer products by itself. The market is further segmented based on profession. A visual artist or a graphics designer will need a high-end iMac more than a schoolteacher. The same goes for tech companies in comparison to call centers.
After segmentation, Apple then hits the target market for the high end iMacs, which is the high income earning group between the ages of 25 and 50 working in fields requiring the use of the highest quality specifications for a computer like graphics design, architecture, visual art, photography and for those who simply want it and can afford to buy it.
When it comes to positioning, Apple is absolutely brilliant at it. Their products are wanted by everyone. The way their products are beautifully designed, their smart advertisements and website interface and the quality of the retail experience, everything absolutely sets them apart from the competition and is attractive to almost every consumer in the world. I know people who go to the Apple Store just to browse through their products on weekends when they have nothing else to do. That is how well positioned Apple is in the minds of the customer.
The bottom line is that we have to understand that we might not be part of the target market of a particular product before claiming that it is too over priced. The right reason to not buy something beyond our affordability range is that it is not meant for us.
But, I still do hope I can get my hands on that 6K iMac.
Apple. 2016. iMac. [ONLINE] Available at: http://www.apple.com/au/imac/. [Accessed 18 April 2016]
Market Segmentation Study Guide. 2015. What is the STP Process?. [ONLINE] Available at:http://www.segmentationstudyguide.com/stp-process/what-is-the-stp-process/. [Accessed 18 April 2016]
Marketing 91. 2015. Difference between Segmentation, Targeting & Positioning. [ONLINE] Available at:http://www.marketing91.com/difference-segmentation-targeting-positioning/. [Accessed 18 April 2016]
JB HI-FI. 2016. JB HI-FI. [ONLINE] Available at: https://www.jbhifi.com.au/computers-tablets/apple-mac/. [Accessed 18 April 2016]