MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 1

Market Segmentation, Targeting, and Positioning

Name of Student

Course

Instructor’s Name

Institution Affiliation

State/City

Date
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 2

EXECUTIVE SUMMARY

Strategic management requires the involvement of certain marketing strategies for a

brand to be successful. Some of these strategies include the STP marketing strategies, which

stand for segmentation, targeting and positioning marketing. The three are an effective way of

marketing as segmentation involves dividing the market into segment with ideal customers then

picking on the best segment for the product you want to sell. Targeting involves picking the best

targeting strategies that would enable you to sell well in the selected, market segment while

positioning involves the customers view on the market. The customer’s preference will create the

product dominance thus putting it in a certain position when compared to its competition.

Despite this, there are several criticism that comes with the STP marketing strategy which are

talked about. Nonetheless many companies have used this strategy to market their product and

they include Apple Inc., Ferrari among many other.

 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 3

INTRODUCTION

For any and all business to succeed in its operations there must be a proper strategic

management within the system. Strategic management entails formulating and implementing

certain well-thought goals while analyzing the internal and external environment including the

market competition. Effective strategic management keeps the business informed thus making

the most appropriate and profitable information. One of the major aspects to be focused on is the

market, in modern marketing, there are some factors controlling the market and they all revolve

around segmentation, targeting, and positioning of the market. The three go hand in hand but are

very much independent of each other.

SEGMENTATION

Market segmentation is basically dividing the market into groups based on similarities

they may have. Segmentation is mainly done so that a business can put energy and focus to the

segmented market in order to get a competitive advantage and get maximum returns from the

market. The process entailed in market segmentation and they include: identifying the needs in

the market, identify the characteristics that would segregate the population into groups,

determine what each group want (Bergh et al. 2016, pg 951).

Segmentation in the current market may be based on four main classifications:

geographical segmentation, demographic segmentation, behavioral segmentation, and

psychological or lifestyle segmentation. Each of these may contain other segregation with it.

Geographic segmentation
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 4

This is mainly based on the region the market is. It can be segmented by states, regions,

countries, cities or even communities. Preference and data may vary from a region to another

because various factors such as population shift, purchasing behavior of the people in the region

and regional preference or consumer preference, or simply activities/feature that may favor the

purchase a product in a region and not another. Most brands use this form of segmentation since

it is a homogenous population. Geographic segmentation often comes in handy when dealing

with political and cultural factors. Marketing a certain product in some regions may not be ideal

because of these factors and therefore a business avoids it all at once. There are some regions

that would not support the prosperity of a business while other businesses thrive in it (Bergh et

al. 2016 pg. 486).

Psychological segmentation

This often referred to as lifestyle segmentation though it also is based on a person's

personality as well as psychological profile. This segmented market depends on the values,

emotions, wishes, lifestyle, and opinions of the intended target market. This segmentation can be

quite profitable for the business as certain psychological groups prefer a certain class of life.

There are certain groups that maintain high lifestyle and producing products and advertising to

this group could be quite profitable since they are also known to be spendthrifts (Bergh et al.

2016 pp.488).

Behavioral segmentation

This form of segmentation focuses on the customer's attitudes towards products. There

are variables that are entailed in this form of segmentation and they include; occasions, benefits,

user status, buyer readiness, among others (Hoek, et al. 1993 pp. 44).
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 5

Occasions

This is segmentation based on time, there are some products better presented to the

market in a certain time of the year or even day. This is because these products do are not bought

throughout but only at the specified time. An example is some products and services are in

demand during certain holidays like flowers on Valentine's Day, or Cyprus trees on Christmas

season or even turkeys on Thanksgiving. Other products that vary with time of day include food

and beverage consumed during different times of the day thus appealing to a consumer at those

specific time, for instance, coffee and tea in the morning while heavy meals like steaks in the

evening.

Benefit

This segmentation divides the customers to the benefits or satisfactions they sake from

the products and services offered.

Attitude

The attitude of the segment will dictate if the market is to be ventured or not. If the

market has a bad attitude on a certain type of product them there is not much need to introduce

the product to the market but if the opposite is the case then it would be profitable. For instance,

if a population does not think much of the swimming culture, it would not be profitable to

introduce a swimming pool venture in that population.

Loyalty status

A market can be known for its loyalty to certain products. This can be an asset if you are

introducing a new product that is needed by the market as the market position is guaranteed. It
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 6

could not be wise to introduce a competing product in such market segmentation as their loyalty

is already spoken for.

