MKTM028 AS 2 -STP Analysis PDF

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MKTM028 2...

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Faculty of Business & Law MKTM028 AS2 Strategic Marketing

Assignment Topic

: Study of Segmentation, Targeting & Positioning

Word count

: 2622

Lecturer Name

: Mr. M Shazly Oowise

Submission Date

: 16.11.2020

Student Name

: Virangi Jayawardena

Student ID

: 20422488

1

Contents 1.

Preamble .............................................................................................................................................. 3

2.

Overview and Analysis of Segmentation, Targeting and Positioning ............................................ 4

3.

Market Segmentation ......................................................................................................................... 5

4.

Target Marketing ................................................................................................................................ 6

5.

Market Positioning.............................................................................................................................. 8

6.

Empirical review on STP application................................................................................................ 9

7.

Recommendation............................................................................................................................... 14

8.

Conclusion ......................................................................................................................................... 14

9.

References .......................................................................................................................................... 15

10. Appendices (Annexure 01) ............................................................................................................... 17

Table of figures Figure 1. Overview of Marketing Segmentation, Targeting and Positioning ............................................ 4 Figure 2 Target Marketing critical conditions ........................................................................................... 6 Figure 3. A perceptual map provides a visual of how customers see different competitors ...................... 8 Figure 4 Flavours of the World - McDonald‘s ........................................................................................ 10 Figure 5 Target Marketing Activities and products ................................................................................. 11 Figure 6. Customer complaint received By COCA-COLA ...................................................................... 12 Figure 7 Segmentation of HSBC customer groups .................................................................................. 13 Figure 8. Market Segmentation Overview ................................................................................................ 17 Figure 9 Flavours of the KitKat world ..................................................................................................... 18 Figure 10. Demographics of Starbucks Group............................................................................................ 19 Figure 11. Signal Toothpaste segmentation overview ................................................................................ 21 Figure 12. Application of Multi segmentation by Marriott's ...................................................................... 23

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1. Preamble

Today,-as-the-world-has-become-a

universal community, marketing has become a critical

component for any business acumen. It is virtually becoming impossible for every other competitor to succeed on the market for an elongated time since rivalry is being slashed to the throat.” Adopt or Vanish” is the crucial conviction in marketing. Which is why it is critical to set a proper marketing plan over time. The effective marketing approach is something which enables businesses to meet their marketing goals. These marketing goals strive to accomplish not only marketing objectives but also corporate objectives to achieve a strategic edge over competitor companies (Goyat, 2011). A-company-will-achieve-efficiency-and-competitiveness-if-it-is-capable-of-making-good-use of its-comparative-advantages,-by-the-design-process,-in-either-a specific product or service market. Customer-loyalty-is-the-primary-priority-of-companies, since-the-returns-they-earn-from-happy clients,-through-the-implementation-of-business-level-policies,-are-the-cornerstone of firms. It should-be-remembered-that-consumer-retention-campaigns-should-be-well-calibrated-to-retain-a competitive-edge. In-the-1990s,-Dell-Computers-focused on cost-effective supply chain management-to-satisfy-the-low-price-need-of-customers-and=quickly-became-the world's largest personal-computer-seller. In-doing-so, the-company-lost-emphasis-on-customer-loyalty metrics and-began-losing-territory-to-Hewlett-Packard. HP-learnt-from Dell's error and-concentrated-on consumers' distinct-commodity-needs. (Hitt, et al., 2012) Collaboration-with-consumers’-is-the-essence-of-a-marketing-plan-which-allows-the-companyto-satisfy-user-expectations-while-continuing-successful. Nevertheless,-one-restriction-is-that the contemporary-business-world-is-marked by diverse entities that-are-homogeneous, different desires-and-aspirations. Every-business-has-to-concentrate-on-customers-within-its-capabilities and-their-strategic-edge. To-overcome-the-above-limitation-business-fraternity-widely-adopt-the-STP-model, which-is-a three-tier-strategic-marketing-model-that-harps-on-customer intelligence and uses customer satisfaction-in-the-enhancement-of-the-company's-brand-image-and-customer-loyalty. The-three phases-consist-of-segmenting-the-market-on-an-appropriate-basis,-targeting-the-most desirable segment-and-positioning-the-within-the-category (Atalay & Desarbo, 2008). This -report-will discuss-and-analyse-the-nature-of-market-segmentation,-targeting-and-positioning-in-application to-various-sectors. P a g e 3 | 24

