Segmentation, Targeting and Positioning (STP) and Branding

Keywords: Global segmentation, Targeting and Positioning (STP), STP and international marketing, Dimensions of customer segments and targeting, Global positioning, Relationship between positioning and branding, Marketing and branding assignment writing services

Introduction

According to Schlegelmilch (2016), Segmentation, Targeting and Positioning (STP) involve identification of market segments to direct marketing activates at these segments in order to satisfy the needs of customer better than competitors by positioning product which appeal to target market customers.

Brand is a name, design, term, symbol or other feature which differentiate one company product or services from other companies. Brand positioning enables the organisation to develop image of brand the way it wants consumer to think about product (Blankson et al., 2016).

This report is based on two parts. The first part of report discusses the concept of STP and analyse its importance for marketing strategy. The second part of report analyses relationship between positioning and branding along with brand positioning example of global brands.

Part A

Global segmentation, Targeting and Positioning

According to Doole and Lowe (2008) stated that international marketing involves process of planning and execution for global companies to take decision for price, promotion and distribution of product and services to satisfy customer need in global environment. Global market segmentation involves dividing the world market into distinctive customers’ subset with similar needs.

Armstrong et al (2014) evaluated that it is a process of identifying specific customers segments (individuals or groups) with similar buying behaviour. Global targeting involves evaluation of attractiveness of segments and selecting the one or more segment to enter the market. Global positioning is process of arranging product to develop clear, desirable and distinctive image for brand on the mid of customers (Baack, Harris and Baack, 2013, pg. 26). The diagram 1 below enclosed the process of STP

segmenting, targeting and positioning (STP)

Importance of STP for marketing strategy

According to Shankar et al (2012), the three important components to devise effective marketing strategy are segmentation, targeting and positioning. The STP process is a useful tool to categorise homogenous segments, target discrete market segment and position product appeal to customers.

The benefits of STP in marketing includes improving competitive position of company by setting direction and emphasis on marketing strategies such as product development, target advertising and brand differentiation.

Baines, Fill and Page (2013) added that importance of segmentation is that it enables the organisation to effectively allocate the resources.  This allows identifying and examining opportunities and gaps in the market based on growth segments, new customers or product lines.

STP model allows matching the resources of company with target market to achieve better return on market. STP model demonstrates the linkage between the market and company strategy to compete in that market. The STP process involves segmentation, selection of target market and then implementing positioning (Alon and Jaffe, 2016).

Consequently, the aim of STP process is to provide an insight to organisation how to develop appropriate marketing mix and provide foundation for marketing strategy.

STP and marketing mix

STP and international marketing

Marketing segmentation

Kotler et al (2015) stated that global companies segment the world markets based on following criteria which are psychographic (attitude, value and lifestyle), demographic (size, income and population), demographic and behaviour characteristics as shown in diagram below.

The requirement of effective segmentation is that each segment is measurable (size and purchasing power), accessible (reached and served), substantial (profitable), differential (respond to marketing mix) and actionable serve the segment). Segmentation offers subset of customers to be selected as target market which can reach through distinctive marketing strategy (Darroch, 2014).

Market segmentation -- demographic, psycho-graphic, behavioral, geographics

Customer profile

Darroch (2014) highlighted that the two important elements of customer profiling are demographic and geographic segmentation. Demographic segmentation involves measurable characteristic of population based on age, income, gender, occupation and education.

The range of trends emerges based on demographics such as level of income, living standards and, number of children highlights global segments. For example, ‘Sony PlayStation’ and ‘Microsoft Xbox’ customers are teenagers as well as young adults.

Weinstein (2015) disucss that ggeographic segmentation involves dividing world market into geographic subset. The benefit offered by geographic is proximity which means segment are closer to each other, have similar taste and preference and easy to visit.

For example, a global brand ‘National Geographic’ has global presence and broadcast programs for different regional of worlds by categories it offering based segment of markets such as National Geographic travel, Animals and Kids.

Psychographic segmentation

According to Gunter and Furnham (2014), psychographic segmentation is not based on product qualities or performance but it rather focus towards perception and emotions of customers in order to deliver better value and benefits to customers. Psychographic segmentation involves how customer spent money and time based on attributes of education, personality, culture and social background.

Therefore, psychographic segmentation involves is process of grouping customers based on their lifestyle, value and attitude. For example, Porsche AG used psychographic segmentation to tackle car sales decline in the US. Company subsidiary in the US had clear demographic profile of 40+ male college graduate having income of $200,000.

