Haramaya University

College Of Business and Economics

Department of Management
Program of Masters of Business Administration
Course: Strategic Marketing Management
Title: Analysis of Segmenting, Targeting, Positioning and Marketing
Mix Strategies

By:
Milkesa Ibro
ID No: GPG/939/14

Instructor: Dr. Ramadev J.

Abstract - These days’ businesses do not have enough resources to fulfill the requirements of all their
customers and that too every time. It is also very difficult to cater the requirements and needs of each
and every individual. There are so many people in this world with such a huge diversity in their
choice and preferences too, so it becomes very difficult to design a product that meets up their
expectations and satisfy them fully. Therefore, companies are leaving up their old strategy of
undifferentiated marketing and coming up with target marketing. It involves segmenting and dividing
up the markets and its customers based on their similarities in choices and designing products which
caters them specifically. It is oriented towards customers wants and needs. The managers select and
serve those segments which will be most profitable and feasible for them to produce. Accordingly,
they change their marketing mix elements comprising of products, their prices, distribution channels
and marketing and promotional strategies which will fill up the requirements of individual set of
customers. This chapter elaborates and explains the three phases of marketing namely segmentation,
targeting and positioning. Applications of STP in the companies have also been illustrated.
Segmentation, positioning and targeting are those tools and vital elements of marketing that are useful
for increasing and achieving a competitive advantage by a firm over its competitors in the market.
They are main disciplines in marketing strategy. In not taken care of properly then any faults and
mistakes in this area can lead to failure which can be costly and if done properly then it leads to
success.
Key Words: Target marketing, segmentation, positioning, marketing mix
1. INTRODUCTION

Target marketing is a strategy that involves identifying and selecting most economic and profitable
segments and sectors of a company to cater. It is very different from mass marketing and product
marketing where companies decide to produce and distribute a single product to its all customers and
offers many varieties of products to a big market respectively. The aspect of strategy is very critical
for a company. There are three ingredients of strategy that is segmentation, targeting and positioning.
STP is very important for a company in order to get the fetch the right customers. It enables the
company to understand where it stands with respect to its competitors. It can also serve as a
tremendous source of brand differentiation, targeted advertising and new product development for the
purpose of development of a competitive edge. It also helps in the identification of and location of the
various opportunities by properly analyzing and identifying new customers within the market.
Segmentation is understanding that the whole actual market is equivalent and same, but is the
company's perceptive on the market which could serve as a differentiating factor between its various
competitors. With segmentation, the company becomes more specific in developing a product and
fulfilling the needs of its targeted market. The company decides the segments which it wants to enter
after it has finished classifying, segmenting and grouping the market into set of its potential
customers. Finally, comes into play positioning. After penetrating the market and adapting the
resources of the company according to the segment the company must be able to create a credible
position. Its main target is to create a competitive advantage that is sustainable so that the brands
positions high in the minds of the people. In order to achieve this, its products should be valued as
important and unique by its customers. The company should use these strategies in influencing and
affecting the purchasing decisions of its customers. The marketers of STP make efforts to highlight
the segments and direct marketing activities in which they are confident that their business that do
better than their competitors. Unlike the traditional marketing strategies which are more focused on
the product, the STP strategies concentrate more about its consumers. The model is very useful and
critical when we have to form and develop communication strategies of marketing as it helps the
marketers in prioritizing the propositions and forming and sending personalized and customized
messages to involve with different audiences.