Demographic segmentation

This is also a main form of segmentation as it can be grouped into different categories

depending on age, gender, income, religion, race, just to mention but a few. This form of

segmentation is easy to identify and to measure thus associated with bulk sales.

Age

This basically is marketing the product for the specific age groups. It should be noted that

some products may be accepted throughout the age groups but most are age specific. People with

same age tend to be drawn to similar likings .

Gender

Products are often designed and marketed for specific gender while others are produced

for both genders, these products are usually clothes, cosmetics, footwear's, hair products and the

likes. Each market segmentation has different likes and preference and is usually reflected in

these products.

Income status

Income status dictates the purchasing power of an individual thus likelihood of them

purchasing certain products. Marketing some products that are often termed as a luxury needs to

focus on people with certain incomes since they are the ones willing and can afford to purchase it

Religion
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 7

Different religions have different product references in the simple commodities, it can be

observed that the food consumed and even clothes that are worn by people from different

religions are different therefore marketing to the religion that takes the product ones offers is

advisable. Another example for places with Muslim occupant it would not be profitable to

introduce a funeral home service as they do not keep bodies of the dead in such facilities as they

bury their dead immediately.

MARKET TARGETING

After the process of segmentation, we proceed to market targeting process. After the

marketer has segmented the various markets he should pick on the group to target. After the

group has been selected, the company has to define a marketing strategy they are to use to get to

the segment (Weinsten, 2013 pr. 8). The marketing segment that may be picked on includes,

undifferentiated marketing, differentiated marketing, or concentrated marketing.

Undifferentiated marketing

In this form of marketing, the marketer targets the entire market and does not pick or

specific segments. He focuses on the similar needs all the segments have rather than the different

needs. The downside of this type of marketing is that it does not meet specific needs thus will not

satisfy all the customers.

Differentiated marketing

This kind of strategy enables the marketer to target several market segments with

products and services tailored to each market. This will mean that most, if not all customers will
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 8

be satisfied therefore the sales will be high thus putting the product in a stronger market position

as per the segment. The downside to this kind of market strategy is that it is costly since the

company builds separate market plans for each segment (Carroll et al. 2016 pp. 72).

Concentrated marketing

This is the opposite of the undifferentiated marketing strategy where the company

focuses on a larger part of a few, say one or two segments. This strategy is known to be

profitable since it puts focus on its segment thus is more effective and understands the market

well. Nonetheless, this strategy has its own shortcomings, the method involves a lot of risks as it

only focuses on a few markets and if any fail, it will bring very little returns.

For a company to pick on one of the above strategies they must consider several market factors

such as:

 Competition in the respective segments, so as to know if the company has a chance of

competing or it would be overwhelming,

 Market and product homogeneity, if the market is governed by one brand and how the

brand fairs on in the market.

 Trends in the respective markets, if the market is willing buyers or if it is a seasonal

market
 Segment sizes, this will guide the company in anticipating the returns to be gotten from

the market thus knowing its profitability

 Resources the company can avail for promotion, this is applicable mostly to the

differentiated marketing as it investing a lot of promotion within its market.

 The marketing environment, this gives a general feel of how smooth the business can be

conducted in the stated market segment

 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 9

All these will help the company know if the business venture is feasible for the intended market

(Weinsten, 2013 pr. 13).

MARKET POSITIONING

After identifying the segment one intends to target, the next thing is to identify the

position the segments is to occupy in the market. This is the ability to influence consumer's view

of the product or brand in relation to its competitors. To maintain relevance in a market, a

product has to stay competitive and bring in some uniqueness. In order to do this, a company

must do a positioning strategy where they will figure out what the company is and how to

differentiate itself from its competitors, understand the market itself and try to figure out the

opportunities in the market that can be exploited.

The consumer tends to organize the products in their minds in order to make them remember

easily. This arrangement is done with or without the help of the companies. To get an edge in the

market it is effective if a company positively influences how the consumer views and rate their

product, therefore, they pay attention to the following.

 The customer’s believe on what is important to them when purchasing a product or

paying for a service

 Developing a product brand that is targeted at meeting the needs and expectation of its

customers
 Evaluate how the customers perceive the competition
 Identify and assume an image for the company that differentiates it from its competition

on the basis of brand/product characteristic, understanding of customers need and

expectation and the customer's view of the competing brands.

