The concept of segmenting, targeting and positioning (STP)
Discuss about the Analysis Of Stp Of Four Companies.
The concept of segmenting, targeting and positioning or STP holds utmost importance in the field of marketing (Makgosa and Sangodoyin 2018, pp. 65). This is considered to be a broad framework which simplifies and summarises the market segmentation process (Schlegelmilch 2016). Market segmentation is mainly a process which helps in the division of the group of buyers within the market (Venter, Wright and Dibb 2015, pp. 80). The buyers are further profiled based on a range of variables that help in the determination of the market tendencies and characteristics (Makgosa and Sangodoyin 2018, pp. 70). The processes related to segmentation, targeting and positioning form the major parts of the chronological order based on the market segmentation.
Segmentation can be defined as the process of the identification of the market which needs to be segmented. The identification, the selection and the application of the bases which are to be used in the segmentation are part of this process. Targeting defines the process of the identification of the attractive segments of the market which can prove to be the most profitable for the business (Makgosa and Sangodoyin 2018, pp. 75). Positioning is considered to be the final step of STP and is the business-oriented step as well. This step involves the process where the business organization aims at creating a competitive position in the market where it operates.
STP or segmentation, targeting and positioning is considered to be e familiar strategy based approach of the modern organizations. It is also considered to be a commonly applied and most popular model of marketing in the modern competitive business environment. This approach helps the business organizations to select the most appropriate market area which is suitable for the marketing of its brand or products (Venter, Wright and Dibb 2015, pp. 83).
As discussed by, Cruceru and Moise (2017) the method of segmentation, targeting and positioning has become a popular approach in the modern business environment. The model of STP is the most useful for the purpose of creating marketing communication plans. This helps the marketers in the prioritisation of the propositions and in the development and delivery of the relevant and personalised messages to engage with the audience (Bickhoff, Hollensen and Opresnik 2014). This approach is totally focussed on the audience or the consumers rather the product or the brand itself. The STP based process is mainly focussed on the commercial effectiveness and the selection of the most valuable and effective segments for the business organizations. STP is a relevant tool in the process of digital marketing of the business organizations.
Market Segmentation Process and Variables
As argued by, Cruceru and Moise (2017, pp. 140) The segmentation based process can help in the proper identification of niches with specific needs and the mature markets which can help in finding new customers and delivering effective and focussed markets. The process of segmentation can be completed based on the different existing variables in the market. The different ways of segmentation which can help in the division of markets are as follows,
The demographics of the target market that are used for the purpose of segmenting the market are, gender, age, education, income, marital status, household, length of the residence, types of residence. The psychographics of the target market are used for segmenting of the audience which is based on the behaviour related to the purchase choice, lifestyle, attitudes, risk, hobbies, personality, leadership traits and the risk aversion attitude (French 2017, pp. 38). Demographics of the market help in determining who the consumer is and further psychographics help in the determination of the reason behind the buying behaviour of the consumers. The psychographic data of the consumers can be collected with the help of a variety of methods which include, interviews, surveys, customer data. The hobbies of the consumers are also targeted and are taken as a determinant of their behaviour in the market. The beliefs and the values based on their religion, culture, nationalism are also major determinants of the psychographic variables. The other determinants of the psychographic behaviour of the consumers include, the life stages of the consumers, the geographical locations of their belonging.
As argued by, Lopatovska (2015, pp. 176) The process of market targeting refers to the attractiveness of the market where the organization is planning to bring the brands and the products. The target market of the organization is also based on different factors which can help in determining its effectiveness. The size of the market, the difference between the various segments of the market, the profits that are expected from the market, the accessibility of the market and the benefits that are provided to the company by the market are all major determinants of the target market.
The positioning of the products is thereby considered to be the last step of the entire STP process. This process helps the company to analyse the position or status that it has been able to create in the industry in which it operates. The market positioning map is also used for the purpose of positioning the products of the different companies based on their quality and price. The position that is held by the organizations based on their share in the market is a part of the positioning process. This further helps in analysing the share that is held by the organization in the market. The positioning of the products in the industry is based on their price and quality. The high quality and high priced products and services of the companies mainly fall in the category of premium products. The position of the organizations in the market is also decided with the help of the part of the market segment which it is targeting.
Process of Market Targeting
According to, Schlegelmilch (2016, pp. 64) the STP process helps the marketers of the various organizations to decide the market area where it wishes to introduce its products or brands. However, this process is also related to some major disadvantages for the marketers as well. The process of STP proves to be expensive for the various organizations in which it is applied. The small companies thereby may need to spend huge amounts of money in the research that they conduct on the national and the regional markets for the purpose of selecting their target area (Lopatovska 2015). The process of research that is conducted to the selected market area is time-consuming in nature and companies need to invest a huge amount of time on the research based activities. The segmentation process needs the marketers to determine the target audience in an adequate manner and then decide on the marketing related activities that they wish to implement in these areas (Bickhoff, Hollensen and Opresnik 2014). The organizations further concentrate only on the selected market area instead of providing their attention on the whole market. This reduces the customer base of the organization in the market and they can concentrate their activities only on the specific areas.