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II. LITERATUR REVIEW
Marketing Strategy
According to the American Marketing Association, as cited by (Kotler and Keller), describes the
definition of marketing is the process of planning and implementing thought, pricing, promotion, and
channeling ideas, goods, and services to create exchanges that meet individual and organizational
goals. Marketing is a social process that, by processing, one individual and group gets what it needs
and wants by creating, offering, and freely exchanging valuable products and services with others
(Kotler and Keller).Strategy refers to various managerial decisions and actions aimed at distinguishing
a company from competitors and maintaining its competitive advantage. A company's strategy must
match its mission, resources, and environmental circumstances Marketing strategy is one that
organizations use to provide their target customers with quality products at affordable prices (Daniel),
offer effective promotional strategies, and interact with their distribution outlets, thereby creating
demand for their products and improving performance (Gituma). Marketing strategies are essentially
based on a mixture of human psychology, sociology, and behavioral economic thinking then
simplified for broader adaptations in everyday use for managers (Kotler, Gary and Hongwei; Kotler,
Gary and Hongwei) .The process starts with understanding the current market situation and
competition, analyzing the most profitable customer groups, and finally adjusting a unique value
proposition for that chosen target audience (Kotler, Gary and Hongwei). However, as the market
matures, creating a unique value proposition for customers becomes increasingly challenging.
Therefore, the company has developed new engagement models for interacting and engaging with
customers on digital channels (Kotler, Gary and Hongwei).
Segmenting
Market segmentation is an economic concept. A company separates a market into homogeneous
segments based on characteristics such as age, income, region, lifestyle, or behavior, thus resulting in
an addressable market (TAM) (Blank and Dorf). TAM determines the number of potential clients, but
this does not mean that they all consume the same way (Kotler, Gary and Hongwei). According to
researchers (Hassan et al. 2000; Leonidou et al. (2002), the company has adopted a variety of
segmentation strategies, ranging from country-by-country design to hybrid strategy, where part of
segments is defined globally, and then regional attributes are used to get the most out of components.
The foundation for determining alternative segmentation strategies for customer groups is determined
by group buying habits and the brand reputation of companies within the group (Kotler, Gary and
Hongwei). The next stage is to decide the number of segments the organization wants to pursue using
methods like cluster analysis (finding similar groups based on features and evaluating them) or
segmentation trees (splitting the whole market into user types based on behavior) (Blank and Dorf).
Segmentation studies seem to rely too heavily on homogeneous ideologies, and the results are
comparable in terms of trial-and-error techniques. If the segmentation results vary depending on the
market and situation, it can only be used as a framework and not as a successful repeat approach.
Further study of the causality of purchasing segmentation, or why customers buy certain services and
belong to a particular customer group, is needed.
Targeting
According to Philip Kotler, there is only one winning strategy. This is carefully determining the target
market and directing a superior offering to that target market. So, the target is to find out how many
profitable customer segments a company can target with the budget they have allocated into key
marketing activities (Kotler, Gary and Hongwei). Therefore, companies need to evaluate the right
approach that generates the most profit from the targeted segment (Blank and Dorf). Companies can
use the competitiveness matrix to assess their offerings (Hunt and Arnett, 2004). Applbaum (2003)

