21/10/20 e-Portfolio Foundations of Marketing Word Count: 4013
Week 7 Segmentation Targeting and Positioning Theory: Segmentation STP is a marketing process that is made up of; segmentation, targeting and positioning. Through this process companies are able to identify potential customers, select which customers to pursue and finally decide its value proposition for its target customers (Gupta, 2019). STP Marketing Model S Segmentation T Targeting Divide market into distinct groups of customers. (segments) Select most attractive segments to focus your marketing on. Figure 1: STP marketing model P Positioning Determine how to position your product for each target segment. The initial segmentation process is where customers are grouped together based on their needs and similarities. Market segmentation can be traced back to the 1930s, when the prevailing theories of perfect competition and pure monopoly no longer seemed to fit the situation (Barrow, 2020). The notion that every firm was unique and important in its own way came to surface and therefore every firm was able to create its own local monopolistic position; through the process marketers SOURCE: segmentation. marketin g-model/ now recognise as https://expertprogrammanagement.com/2019/11/stp- four (EPM, 2020) markets can be these can be seen in Table 1: Variables affecting segmentation (Barrow, 2020). There are main ways that segmented, table 1 below. Geographic o Country, region, city, urban/rural Demographics Behavioural Psychographics o Age, income, gender, generation, marital status, occupation, education, religion, ethnicity o Purchasing habits, customer journey stage, benefits sought, user status, brand interactions o Lifestyle, personality, activities, interests, 1
opinions SOURCE: https://services.hbsp.harvard.edu/lti/links/content-launch (Gupta, 2019) For firms to be successful they group these variables into; who, what, where and why. Who are the customers? This includes demographic, media habits and lifestyle. Followed by; what have the customers done? Referring to their loyalty, usage and profitability. Finally, why do customers make the decisions they do? This covers their needs, preferences and decision process (Gupta, 2019). As the world evolves, consumers needs are becoming increasingly diverse; hence why segmentation is a crucial step in the world of marketing. Needs can no longer be satisfied with the traditional mass marketing approach (Dibb, 1998). The segmentation process is essentially a survival technique for firms to cope with such large diversity that now exists among customers (McDonald, Christopher, & Bass, 2003). Since the introduction of market segmentation, a number of benefits have been linked to the process. Marketers have found that firms who adopt the concept have; a full understanding of a market, can create stronger marketing messages, identify niche marketing opportunities and have the ability to predict behaviour of consumers accurately, leading to an increased likelihood of identifying and exploiting new market opportunities (Hoek, Gendall, & Esslemont, 1996). Whilst some products and services have an obvious target market, for example; beauty products targeted towards females, segmentation goes beyond these judgments. By segmentation, marketers collect and analyse several variables to fully understand a market (Hoek, Gendall, & Esslemont, 1996). Once they have formed this deeper understand, they use it to divide a market into distinct groups. They