Segmentation Targeting and Positioning

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STP model is the heart of strategic marketing where S stands for segmenting, T stands for targeting and P stands for positioning (Qiang & Xiumin, 2013, p. 221).

Market segmentation is the process of grouping customers in the markets with similar needs and traits into smaller, homogenous groups (Armstrong & Kotler, 2000; Boone & Kurtz, 1999; Brooksbank, 1994; Dibb et al., 2006; Ennew, 1993; Jobber, 2007; Lamb et al., 2004 cited in Fang, 2012, p. 141). This enables firms to serve customers in the same group more efficiently and successfully (Armstrong & Kotler, 2000 cited in Fang, 2012, p. 141). Furthermore, there are no predetermined rules to segment a market (Armstrong & Kotler, 2000 cited in Fang, 2012, p. 141). There are four common ways to segment a market, and they are geographic segmentation, demographic segmentation, psychographic segmentation and behavioral segmentation (Armstrong & Kotler, 2000 cited in Fang, 2012, p. 141).

Marketing targeting is the process of analysing dissimilar market segments and selecting the most attractive segments to enter based on the firm’s own capacity (Armstrong & Kotler, 2000; Ennew 1993 cited in Fang, 2012, p. 142). There are four ways to target a market and they are mass-marketing, segmented marketing, focused marketing and customized marketing (Jobber, 2007 cited in Fang, 2012, p. 142).

Market positioning is the process of designing and retaining a competitive place for a product or service in the targeted customers’ minds (Armstrong & Kotler, 2000; Baker, 2000; Dibb et al., 2006; Ennew, 1993; Orth & Tureckova, 2002 cited in Fang, 2012, p. 142). Firms should establish their unique position which is different from their rivals (Robertson, 2005). A perceptual map helps firms to see how customers view their products and identifies gaps in the market (D'Aveni, 2007, p. 112). The map also allows firms to predict and counter rival’s tactics (D'Aveni, 2007, p. 120). Moreover, it is crucial for the firm to identify a...
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