Market segmentation process used by Emirates and Air Arabia
The segmentation process that is implemented by Emirates is based on dividing the market into small group which have different needs and they behave in a different manner as well. This process is further related to the targeting of the market segment which is attractive and one or more segments are selected by the company to enter the market in an effective manner. Air Arabia also looked undertook the process of segmentation to divide its customer groups (Airarabia.com. 2018). The division of customer group is an important factor that helps Air Arabia to provide the appropriate services to them in an effective manner.
Demographic segmentation is used by Emirates to divide the customer base with the help of the family size, gender, life-cycle of the families, occupation, income, religion, race, nationality and generation. The demographic factors are the popular areas of the group of customers. Age is not a limit for the customers of Emirates. The customers are divided according to the age, as the needs of the customers belonging to different age groups are different (Emirates. 2018). The company has various sets of rules for the customers who travel with infants or children belonging to different group of age. The services that are offered to the female customers may be different from those offered to the male customers as the choice of services can differ with sex. The income ranges of the customers affect the services that are provided by Emirates. The customers of the company mainly belong to the middle and the high income group of people. On the other hand, the target market segment of Air Arabia is based on the budget travellers, for the people who wished to travel by air at low costs (Klein 2016, pp. 110).
Positioning of Products in Industry
Geographic process of segmentation is related to the various areas where the company has its operations. The time and energy that is invested by Emirates in the different operating areas is not the same. The different operating areas of the company include, Europe and America, Australia, Asia, Middle East and Africa. The geographic segment that is served by Air Asia is similar to that of Emirates both have their operations and base in UAE (Lopatovska 2015, pp. 176).
The target market of Emirates is mainly based on the objectives that have been set by the company. The objectives of Emirates are aligned with the mission statement which states their commitment to the highest standards in all the operations. The primary objective of the company was based on becoming the national carrier of the Emirate of Dubai (Emirates. 2018). However, the organization later on expanded its operations and started increasing its presence globally. The increase in global presence has led to the complex method of selecting the target market for the organization. The target market of the company was also set according to the changed operations (Cross, Belich and Rudelius 2015, pp. 534). The target market of the company is based on the customers of the entire world who expect high levels of services from the airline organizations. The convenience that is provided to the customers is the major target of Emirates. The business travellers are the major target market of Emirates and they expect high levels of service from the airlines. The leisure travellers are the other major segment of target market for Emirates. This market is served by the airlines with the help of various packages based on prices and destinations. The target sub segments of Emirates are based on the services that are provided by the airlines from the purchase points of the tickets to the entertainment that is provided to the customers within the flights (Ernst and Dolnicar 2018, pp. 70). The organization pays attention to the services and the products that they offer to the customers which can help them in delivering the brand promise. The in-flight catering related services are also based on the tastes and the demands of the customers who travel by their flights. The organization however faces immense challenges in the process of maintaining its brand image and the high expectation levels of the consumers. The target market of Air Arabia on the hand is mainly based on the travellers who want just the basic in flight facilities. The main reason behind this being the low cost carrier based reputation that has been gained by Air Arabia in the industry (Venter, Wright and Dibb 2015, pp. 64). The major difference that lies between the targeting process that has been implemented by Emirates and Air Arabia is based on the group of customers which the two organizations are targeting. Emirates has targeted the premium group and Air Arabia has targeted the budget travellers.
Advantages and Disadvantages of STP
Positioning strategy is mainly based on the perception of the brand that is created in the minds of the consumers. The major ingredients that are related to the positioning strategy of a brand are the physical value of the company and the true needs of the consumers. The business class of Emirates Airlines focusses on the brand values like, reliability, punctuality, prestige, frequency and consciousness. The leisure class of the organization is focussed on the prices of the tickets and the image that has been created by the brand in the minds of these travellers. Emirates has been successful in building a modern, innovative and customer-oriented atmosphere for the customers. This has helped the organization in creating a different position in the minds of the consumers. The customers have been the most important part of the entire operations of Emirates in the industry (Barton 2015, pp.48). The company strives to provide the best value for their money and maintain the promise that had been made the brand at the time of setting their objectives. This has been further helpful in creating a successful image of the brand in the minds of the consumers. The positioning strategy that has been implemented by Emirates is based on the emotions of the customers (Emirates. 2018). The importance that has been given by the organization to its customers has been helpful in making them one of the largest and most loved airlines in the world. Emirates has been able to face the challenges related to the creation of a positive image of the by changing its operations and offerings based on the constant changes that have taken place in the external environment in which the organization has its operations. On the other hand, Air Arabia positions itself in such a manner so that the customers are aware of the low cost facilities provided by the organization. The company aims to create an image of the brand among the lower income groups of people. The organization has further aimed at creating an image of the brand which is based on the low cost services that are provided by the company. The organization has created a completely different image as compared to the others in the airlines industry (Klein 2016, pp. 120).