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highlights that there is no actual formula for evaluating the attractiveness of the target segment, so the
selected model needs to be adequately validated. According to (Markery, Ott and du) companies
should consider targeting customers who are most likely to recommend a product or brand to their
friends, and they call it "Target Design." The targeted segment may not be large enough to benefit
itself, but the brand's potential and word-of-mouth loyalty (WOM) will make them brand ambassadors
(Markery, Ott and du). For this, they also developed a tool for companies to evaluate customer
matches as brand ambassadors called Net Promoter Score (NPS). Research on targeting requires sales
data or previous customer data and is therefore unreliable when accessing new markets. Calculating
the profitability of existing segments and using data in new market segments with different needs are
likely to fail or not be as successful as forecasts. There should be more research on the conversion rate
of the target group in the segment that the company has specified.
Positioning
Positioning is how to position a company's products in the minds of prospective buyers (Kotler et al.,
2020). To create a unique selling point (USP), companies need to understand how the brand of that
segment is positioned in the minds of buyers (Keller, 2012). To that end, Keller (2012) created the
concept of "Brand Ladder," which consists of 3 levels and further developed by (Bolden, A and
Sajdeh,), from BCG explained there arefour4 classes, the first Attributes, features, or actual
specifications offered by the product. Both functional benefits, what benefits the product provides to
customers. User experience, speed, or other unique selling points. Emotional help, how the product
connects with the customer's daily life. The fourth social benefit, how the product makes customers
become better members of society. Companies need to evaluate their Points-of difference (PODs)
against their competitors, separating product brands from competitors (Kotler and Armstrong). In
addition, Points-of-parity (POPs), which customers expect town-branded products in that product
category. To validate POD and POP, companies use positioning and market perception maps they
want to enter (P. Kotler, G. A. and H. H.). Once a company finds a USP for the segment, they need to
choose the positioning strategy that best conveys the message to customers (Hooley et al., 2016).
Research on positioning relies on understanding a consumer's daily life and measuring brand
acceptance of product features and benefits. This will likely require the company to have the
resources to collect that information regularly. There should be more research done on how reliable
brand awareness statistics and benefit measurements are.
Marketing Mix
According to (Kotler and Keller), that marketing Mix is a set of marketing tools that companies use to
achieve their marketing goals in the target market continuously. On the other hand, there are
adjustments to the Marketing Mix, where the manufacturer adjusts the marketing mix elements for
each target market. The variables in this marketing mix can be used effectively if arranged following
the circumstances and situations that are being experienced in a company. Traditionally, the pillar of
marketing is 4P, which stands for Product, Price, Place, and Promotion. However, as customers
became more advanced, three further 'Ps' were added primarily to the service industry: People,
Process, and Physical Environment (Hashim and Hamzah, 2014). A marketing strategy; product,
price, place, and promotion are what organizations use to react to market and internal forces that will
enable organizations to achieve their goals (Kotler and Armstrong). A mixed marketing strategy
includes all of a company's responses in ensuring that the target market positively affects the demand
for their products. Companies that aspire to meet customer needs should often focus on understanding
customers and developing appropriate strategies to improve their performance (Muchiri, 2016). The
marketing mix is the best step to consider all operational factors of Arena Corner marketing, and this
is because the marketing mix looks in terms of products, services, prices, and location. In addition, the
marketing mix for Business to business (B2B) market share can apply the marketing mix by using
NICE Marketing strategy (Networking, Interaction, Common Interest, Experience). This strategy is

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needed to build relationship marketing that focuses on customer relations management (CRM) as one
way of marketing to customers who want to increase long-term growth and to attract and retain
customers through corporate relationships to customers.
III. METHODOLOGY
This study uses qualitative research methods where the data obtained by the author through
observation, analysis of documents, and records or analysis of reports are used as a basis in the
calculation of his research. The sample and population in this study used interviews and data
processing obtained from with segmenting, positioning, and targeting measurements and collection of
marketing data obtained. Furthermore, the analysis is processed and translated into the results of this
study.
3.1. SEGMENTATION
It is a process which involves grouping a market which is heterogeneous in nature into segments and
groups that have certain relationship in their wants, behaviors or responses to marketing businesses. It
can also be defined as a group of customers who share similar set of interests. It is a customer-
oriented procedure. After the segments have been decided the marketers must consider which
segments to consider further. The more diverse the customers the more different will be their
expectations. For example, there will be some costumers for whom high quality will be most
important and on the other hand there will be some for whom price will be most important. Its main
aim is to identify the segments that would be of high yield.
3.1.1 Benefits
1. Gain a better understanding of the customer, their needs and wants and enhance their relationships.
2. Helps business in improving and achieving the requirements of customers as per the expectations.
3. Helps in evaluating and identifying the strengths and weakness of their competitors.
4. Helps in identifying and discovering new business opportunities and also which are not properly
taken care of.
5. Helps in discovering the resources in a better way that could lead to the development of a properly
organized marketing programme.
3.1.2 Segmentation Variables
It can be divided into 5 categories which are:
1. Demographic:
It uses physical and factual data in order to group the market into various segments. Its variables
include:

