MKTM028 Strategic Marketing Segmentation, Targeting and Positioning (STP) AS2


MKTM028 Strategic Marketing Segmentation, Targeting and Positioning (STP) AS2

1.0 Introduction

Strategic marketing underpins the success and competitiveness of a company. According to Huang and Rust (2021), strategic marketing is a continuous process informed by research to understand the market dynamics, including the customer’s behaviour, needs, and preferences. The quantitative and qualitative insights from research are used to develop an effective marketing approach. This describes the importance of information and communication technology (ICT) in collecting and analysing consumer information. An example is artificial intelligence (AI), a technology that allows organisations to segment and categorise the target market according to their unique and diverse characteristics for positioning the product or service (Pitt, Bal, and Plangger, 2019). This introduces the importance of the segmentation, targeting, and positioning (STP) marketing model, a critical tool in ensuring the success of a product or service. However, as Dibb and Simkin (2009), there exists tension in implementing the marketing frameworks. This report entails a critical evaluation of the STP framework and its application in organisational competitiveness and the success of a product or service. The structure of the paper follows a literature review about the STP model, industrial application of the concept, and generic recommendations as drawn from the literature.

2.0 Literature Review

STP model has various definitions. All centred on the three aspects of segmentation, targeting, and positioning. The definition by Liu and Wu (2013) distinguishes the three aspects of the model. Collaboratively, the framework involves dividing the market into segments to identify the target market and convey the relevant information about the service or product through positioning. This definition is similar to that by Han et al. (2012) that STP is an important marketing approach implying the accurate location of the service or product according to the segmentation and selecting the suitable market. These two definitions imply that the market comprises various groups targeted by the organisation. However, the success of the product or service is founded on the organisational ability to determine the most appropriate customer segment for positioning. It is therefore important to understand the three terms individually and their application. 

2.1 Segmentation

The broad definition of segmentation is dividing the market into various segments or consumer groups with diverse wants and needs. According to Goyat (2011), the importance of segmentation is subdividing the homogeneous group according to their preferences to develop a specific marketing strategy for the specific group. Gomez, Loar, and Kramer (2018) note that the market is segmented based on various factors, including behavioural and psychological, such as beliefs, values, and attitudes. This breakout, according to the specific features, is then used to develop an effective marketing approach and making strategic decisions about the group to reach and how to connect with them. However, Dibb and Simkin (2009) note that there are challenges in implementing the segmentation knowledge. Segmentation also informs how the company can ensure the product and service are meaningfully connected to the individuals’ characteristics and preferences. The main characteristics of effective market segments include differentiable, substantial, accessibility, and sustainability.

The discussion above regarding segmentation implies that the marketing managers should demonstrate skills and competence in distinguishing the market. An identifiable aspect involves every segment having a key attribute, including the purchasing preferences, consumption behaviours, and usage. The segment should also be vast to ensure a profitable business. Accessibility implies the ease of communicating to each segment through the promotional tools. Sustainability is concerned with a stable segment for a long period. This allows for strategic marketing. According to Puwanenthiren and Udurawana (2015), market segmentation is a process that should be carefully planned. Another core concern in current organisations as described by Dibb and Simskin (2009) is the need for other approaches since segmentation only is not enough. Further customer insights’ strategies are important.

2.2 Targeting

Targeting follows the segmentation. It involves the selection of the most suitable segment as the target market. According to Liu and Wu (2013), targeting is critical in analysing and selecting the most profitable segment to carry out the marketing. Han et al. (2012) use the new energy vehicles in China to describe the importance of targeting. The authors argue that it is challenging to serve all the possible users of the product or services. Therefore, targeting allows the company to identify the most suitable population or group to market the product. This is essential in promoting the company’s competitiveness. Liu and Shan (2021) describe the importance of targeting in purchasing vegetables, fruits, and tea drinks. This article concludes that the most suitable target market for these products is healthy individuals. The three studies describing targeting in the STP model show that for companies to remain successful, distinguishing the segments and selecting the most suitable is central in developing a tailored marketing approach to the decided market segment.

2.3 Positioning

Positioning is based on the target market position. Once the most suitable target has been identified, the company considers a specific attribute of the product or service related to the consumer. This is described by Liu and Wu (2013), who note that positioning entails conveying the product’s attribute to the target consumer through various marketing approaches. This is further aimed at establishing the proper position of the good or service in the market. In contemporary organisations, innovative practices are central in marketing the product. As Kozlowski (2015) described, analytical tools allow the company to identify and establish effective approaches to meet the innovative indices. Technology is also important in selecting the most suitable marketing approach. Urde and Koch (2014) describe the importance of positioning as selecting the most suitable advertisement, ensuring the brand becomes more premium, and the product is positioned to the right market. This promotes the awareness of the target market about the product or service.

The above discussion shows that the STP model is important in organisational competitiveness. It allows for the company to distinguish the market into various groups. This is effectively achieved through data collection and analysis. According to Huang and Rust (2021), marketing managers should demonstrate competence in data management. This is essential in obtaining numerical and textual data to determine the different segments and target markets. An important theme that arises from the evaluation is distinguishing the market according to various aspects, including the individual’s needs. This introduces the importance of Maslow’s hierarchy of needs theory, where the individual’s preferences and needs are determined to make an informed decision regarding the most appropriate target market for the product (Kim, 2020). Therefore, it would be important to align the STP model with other theories, including the Maslow hierarchy of needs. This transcends to relating STP with the marketing mix based on issues, such as product placement.

3.0 Industry Application

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