 Promote the product to the market and make the product easily available to the

customers.
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 10

COMPANIES IMPLEMENTING THE STP MARKETING

Ferrari

When the car got into the market it picked on a specific segment as well as the marketing

strategy. Since it is a high-end car it can only be targeted for a certain class of people. Over the

years it has produced one of the most expensive cars with Ferrari 250 GTO at its time being the

most expensive car in the world. The market segmentation for the company was based on

demographic and psychological segmentation. The demographic targeted by this company is that

of a certain income level. Since it is a high-end car, it can be afforded by the wealthy and thus is

made to appeal to that group. The psychological segmentation targeted by this company is those

with a certain lifestyle. A person with an extravagant and high lifestyle would be a good

customer for this model of car as it is an extravagant high-end vehicle. The company's marketing

strategy is that of concentrated marketing. It focuses on its specific segment in various parts of

the world and does not do much to appeal try making entry to new segmentation. This form of

marketing has proved to be profitable for the company as it attracts and retains it segmented

market which gives good returns. The company already has an established brand, therefore, has a

good market position. Despite the market having other brands like Mercedes- Benz, Audi and

even Lamborghini that occupy the same segment it has managed to secure and maintain its

position to the consumers and managed to keep a lid on its competitors

 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 11

From the pictorial representation, it can be seen that Ferrari has a market position as a fair costly

and an excellent quality automobile.

Apple Inc.

The primary strategies of Apple have been always to developed and make sales of brand

new as well as innovative products. It required blend IT technology and art for providing the

streamlined and simple user experience. Apple Inc. is one of the leading multinational

corporations and is the market leader in Consumer Electronics as well as industries of media

sales. Products mainly include Mac, iPod, iPhone, Apple TV among others. Apple market

segmentation is quite broad, its consumers are distributed among most if not all demographic

segmentation, geographic segmentation and even psychological and behavioral segmentation.

With the wide variety of services and products the company offers

Type of services: devices: Accessories: Operating

 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 12

segmentatio segmentation iTunes and iPhone, Mac, Apple TV, system and

n criteria iTunes store, iPod and Apple watch. software: ios,

Mac App iPad osx, iwork,

Store, ilife.

iCloud,

Apple pay

Geographic Region UK UK UK UK

Geographic Density Urban Urban Urban Urban

Demographic Age 18 to 30 20-45 20-45 20-35

Demographic Gender Males and Males and Males and Males and

females females females females

Demographic Income High High High High

Behavioural Degree of Loyal Loyal Loyal Loyal

loyalty switchers switchers switchers switchers

Behavioural Personality ambitious ambitious and ambitious and ambitious and

and determined determined determined

determined

Behavioural User status Users, non- No users and Non users Users, non-

users and potential potential users and

potential customers customers potential

users. users.
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 13

Psychographi Lifestyle Succeeded Resigned Aspirer and Exploded and

c and explorer. and aspirer. Explorer. succeeded.

Psychographi Social class middle and middle and upper class middle and

c upper class upper class upper class

The table shows the wide segmentation range the company has managed to target.

With all these market segmentation being targeted it is logical for the company to apply

undifferential marketing strategy as this form of market targeting casts a net in almost all

demographics in but still manages to catch most of its customer's needs. When the company

entered the market it identified an untapped market in the phones production industry and has

since been branching to other electronic devices. Its market position is well defined in the

customer's mind as it is known to be a high tech. Their smartphone is estimated to rise by nearly

7.3 yearly (Bergh et al. 2016 pp. 494). With this trajectory, they are expected to fill the entire

phone market for the developed and developing countries in the years to come. Some of the

competition it has includes other phone and electronic companies like Samsung, LG, Sony and

Lenovo for the phone brands and Sony, Dell, Hp as well as Toshiba for the computer brands

(Bettis et al. 2014 pp. 958). Since the company has already created a positive and impressionable

image in the customer's mind the competition finds it hard to keep up with the company.
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 14

The figure shows a market positioning of the apple phones.

The figure shows how Apple has created a brand that balances between business and personal as

well as making it interesting and trendy.

There are several other companies that use the SPT model in running it marketing (Bergh

et al. 2016 pp. 480). g, examples of these companies include BT Plc. which is UK's largest

telecom company. It has adopted the STP model for its different customer's group that ranging

from individual customers to B2B services for his competitors (Morschett et al. 2015 pr. 16).

CRITICISM ON THE MARKETING PROCESS

Globalization seems to affect SPT marketing in a great deal. Globalization is marking

many governments to pick on the market free economic system. This system increases the
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 15

competition in any and all market thus marking the concept of market segmentation become null

and void.