However, psychological segmentation analysis shows that company can divide its customers into further subgroups and these profiles were used for advertising (Schlegelmilch, 2016).

Behavioural segmentation

Kotler (2014) stated that behavioural segmentation is third most important type of segmentation involve series of behavioural measures such as knowledge, attitudes, usage rate, loyal status and customer response to product.

Kotler and Armstrong (2015) elaborate different types of segments. The first is occasional segmentation based on product range, second is benefit segmentation which involves attribute and value delivered to customers, user status orientation (types and trends), usage rate and loyalty status of customers.

Marketing planners begin with measurement of customer perception and value system of brand and use the information in marketing strategy. For example, broadband service provides categorize customer in term of usage rate (Kotler and Armstrong, 2014).

Global targeting

Armstrong et al (2014) highlighted that targeting is a process of comparing and evaluating the identify segment of customers to select one or more segments with better prospect of profitability. This allows the organisation to devise a marketing mix to achieve better return of sales and deliver maximum value for customers. Company target customer based on three important criteria which are heterogeneity in customer preferences, segments are identifiable, profitable and competitiveness of segment.

Dimensions of targeting

Targeting is an important issue to evaluate how target the potential market segment. The diagram 5 shows five different market segment (A, B, C, D and C) and potential target strategy. Global targeting enables the organisation to proceed on target strategy and develop marketing strategy (Kotler and Armstrong, 2010).

segmentation and marketing
segmentation and marketing

Kotler and Armstrong (2015) propsoed that targeting allows developing three types of strategies for five customer segments which are standardized global marketing (Undifferentiated strategy) to target mass customer market in single country. For Coca Cola, use appeal to youthful market segment in global advertising.

The second strategy is concentrated global marketing strategy in which marketing mix is devised to reach single segment of global customer segments. For example, premium brands, Channel and House of Lauder target prestige segment of market. The third type of strategy is differentiated marketing and it involves variation of concentrated global marketing. This includes targeting two or more different market segment with distinct marketing mix. For example, Range Rover target at high end market offering fully loaded vehicle as well as it offers scaled down version lower end market by offering Land Rover Discovery (Gunter and Furnham, 2014).

Global positioning

Westjohn, Singh and Magnusson (2012) added that positioning involves choice of market to compete and differentiation how company wants to compete. Product positing involves a commitment to market segment by ignoring mass market and focus on certain segment of market. Global positioning is the location of company brand or product in the mind of customers. Once market segment are selected and targeted strategy is deployed, then it is important to position product on the mind of customers.

Blankson et al (2014) evaluated that unified product position is extremely important to answer the competitiveness of market. The positioning response develop image of brand by creating brand image and elaborating want of customers. The range of product positioning approach is price, product attribute, usage, arbitrary and user. The positioning approach can be based on following as shown in diagram below

Product Positioning
Product Positioning

Positioning is not about selling products and services but it highlights how brand enrich customer life. Thus, it is important to keep in mind customers interests and needs. For example, ‘Lucozade’ initial brand image and targeting marketing strategy for sick children which later repositioned as energy drink for athletes  (Steenkamp, 2014).

Part B

Relationship between positioning and branding

Elliott, Elliott and Percy (2007) Brand is a name, design, term, symbol or other feature which differentiate one company product or services from other companies. Positioning involves creating distinctive and unique image of brand in relation competition. The purpose of brand is that product/service perceived different from customers.

Aaker and Joachimsthaler (2012) added that brand positioning enables the organisation to develop image of brand the way it wants consumer to think about product. Positioning itself is not arbitrary and it is difficult to make people believe product is last point.

Thus, branding create unique image and name of product position on customer mind and positioning includes communication of actions for development of image of brand companies offers for customers.

Brand Positioning
Brand Positioning

De Chernatony (2014) added that the goal of brand positioning is achieve product leadership, customer intimacy and operational superiority. Brand positioning creates competitive advantage for company through position product in the mind of customers with purpose.

According to Kapferer (1997) positioning along cannot reveal the richness and potential of brand. Brand positioning is crucial and elaborated based on four questions as shown in above diagram. The first question is ‘why’ and it allows understanding customer benefit and branding promise. The second question is ‘for whom’ which highlight the target aspect. The third question is ‘when’ which enclosed description for occasion brand is consumed.

The fourth question is ‘against whom’ which defines the competitors against who company can win. Brand positioning communicates brand promise to customers and highlight sum of features it offers (Kapferer, 2012).

