Market Segmentation, Targeting, and Positioning (STP) as for Business Success
Find and describe three examples of the segmentation, targeting, and positioning (STP). Evaluate each example in terms of effectiveness.
Segmentation of a market involves division of the broad market into smaller groups of consumers who bear similar characteristics. Marketers adopt this approach when they want to maximize and optimize their sales to clients. This is an approach that can be undertaken in different ways. Examples of segmentation include; geographic segmentation, behavioral segmentation, and demographic segmentation. The characteristics of each of the examples differ, and each follows a specific pattern. Geographic segmentation involves dividing the market according to the physical mapping, where customers are served according to their particular area. For instance, Adidas segments its consumers in this style. They have Adidas America, Adidas Asia, Adidas Europe, and Adidas Africa; all of them partitions derived from the global geographical map. This geographical segmentation best functions because consumer accessibility is eased as they are concentrated in one place.
Demographic segmentation is another example of how this partitioning is done. This approach considers aspects as age, race, religion, gender, family size, ethnicity, income, and education when partitioning the market. The packaging and marketing of goods is meant to appease to a specific group of people in society. This provides more accuracy in targeting specific consumers with their tastes and what they can afford. Huawei is one company that uses this successfully, especially with the age and gender target. They have pink phones targeting young ladies, and high performing gadgets targeting young men. Behavioral segmentation bases its acts of partitioning on the actual consumer buying behavior. For instance, McDonalds are likely to open more branches in the United States than they are likely to do in the whole of Africa, since the Americans are more attached to fast foods than Africans.
Targeting comes about when a business focuses its marketing efforts on a specific group of consumers in their serviceable market, so as to improve its market fortunes. The business decides on the part to focus on, such that they optimize on returns from that segment. Focusing business efforts and resources to a specific segment is informed by the characteristics of the segment, one that shows huge potential but is yet to realize the possible returns. The segment targeted can be either geographically created, demographically, or even behaviorally. One example of targeting was done by the Chinese phone marketers. In the second half of the last decade, they invaded the African market, targeting them with affordable phones of lesser quality than many brands. Huawei released a smartphone brand - Huawei U8150 IDEOS – in 2010 targeting the low-income earners and middle-income earners, which won them many clients in a market where smartphones were a luxurious item before them.
Adidas is a well-known company globally for their sporting apparel production and selling. The company has a great targeting strategy, where they focus on brand names in the sporting industry. In their ranks, they have huge sporting franchises like Manchester United, Juventus, among others. They also target the best athletes such as Lionel Messi to appease to the following of such athletes. This has seen the company increase its market base from such targets, which act as the base from which the market broadens.
Market positioning is an approach that boils down to the perception of consumers about a brand when compared to competing products. Every business seeks to take a vantage position in the market by impressing consumers. When a brand takes a high position, the business stands a great chance of success. As of 2018, Apple Inc. (AAPL) was worth $1 trillion. As of June 2023, Apple Inc. was worth around $3 trillion, [Bloomberg, June 2023 ] making it the first in such levels . This is testament to what market positioning can do. For a long time, iPhone has been perceived as the gadget to won by many people. This has always raised the company's profile, always increasing its worth with more and more consumers every year. The company has always kept a lead in the market over rivals like Samsung, just because it is perceived to be better.
Sony is another company that has positioned its gaming console – PlayStation – to be perceived as the best. This has seen the company always sell more units of any of its releases than competing brands. Sony remains ahead of Microsoft's Xbox console and Nintendo Switch console. For these companies, positioning is all that matters for them. Sony reaps big in the market for being in a high position in the market.
Companies have also lost big when they have failed to best position themselves in the market. Once a giant, Trans World Airlines is now in extinction after being overtaken in the market by the likes of American Airlines and Delta Airlines and thus ceasing operations. When a brand cannot maintain the high tempo required to remain on top, it is overtaken by rivals; the results can be devastating. When overtaken from a good market position, one loses consumers to a rival and the company begins a decline.
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Compare and contrast a four Ps approach to marketing versus the value approach (creating, communicating, and delivering value). Select and examine these approaches for at least one routine and non-routine problem. What would you expect to be the same and what would you expect to be different between two companies that apply one or the other approach?