2. Overview and Analysis of Segmentation, Targeting and Positioning As per Kotler & Keller (2012), the principle of Segmentation, Targeting and Positioning (STP) is the essence of strategic marketing. Individuals have moved away from Ford’s “You can have any colour, as long as it’s black” towards Alfred Sloan "a car for every purse and purpose". One may not have the same tastes, but rarely can one product absolutely please all. Thus, renowned businesses follow a technique known as “Focus marketing”, which partitions the business into segments and produces goods or services for segments. The target marketing will enable to target the most lucrative ones. (Ellson, 2004) As noted by (Kotler & Keller, 2012), the justification for dividing consumers into groups involves fitting brands with their preferences, exploiting competitive advantages, increasing market share by the creation of a niche market. This is important as segmentation directs customer engagement, recognition of emerging business goals, product growth and pricing. The second step focuses on the effective segmentation of the market, which includes assessing the feasibility of the segment and the quality of the organizational resources to deploy. In the final approach of brand placement, the model will respond to customer desires due to a distinctive function, influencing consumer tastes and building loyalty.

Figure 1. Overview of Marketing Segmentation, Targeting and Positioning (Source-strategicmgt.blogspot)

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3. Market Segmentation “Market-Segmentation-is-a-natural-result-of-the-vast-differences-among-people” …Donald-Norman Segmentation is the method of connecting shoppers around each other from a single market with common desires, tastes and behaviours, which show similar trends of buying. (Weinstein, 2004) In 1987, Tynan & Drayton wrote to “Journal of Marketing Management”, market segmentation as a decision-making tool for the key promoter of marketing campaigns in identifying a particular market for a particular commodity while creating an acceptable marketing mix. Lilien & Rangaswamy (2003) also expressed that market segmentation as the fundamental building blocks for competitive marketing. Smith Wendell (1956) was to seize the purpose of use of segmentation as a publicizing strategy by viewing the marketplace as heterogeneous, inclusive of several smaller homogeneous markets. Yet, his argument of “segmentation and differentiation, being alternative marketing strategies” was confronted by Jobber (2004) by stating that, by splitting the marketplace into sub-sectors, the company will then distinguish its products between sectors and thereby gaining a competitive edge. In 1997 Kaj Storbacka introduced the concept of “profitability segmentation” to maximize profit margin from existing customer relationships, with three new segmentation, i.e. cost, volume from relationship and profitability from the relationship. Sharma and Lambert (1994) stress on customer service into a model. In simple terms, segmentation refers to the separation of the larger market into smaller sections based on one or more specific mutual characteristics. Segments have to be identical within a group but distinct from other groups. Simultaneously, consumers belonging to various market groups are somewhat different from each other in terms of certain consumer characteristics. This encourages businesses to target consumers with products, which satisfy their desires and fulfil their expectations while retaining competitive advantage. Researchers categorize variables into four large categories; geographic, socioeconomic, psychographic, and behavioural (Annexure 01). It is also believed that it should be effective to segment if the cluster is measurable, accessible, substantial, actionable and responsive. Pros and Cons of the strategy is detailed in Annexure 02.