 Age and Life-cycle stage: Consumers wants and abilities change with age.
 Life stage: It defines and relates to the person's major concern such as whether the person is
going through a divorce or a second marriage.
 Gender: Men and women have different attitudes and behave differently; reasons may include
genetic makeup and socialization.
 Income: It comprises of dividing people on the basis of their levels of income earned.
 Generation
2. Geographic:
It comprises of identifying the relevant markets which have the potential according to their physical
location. Its variables include climate, natural resources, population density and climate. Markets can

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be identified and divided into various sectors because of the existence of these variables which have
the power to differentiate customers from one region to next. For example, people residing in cold and
wet climate are likely to favor sunny and warm places for spending their vacations. This factor would
heat up the completion between various airlines especially in the period of peak holiday seasons for
certain destinations.
3. Psychographic:
It is used to divide the market based on motives, interests, personality traits, values and lifestyles of
the people. These variables come into play when the behaviors exhibited by the customers while
purchasing match with the personality of the customers. The most popular classification used here is
Strategic Business Insight's (SBI) VAL’s framework. Its main dimensions include consumer
motivation and consumer resources.
4. Behavioral Segmentation:
This type of segmentation is related to the purchase behavior exhibited by the individuals. It considers
into account the frequency and volume of products being shopped. Its variables include:

 Needs and benefits

 Decision Roles: Initiator, Influencer, Decider, Buyer and User.
 User and usage-related variables: Occasions, User Status, Usage rate, Buyer-readiness stage
 Buyer-Readiness Stage
 Loyalty status: Hard-core loyal, Split Loyal , Shifting Loyal , Switchers
 Attitude
5. Product-related Segmentation: Its variables take into account the product or the service which has
to be marketed.
3.1.3 Steps in Segmentation Process
1. Needs-Based Segmentation:
2. Segment Identification
3. Segment Attractiveness
4. Segment Profitability
5. Segment Positioning
6. Segment Acid-Test: It involves creation of segment storyboard to test the attractiveness of each
segment's positioning strategy.
7. Marketing-Mix Strategy
3.1.4 Requirements for Effective Segmentation
Measurability: The purchasing power and the size of the segment should be measurable. It must be
feasible to collect important information on different characteristics of the market.
Substantiality: It is defined as the level to which the various segments are profitable enough in order
to be valuable to be pursuing with the so called 'tailored' programmed of marketing.
Accessibility: It is defined as the extent to which the various segments could be reached and served.
For example, it is a wastage of money to conduct a lump sum television advertising campaign during
the off-peak daytime for business class people.
Action ability: It is associated to the level or extent to which the programs that are effective can be
redesigned again to attract and maintain relationships with the concerned segments.

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Differentiable: The segments should be distinguishable and should respond differently to different
marketing-mix elements and programs.
3.1.5 Uses of Effective Segmentation
Basically, there are four types of opportunities and products offered by market. These include:
1. Market Penetration: It involves entering the market and increasing the share of sales in the current
market. This can be achieved by capturing the sales and customers from our competitors.
2. Product Development: It involves presenting newer, better and improves versions of products to
present markets through product expansion
3. Market Development: Finding new applications of our products and selling them to new markets.
4. Diversification: It involves offering and presenting new products to customers and thus penetrating
new markets.
3.2. TARGETING
It is defined as a process that involves evaluating the attractiveness related to each segment and then
accordingly selecting which characteristics to serve and work on. It involves various problems such as
deciding, electing and reaching the market. Targeting should be measurable, distinct, accessible and
profitable.
I can use three alternatives namely undifferentiated marketing, differentiated marketing and
concentrated marketing for the purpose of market coverage.
3.2.1 Undifferentiated marketing strategy:
It is such a strategy that does not take into concentration any kind of differences in the market. It is an
indication of lack of effective market segmentation. Therefore, in this type of market strategy the
customers are approached with only one market offer. Since at this point of time with such a huge
number of customers with different needs and wants it would not be possible for a business to make a
product which caters to all. It involves the implementation of a single marketing strategy for all the
products. It is an expensive approach that could be implemented in the sectors have less segmented
differentiation. Main advantage of using this type of strategy is that it keeps the total cost down which
comprises marketing research, production, advertising and production. It can be used if the new
product developed is in the "Introduction" stage of life-cycle.
3.2.2 Differentiated marketing:
In this type of marketing strategy large number of segments are targeted. It deals with creating an
individual product along with a marketing plan particularly designed separately for each and every
segment. The objective of this type of marketing strategy is higher sales volume and stronger position
in the market. Thus, it involves conducting a detailed market research for each of its selected
segments. Thus, it involves more cost. So, it is very important to list out the services that are critical
for its segments. If the company's competitors use differentiated marketing strategy, then it should
also follow the same strategy.
3.2.3 Concentrated Marketing:
The companies which have limited resources and small budget will usually identify and target one or
few sub-segments and markets/ for a segment successfully chosen there is huge possibility for the
firm earning high rate of return on investment. There is also high-risk factor involved in this
marketing strategy.
3.3 POSITIONING