Segmentations are seen to use assumptions and arbitrary decisions thus can make it

biased and not accurate. The influence of marketer's opinion in segmenting the market makes it

inaccurate. Segmentation is also seen as unstable since the customer's opinions and wants

change rapidly (Hoek et al. 1993 pp.66). Some researchers feel that if segmentation were

successful there would be no need for target marketing. Positioning, on the other hand, is seen to

be concerned on the customer's perception of the product brand, which is not the case, as the

major thing the customers concern themselves with are the prices, functionality, and quality more

than they do the perception of the company. Positioning also overemphasizes on the product

differentiation and gives the perception that without being different the company will fail, which

is not the case (Lynn, 2011 pr. 12).

CONCLUSION

Segmentation, targeting, and positioning of the market is a technique that has been

present in the market and used by several companies to market its products. The STP is simple

and easily understandable and therefore can be adopted by companies that are coming up and

also the existing companies that wish to venture into new products or new markets. Despite this,

there are several criticisms of the process and one should be careful in implementing the process

or else it may not work for the company.

 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 16

Reference

Hoek, J., Gendall, P., Esslemont, D.H.B. (1993), “Market segmentation: a search for the Holy

Grail?” Asia-Australia Marketing Journal of Business, Vol.1 No.1, pp.41-68.

 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 17

Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management.

Springer.

Bergh, D.D., Aguinis, H., Heavey, C., Ketchen, D.J., Boyd, B.K., Su, P., Lau, C.L. and Joo, H.,

2016. Using meta‐analytic structural equation modeling to advance strategic management

research: Guidelines and an empirical illustration via the strategic leadership‐

performance relationship. Strategic Management Journal, 37(3), pp.477-497.

Bettis, R., Gambardella, A., Helfat, C. and Mitchell, W., 2014. Quantitative empirical analysis in

strategic management. Strategic Management Journal, 35(7), pp.949-953

Carroll, R.J., Primo, D.M. and Richter, B.K., 2016. Using item response theory to improve

measurement in strategic management research: An application to corporate social

responsibility. Strategic Management Journal, 37(1), pp.66-85.

Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a

digital strategy. John Wiley & Sons.

Peteraf, M., Gamble, J. and Thompson Jr, A., 2014. Essentials of strategic management: The

quest for competitive advantage. McGraw-Hill Education.

marketingcgm95. (2018). Arguments against Segmentation, Targeting and Positioning in the

Marketing Plan. [online] Available at:

https://marketingcgm95.wordpress.com/2012/12/27/arguments-against-segmentation-

targeting-and-positioning-in-the-marketing-plan/ [Accessed 17 Apr. 2018].

Pure.au.dk. (2018). [online] Available at: http://pure.au.dk/portal/files/11462/BA.pdf [Accessed

17 Apr. 2018]
 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 18

Is.muni.cz. (2018).[online] Available at: https://is.muni.cz/el/1433/jaro2015/PV240/um/PA240_-

_L3_-_Market_segmentation.pdf [Accessed 17 Apr. 2018].

ManagementMania.com.(2018).StrategicManagement.[online]Availableat:

https://managementmania.com/en/strategic-management [Accessed 17 Apr. 2018].

Weinstein, A., 2013. Handbook of market segmentation: Strategic targeting for business and

technology firms. Routledge.

Durand, R., Grant, R.M. and Madsen, T.L., 2017. The expanding domain of strategic

management research and the quest for integration. Strategic Management Journal, 38(1), pp.4-

16.

Smart Insights. (2018). The Segmentation, Targeting and Positioning model. [online] Available

at: https://www.smartinsights.com/digital-marketing-strategy/customer-segmentation-

targeting/segmentation-targeting-and-positioning/ [Accessed 17 Apr. 2018].

Insivia Marketing + Web Design. (2018). Segmentation, Targeting, and Positioning - Insivia.

[online] Available at: http://www.insivia.com/segmentation-targeting-and-positioning/

[Accessed 17 Apr. 2018].

Your Article Library. (2018). Market Targeting: Introduction, Definition, Procedure and

Methods. [online] Available at:

http://www.yourarticlelibrary.com/economics/market/market-targeting-introduction-

definition-procedure-and-methods/48609 [Accessed 17 Apr. 2018].

Smartling. (2018). Market Positioning Strategy | Complete Guide | Smartling. [online] Available

at: https://www.smartling.com/market-positioning-strategy/ [Accessed 17 Apr. 2018].

Khan, T., 2013. STP strategy for New Product Launch-a Work in Progress. International Journal

of Business and Management Invention, 2(3), pp.56-65.

 MARKET SEGMENTATIKON, TARGETING, AND POSITIONING 19

Lynn, M., 2011. Segmenting and targeting your market: Strategies and limitations.

Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.

Pearson Education.