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4. Target Marketing “Everyone-is-not-your-customer” …Seth-Godin In 2012, Kotler & Keller, suggested that the target group is regarded as a collection of customers holding common needs or characteristics that the business chooses to service. Targeting will be followed by an effective segmentation of the market, which includes determining the financial attractiveness of the sector and the quality of the operational resource. Based on the evaluation of the financial attractiveness of the many sectors, one or more clusters are selected which are aligned with their strategic goals and strategies (Annexure 03). The optimum level of capital to be assigned to these targeted customers. (DeSarbo, et al., 2015) The market segment involves choosing, pursuing and reaching the correct market. As per (Kotler & Keller, 2016) elements such as measurability, dissimilarity, accessibility and profitability are critical for the targeting market. To optimum, the target marketing application following must be met, thereby Target marketing can be divided as Annexure 02,

Figure 2 Target Marketing critical conditions

However many marketers believe that target markets assist in developing successful marketing communication strategies. Ascertaining a target market helps to direct the campaign activities as cost-effectively as possible. Selecting a target group allows the company to craft _a_message specifically for them. Organizations may not have the time or resources to deploy customers at large with their product messages by limiting studies on market funnels and expenditures to P a g e 6 | 24

consumers with the greatest potential for benefit. Furthermore, any corporate in searching for investors for the venture, understanding the target will significantly affect the success of the business presentation. Also, a well-defined target market approach, for small companies may seek better customer’s feedback. Reception feedback from the target market helps small-businesses to advance their products and develop new products to serve the market. Nevertheless, Wright & Esslemont in 1994 argued that, if segmentation were effective, with authentic segments defined and confirmed, there'd be no rational justification for target marketing to be implemented. Moreover, it’s a misconception that targeting the market with the finest response, consumers outside the target community are also exposed to the marketing mix, and targeting the segment with the supreme response is different from creating marketing mix with the utmost responsibility. In the current world, companies are pursuing customers in China, Russia, India and Brazil due to their rapidly increasing middle classes sector. E.g. Avon cosmetics, the prime market for Avon is no longer in the USA. It is Brazil. Brazilians & Korean who are highly attentive to their appearance and willing to afford cosmetic products and even plastic surgery. These countries are so enticing that companies are modifying the way they produce products and services, too.

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5. Market Positioning “In a competitive crowded world market, it's the well positioned brands that Stands Out!” “…Bernard Kelvin Clive” After successfully targeting the segmented market, the company should position its brand in the market to stand-out from the competition. No company would want to be just a face in the crowd in the minds of the consumers. Thus, positioning the band by customizing the product by the way consumers want to purchase. Accordingly many organisation’s catch-line is designed in a way that gives the essence of the product. E.g . Cargills wants to position themselves as a convenient supermarket thus the tagline “ Gedara yana gaman” (On your way home). In-1964,-Daniel-Yankelovich-mentioned-positioning-as-modest-variations,which appeal-towards different-customer-segments.-He-also-relates-positioning when explaining variations in consumer behaviours, intentions, and-beliefs, habits-of-use, artistic-tastes, and-level-of-vulnerability=as=an alternative=to-market-data. Blankson in 2004 also stated that positioning is an act of creating a company’s offering and picture of distinctive identity in the target’s market mind. Normann & Ramirez, in 1993 also stated that positioning is a conversation between competence and customers to make a better match between expertise and relationship. A straightforward positioning policy will guarantee the marketing campaign components are coherent and mutually supported. Competitive advantage is used to indicate dominance in skill and resources in the market positional superiority, which is based on customer value and profitability. (Charles & Frankwick, 2015) Perception mapping is an effective tool in marketing strategy.

Figure 3. A perceptual map provides a visual of how customers see different competitors (Source: strategictoolkits)

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6. Empirical review on STP application Applications for STP models from the world's leading consumer goods industry are given in this segment. Brief debate is presented in this section of three different markets.