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It is defined as a process that involves crafting the image and perception of a company and putting it
to be in a space that is different in the mind of the targeted market. In involves putting a product in a
way such that it creates a clear and differentiate place compared to its competitive products in the
minds of its customers. It is considered to be a modest tool in the terms of marketing when it comes to
building an image. Appropriate analysis of the consumers is the core of positioning. It is a tool which
enables differentiation between various products and services and attracts and affects the customers
and their buying decisions. There are two aspects of positioning comprising of functionality of brand
and the way the companies communicate their principles to its customers. For positioning to become
effective, a propositioning statement or a value proposition becomes essential. It is defined as a
promise or a guarantee that is provided by business to its prominent customers of offering and
delivering them with a huge range of value-creating benefits. It also plays a critical role in shaping the
decision-making activity of the consumers. It can also be seen in the statements reflecting the mission
and vision from a corporate perspective. From the eyes of a customer, it can be defined as a measure
of measuring the pros and cons of using a product or a service. It helps in understanding the behaviors
exhibited by the customers while purchasing, their buying timing and also the feelings and emotions
shown by them while making a purchase. In order to create an amazing value proposition, creation of
a positioning map can be done. It is a visual tool that enables the understanding of the complexity of
different processes at a ease. It helps in building up a geometrical comparison between the various
rivalry products competing in the same market or industry. According to this, if the various competing
brands are clustered together, it indicates an excellent competition among them. The farther they are
clustered indicating less competition so offering good opportunity to new players. There are four
important characteristics for effective product positions. First, they are constructed around the interest
of expected customers. Second, they serve as a differentiation factor between a specific company's
product and its key competitors. Third, the firms need to have the required resources, skills and
credibility in order to deliver on the implied statements and promises that are stated. Fourth, an
impressive position is permissible, which means that a destructive competitor cannot act immediately
to offset or acquire another positioning strategy.
3.3.1 Steps involved for Determining a Positioning Plan:
Step 1: Identifying the segments in a specific market.
Step 2: Considering which segment to point and target.
Step 3: Understanding and recognizing the expectations of the customers and considering the factors
that are most important according to them while making decisions regarding purchase.
Step 4: Developing and presenting a product that fulfils these needs and expectations of the customers
specifically.
Step 5: Calculating the position as recognized by the customers of the competitors’ products.
Step 6: After analyzing the requirements and expectations of the customers of our products and of
those competitors’ products an image is selected that differentiates the brand from competitors. The
image selected should be such that it matches the expectations and aspirations its concerned
customers. The image and position selected should be credible.
Step 7: The marketer must say its customers regarding the product and its promotion. The product
should be easily accessible to its customers and at the right price leading to full marketing mix.