Market segmentation process used by Red Bull and Pocari Sweat
The process of demographic segmentation has been used by Red Bull to divide the customers into smaller group so that the marketing related activities can be concentrated based on the age, income, gender and the occupation of people. The organization has designed the products based on the age groups of the customers. The customer segment Red Bull belongs to the age group of people from 16 years to 30 years (Bickhoff, Hollensen and Opresnik 2014). The customers belonging to the age group below 16 years also account for the huge sales of the company. The company has also formulated special products for the customers belonging to the age group of above 30 years. The organization mainly targets the male customers, however, females are also a part of its customer base (Red Bull. 2018). The income of the customers affects the segmentation of Red Bull as it is considered to be a part of the premium product range of the company. The target age group of Pocari Sweat is between 15 to 35 years which consists both male and female consumers.
Market Segmentation Process used by Emirates and Air Arabia
Psychographic segmentation is also used by Red Bull to understand the psychology of the customers based on the flavours and the tastes of the products offered by the company. The psychographic process of segmentation is based on different variables which are, the lifestyle, the personality, the occasions in which they use the product, the status, the rates of usage, the intention to buy the product and the attitude towards the product. The customers of Pocari Sweat on the other hand belong to a variety of groups including, students, employees, entrepreneurs and civil servants (Business, Products and SWEAT 2018).
Geographic process of segmentation is used by Red Bull to decide the areas in which the company can market its products and receive positive feedback as well. The products of Red Bull are thereby limited to the urban and the semi-urban areas of the different countries. The products manufactured by Pocari Sweat are available in the urban and the rural areas.
The process of socioeconomic classification can also be used by Red Bull to create an advantage in the market. This process is related to the effective process of communication and the knowledge that is used by the company.
The targeting of the market or the customers acts as the key to the success of the organizations in the industry. The audience that is targeted by Red Bull is active in nature and they belong to the age group between 17 years and 23 years. The target audience or the consumers of the products manufactured by Red Bull are mainly those who have graduated from recently or are currently studying. The company targets the customers who are at the turning point of their lives and thereby require a lot of energy to face the challenges that are posed towards them. The target market of the company is then targeted with the help of the products that are manufactured (Camilleri 2018, pp. 70). The target segment of Pocari Sweat is divided into two major groups which are, the people belonging to the age group of 18 to 35 years and the young couples or families who are open to the health products.
The positioning strategy that is used by Red Bull is based on the differentiation of its products and the image that it holds in the market. The image of the brand has proved a strong competitive advantage for Red Bull. The advertisement media is used by the organization to create awareness about the products that it offers in the market. The company has built an image of the brand of a trendy and cool energy drink which is related to the lifestyle that is followed by the young people. The premium products of the company also require premium levels of distribution based strategies as well (Rahman 2016, pp. 60). The customers of the company can obtain the products from the convenience stores, the vending machines, the supermarkets and other premium locations which include, event venues, sports stadiums, bars and nightclubs. The company further recruits the students of the universities in the position of brand managers. This has helped Red Bull in creating the advertisements in such a manner so that they can appeal to the minds of the consumers who belong to the same age group. Pocari Sweat has a strong image in the market and among the consumers. This drink provides a unique benefit of body ion replacement. The body fluids can be restored with the help of the products that are offered by Pocari Sweat. The organization holds the second position in the Indonesian market and has been able to maintain its position for many years (Gengler and Mulvey 2017, pp. 231).
Conclusion
The essay is concluded by stating that the segmentation, targeting and positioning based activities of the organizations are important for the purpose of deciding the suitable market for their products. The organizations are able to form strategies that can further hep them in creating a sustainable position in the market. The two organizations that have been considered for this analysis are Emirates and Air Arabia in the airlines industry and Red Bull and Pocari Sweat in the health drinks industry. Emirates and Air Arabia have used the process of STP in a successful manner to decide the suitable customer base. Although the process of segmentation does hold much importance for Emirates, this variable has played a major role for the strategy formulation of Red Bull and Pocari Sweat. Red Bull and Pocari Sweat have targeted the customers who belong to different class and age group. The targeting related activities have been utmost importance for all the organizations as this helped them in deciding the ways by which they can create awareness of the products in the market. The positioning based activities are also important for the organizations as Emirates and Air Arabia have different positions of their brand in the market. Red Bull and Pocari Sweat have also created their images and positions of the brands among the target group of the consumers.
- Emirates and Air Arabia can be recommended to improve its advertising related activities and provide various packages to the customers.
- Red Bull can be recommended to increase the target market and add more items to the product line which can help the company to increase its presence and revenues in the market. This will also increase the demands of the products that are offered by Red Bull to the present customer base. On the other hand, Pocari Sweat can be recommended to increase the presence of its brand all over the world.
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