6.1. Industry: Quick Service Restaurant (QSR) 6.1.1.

McDonald’s – “I’m loving it”

This section will reveal the success story of with the adoption of STP in, McDonald's is one of the largest fast-food chains in the world which is serving more than 69 MN clienteles per day. Geographical Metropolitan Markets Mc Cafes

Demographical Age - kids Meal

Physiological Preference - Vegetarian Range

Behavioural Occasions - Birthday parties celebrations at McDonalds

Nation Markets 101 operating countries

Income levels - Dollar Menu

Beliefs - Halal range

-

Make reasons to Visit McDonald’s Campaign in India. “Bhaana Kyai Hai”

In an interview, Carol Sagers (2017) Marketing Director- McDonald’s, reveals that, not like other companies, McDonald’s has separate managers for each segment, not product-wise. E.g. Director for Young adults, Director of Moms/Women, Director of African/American consumer etc. Marketing insight from these segments about consumer behaviours was obtained to maximus the marketing of efforts accurate targeting. Company collects market intelligence daily order to be upto-date. McDonald’s creates its value by following the tagline of “Think Global, Act Local”, being competitive at different segments by agreeing to regional tastes and preferences. E.g, McAloo Tikki and Veggie for India market.

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European

Meal

Middle East & African Greece outlets with

Beer McArabia

Meal with Salad

Japan

Philippines

Sri Lanka

Mc Rice Patty Burger for

McSphagetti

Spicy- Fiery Pepper Chicken

Figure 4 Flavours of the World - McDonald‘s

Besides, company’s use age as demographic segmentation, e.g. child, young adults, and adults. Happy meals which come with the latest toy for kids and young adults Beef and Hamburger were the highest revenue category. In some parts of European countries burgers are served with beer for young adults. In behavioural segmentation, McDonald’s provides a party arena for birthday celebration of kids. McDonald’s pricing strategy varies from country to country. In Sri Lanka, they provide free WiFi for young students to hang-out with their colleagues. McDonald’s found success in market segmentation in many countries. I.e. winning over Indian Territory by entering where their signature dish is not welcome. Soon the company introduced a vegetarian meal version which became a huge success. However, in 2015 McDonald’s was facing huge negative criticism due to the Mclibel incident (Lewis & Evans, 2013), where the company broke the promise of not giving happy meal vouchers to children. Each happy meal contains 2,678kJ, 7.7g of saturated fat. It is worthwhile for McDonald’s to invest more in gastronomic research and development to preserve this segment.

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6.2. 6.2.1.

Industry: Non-alcoholic beverage Coca-Cola – “Taste the Feeling”

Established in 1886, with its history and reputation over generations became the world’s largest non-alcoholic beverage manufacturer, not only from the secret recipe, but also from their remarkable marketing campaign and unique portfolio of over 500 drinks. Company segment Coca-Cola in Nations, towns, or communities, family size, income-wise, life choices wisely. Demographic variables are the most popular segregation of them all. In Psychographic segmentation, they introduce beverages with a-shorter lifespan and for mobile generations. In Behavioural segmentation, the-company produce goods for occasions and benefit are sought. (Kanesan, et al., 2018) Coke-doesn't-have-a-clear-target-market-and-is-meant-for-anyone. The-target-market-for-CocaCola-is-ranging-from-youngsters-who-are-more-health-conscious-to baby boomers who adore the classic-cola. The-main-customer-target is-the=youngsters=aged 13-24, who=are=the=heavy=nonalcoholic=ingestion=group. They=have=autonomy=over=the=purchase, and=they=focus=Cola's on=coolness-and-satisfaction=that-is=consistent-with=their-lifestyle. (Kanesan, et al., 2018). The brand was a-success in reaching these profitable target groups through partnerships with restaurants, fast food joints i.e. McDonald’s. The company uses traits of this target market to produce goods and reach-out to them, i.e. share a can project, find your name project, Split the can, sustainable packaging, Coco with vitamins and minerals.

Figure 5 Target Marketing Activities and products

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Coke is strategically positioned within the consumer’s mind-set as a company who is selling anabstract of happiness. For example, p...