3.4 Marketing Mix

The marketing mix that is the focus of a business that makes the target market of the industry to
industry (B2B) is namely Networking, Interaction, Common Interest, and Experience.
3.4.1 Networking

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Networking or business networking is an essential skill for the development of a company's
business. Extensive networking can make business activities easy, such as gaining new customers or
business partners. This method is very effective so that the company can get new partners to smooth
its business. To maximize the networking list by choosing the person (consultant and quantity
surveyor) who is most influential in the company’s sales target purchase decisions. The company also
builds strong networks with competitors, customers, suppliers, and other stakeholders, to create strong
competitiveness.
3.4.2 Interaction
The goal is for customers and prospective customers to believe that the startup is managed
professionally—interaction s promotion. Promotion is a form of corporate activity to communicate
and introduce to the target market. In interacting with potential customers or customers, salespeople
provide customer service, how they work, attitudes, speech, and best actions to potential customers or
customers.
Its advantages
First, introduce the company profile. The company profile is better known to people so that the
startup's pro shape is more widely known. Second, it creates a professional effect. Prospective
customers will pay more attention and trust companies that already have a website. Third, as a means
of indirect sales in finding new customers in large numbers outside the four leading contractor r
companies. Fourth, as a means of finding new partners to work with.
3.4.3 Common Interest
Common interests or shared needs are the emotional bonds established between customers and
marketers to achieve shared values. Prices include last prices, discounts, payment periods, credit
terms, and warranty after work. Usually, the customer takes a tender or offer of approximately six
weeks because twice do the tender or receive an offer to get construction services
3.4.4 Experience
Satisfied customers are expected to repeat their orders and provide recommendations to others (word
of mouth). Customer loyalty is one of the critical assets in creating business and customer
profitability. Build a marketing database (Customer Relation Management an essential part of the
marketing industry in transacting and building relationships with customers. The company provides
entertainment services and free consultation to its customers to increase productivity following the
user's final needs. The Company also offers special rates for its loyal customers.
4. APPLICATIONS
I have studied the STP strategies adopted by various companies:
1. Barclays:
It is a UK-based bank which has incorporated hybrid-based segmentation model and has adopted four
types of segmentation as discussed below:
i. Type of business (Private, personal, premier and small business)
ii. Operational Segmentation (On the basis of wealth and age)
iii. Executional segmentation
iv. Attitudinal segmentation

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 Figure 1: Hybrid Segmentation Model at Barclays
Applying Segmentation:
The operational segmentation is mainly used for planning, formulating strategies related to marketing
and finally evaluating them. Executional segmentation is used for improving the customer base
management of the existing customers. On the other hand, attitudinal segmentation is useful for
planning media related events and activities, development of the proposition and handling and solving
communication related issues.
2. British Telecommunication plc
Generating Segmentation: It defines customer segments on the basis of value which considers
potential value; industry sector; and on the basis of business needs.
This segmentation has defined four types of buyers:
1. Low involvement
2. relationship seekers
3. Demanding
4. price-sensitive

5. CONCLUSIONS
I can arrive at a conclusion that STP serves as a valuable tool in order to visualize the competitive
nature in the market. It becomes impossible to satisfy all customers so it becomes very essential for a
company to divide and select the specific parts of the market which they are capable of serving the
best. Hence, target marketing becomes very critical. Marketing mix should be designed by aiming and
keeping these sectors in mind. In addition, the implementation of marketing mix will be more focused
on networking where relationships will be maintained by utilizing existing digital platforms, in

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addition to interaction with customers is also strengthened by digitalization. In comparison, common
interest will be given promos and discounts and additional benefits for customers so that later an
experience that will satisfy customers, with the help of offline customer service channels and digital
platforms. This approach is still essential cause markets have not switched, and some have switched to
digital communities that have begun to increase, so it is still necessary to use both of these
approaches.
Segmentation can be defined as identification and classification of customers into groups on the basis
of their similarities in their characteristics. This process offers a range of advantages as it gives the
power to the manager to design a separate plan and strategy for each segment. Various behaviors of
marketing namely demographic, geographic, psychographic, behavioral and product-related have also
been discussed here. Irrespective of the method chosen and applied the main outcome and issue to be
achieved is the utility of the final solution. The segments developed should be such that they offer an
edge over the competitors since they become attractive.

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