1.0 Introduction
Currently, the core challenge that affects organisations is not lack of goods and services, but the reduction of customers. This is attributed to market dynamics, an increase in competition, and changes in consumer behaviour (Khan, 2013). Therefore, for a firm to increase its sales and market share, it has to conduct broad research regarding its potential market. Kampamba (2015) espouses that establishing a profound marketing strategy is centred on three core elements of segmentation, targeting, and positioning (STP). This report, therefore, evaluates and critiques the STP concept and its implementation. The structure of the report follows an overview of the STP concept, its implementation in various industries such as automotive, hospitality, and banking, and recommendations on how companies can apply the concept for competitive advantage.
2.0 Overview of STP
The STP concept is fundamental in strategic marketing management. According to Asih and Asih (2015), this concept allows firms to identify their most valuable segments in the market and later develop a marketing mix that will sell the goods and services to the segment. In addition, the STP model allows the firm to establish the best messages in marketing that will suit the customers. Also, STP promotes engagement between the organisation and the target group, which increases the number of customers and sales.
2.1 Market Segmentation
Presently, organisations that do not understand the details of their customers are losing them, which is reflected in low revenue and lack of competitiveness. According to Alt and Iversen (2017), the current era is characterised as customer-oriented. Firms, therefore, aim at breaking down markets into small and manageable segments comprising of consumer groups and accord them different treatment based on similarities in their characteristics. Khan (2013) note that an increase in competition, educated and informed customers, and dynamism in the changing clients’ demands prompt companies to remain attentive to the segmentation factors. One of the theories related to segmentation is the Maslow hierarchy of needs. Velmurugan and Sankar (2017) describe this theory based on the five categories that should me met among people. These needs include physiological, safety, social, esteem, and self-actualisation. Notably, one need must be met before moving to the next categories. Companies are, therefore, expected to establish ways to meet these needs. The relationship between Maslow’s hierarchy of needs and market segmentation is demonstrated in figure 1 below, where the segmentation is distinguished into various elements.
Figure 1: Segmentation of Consumer Market (Khan, 2013).
2.2 Targeting
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