Graduate School of Management
Kotler (1988) has stated that: “The heart of modern strategic marketing can be described as STP – segmenting, targeting and positioning.’’ Discuss this statement using appropriate examples.
By definition market segmentation is the division of a market into different groups of customers with similar needs. Or to express it in another way, market segmentation is the division of a mass market into identifiable and distinct groups or segments, and each has common characteristics and needs and displays similar response to marketing actions. ‘’In essence it is the process of dividing a varied and differing group of buyers or potential buyers into smaller groups, within which broadly similar patterns of buyers exist.’’ (Wilson and Gilligan, 2007, p. 318). There are several ways in which companies can segment their markets. Just as you can divide an orange up into segments you can divide the population as a whole into different groups of people or segments that have something in common. Marketers therefore look for variables they can use to divide up the population. According to Kotler (1997) the commonly used variables are: Geographic segmentation, demographic segmentation, psychographic segmentation and behavioural segmentation. Products can be aimed at a lifestyle. People are grouped according to the way they lead their lives and the attitudes they share. For example, young professionals may drive a sports car because of the image they want to portray. Married parents might want the same things, but have to provide for their children, which is a large extra cost. They will need a family car to suit their lifestyle. Thus you will find a couple that has just married and have no children, will go for a Mazda 3, while older couples with three or so children will go for a Mazda BT-50 because it is bigger and can accommodate the whole family. However the range and variety of marketing decisions suggest that any attempt to use a single basis for segmentation may result in incorrect marketing decisions as well as a waste of resources. Thus increasingly today you will find marketing strategies combining two or more basis for segmentation of their market. TARGETING
Once the firm is satisfied that the segments warrants attention there are various ways in which a firm can then target a market. The first is a single product offering. In other words, the marketer targets a single product offering at a single segment in a market with many segments. For example, British Airway’s Concorde is a high value product aimed specifically at business people and tourists willing to pay more for speed. Identifying marketing targets enables organisations to find opportunities and tap into them. It gives firms the information needed to focus on the buyers that are interested in what they have to offer. This saves both time and money in an ever-changing society. However if you pursue one segment of your target market and the demand for your product decreases, so will your financial strength. In essence, you are putting all your eggs in one basket. When your firm becomes well established in a particular market segment, it may be difficult for you to move to another segment. This may occur due to your market reputation or popularity. For example, if Lorimark HR Consultants becomes known for helping college graduates find jobs, unemployed professionals may perceive them as only having the expertise to serve that market. Another downside of target marketing may that a large segment of the population may be left out in the cold. Though demographics and segmentation might give an overall view of the intended market, consumer spending habits change greatly, depending on trends and economic factors. With society taking on more of a unisex lifestyle businesses should be careful when using for example...