Alon and Jaffe (2012) added that brand positioning provides added value through remarkable differentiation for customer based on brand association. The common bases used in brand positioning are premium (quality and exclusivity), value (cost effective), innovation, lifestyle, ease of use and performance. A strong brand image is key differentiation point from competitor and brand positioning is an effort to create distinctive and compatible brand identity

According to Jobber and Ellis-Chadwick (2012) perceptual mapping allows determining the brand position in the market. It enclosed visual representation of competitor attributes and consumer perception of brand. The four key elements of perceptual mapping are identification of attributes customers’ value, marketing research and plotting brand dimensional map.

Aaker and Joachimsthaler (2012) stated that brand position framework is based on two step process as shown in diagram 8. The first is to indicate the category to which brand is associated and second is essential brand differences in comparison with brand and product category. To develop strong brand position, it is important to define specific place of brand in mind of customers. The four elements of branding position are value proposition, target audience, communication and creating competitive advantage.

Brand Positioning, Aaker
Brand Positioning

Aaker (2009) elaborated that value proposition enclosed the differentiation is also known as unique selling proposition and allows understanding why customer purchase product and how customer value differentiation in their purchase decision. For target market, brand positioning highlight what appeal to customers and market specific position of brand.

Frame of reference explains the market space for company in which brand is positioned. The supporting points highlight what point deliver differentiation and attributes to support claims. The supporting points enable the organisation to manage market communication. The third element is ‘communication’ to understand whether marketer able to communicate brand position. The fourth element is ‘competitive advantage’ which explains whether brand can deliver differentiation and meets the promise overtime (Hassan and Craft, 2012).

Examples of Brand positioning of global brand

KFC

KFC operates around the world and famous for its popular chicken. However, KFC was heading in wrong direction because it fell out of date for consumer taste and preference. Brand position was lost in terms of target customer and value offered to customers. The changing customer preferences and consumer aspiration for healthy food affected ready to market.

Jobber and Ellis-Chadwick (2015) analysed that competitors such as ‘Pret-a- Manager’ took market share from KFC as well as other fast-food chain follow health food options. Brand challenges in terms of proposition offered to customer were limited as company was unable to response to health menu and it was confusing its primary because lack of communication of key benefits

KFC reposition itself on its existing product offering and communicating the benefits through Psychographic segmentation. Company reinforce the brand image based on taste of its product (differentiation strategy). KFC new market segments were families through offering family treat (targeting). Company point of superiority was taste as value proposition and target families and youth with new product and advertising through brand repositioning (Chernev, 2015).

Special K

Kellogg’s special K had image of ‘one favour of cereal with zero innovation’. The brand consider undifferentiated brand as rice cereal and competitors were less concerned about Special K. However, company approach to re-position its product and associated with weight loss has revamped the brand. The benefit focus in shape of fewer calories and weight attract the women segment (behavioural segmentation) of market (Wilburn, 2016).

The company communication of value proposition that Special K twice a day for two weeks could help lose up to 6 pounds weight (point of leverage) has particular attracted young women (25-45 segment) conscious for weight. Company reinforce the brand position through brand story and communication (weight loss TV ad) to empower women through ‘Drop a Jean Size’ Idea was proven success of Special K brand in the market (Dahleh, Lange and Smith, 2015).

Cathay Pacific

Cathay pacific has been voted best airline many times and renowned for its exceptional experiences and customer services. However, reward and benefits offered by airline were out-dated and messenger reward and recognition program failed to deliver value for customers. The key benefits offered under program of ‘Polo Club’ were to attract the primary customers (Psychographic segmentation). The challenge faced by Cathay Pacific identification of customer segment to create reward program and target the segment for desired behaviours (Hassan and Craft, 2015).

Wilburn (2016) explained that Company revamp the existing program to new miles and sector program which deliver benefits to customers through aligning customer profiles. This program provided additional benefits for customer and enhances customer experience through developing sense of exclusivity for high-value customers (differentiated marketing).

Company evaluated the brand position through understanding customer for whom of reward program, purpose (high end customer) the program and aligned against united airline.

Conclusion

The STP marketing process allows breaking market into homogenous segments, target discrete market segment and position product appeal to customers. STP provides useful insight for marketing to make decisions on price, place, promotion and product offering of company. This allows the company to devise affectively marketing strategy for selected market.

A strong brand positioning creates differentiation to pay dividends, provide guide for dividend and increase operational efficiency for whole company. Moreover, brand positioning is difficult but it allows to create differentiation through improve competitive position, customer satisfaction and efficient operations. Brand positioning is fundamental for marketing strategy selection to achieve objectives of company.

 

 

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