Abstract
The segmentation, targeting, and positioning (STP) model has gained massive relevance in the current competitive business environment. As shown in the discussion, it is not possible for a firm to meet the needs of all customers in a diversified market. When one product is developed for all customers, it is common to find cases where a section of the market has their needs met while the other would feel ignored.
In some cases, the product may not meet the needs of any of the major segments of the market, which may harm sales of a firmâs products. The model proposes a method where a firm selects a specific segment of the market then delivers products that meet its needs in the best way possible. In this study, the researcher has applied this model to demonstrate how various companies in different industries can use the model to manage the stiff competition in the market and deliver the best results to their selected customers.
The model has also demonstrated how Qatar Airways can overcome competition and other challenges that exist in the market. When used appropriately, this model can help this company to manage the volatility in the aviation industry and stiff rivalry that exists among local and international competitors.
Introduction
In a highly competitive business environment, firms are always under pressure to meet expectations of its customers in the best way possible to ensure that they remain sustainable. According to Finch and McIntyre (2019), various marketing tools and concepts have emerged to help firms deliver superior products and services to their clients. Segmentation, targeting, and positioning, often referred to as STP, have emerged as powerful tools that define how a company can define a path to success when operating in an industry where rivalry is high.
These tools are often used to help a firm select a portion of the market and develop products that meet their needs in the best way possible. In this paper, the researcher seeks to evaluate and critique these tools, and apply them in solving real-life problems at various organisations and at Qatar Airways in specific.
Evaluation and Critique of Marketing Concepts: Theoretical and Conceptual Perspective
The STP model has come out as one of the most effective marketing models in the modern century. The tool is currently used and has proven to be effective in managing various external forces in the market and ensuring that a firm delivers what customers expect to the market. It is important to analyse each of these concepts individually to understand their significance in marketing.
Segmentation
The STP model starts with understanding the theory of segmentation, where one is expected to select a general market aligned to what a firmâs offers. The market should then be classified based on size, purchasing power, social class, frequency with which they purchase the product, decision-making process, and any other relevant factor. Hulland, Baumgartner, and Smith (2018) argue that the marketing team should ensure that in each segment, customers will respond in a similar way to strategies that a firm uses to attract their attention. As such, they should have common interests, needs, and preferably be in a similar location. The segmentation process is the stage where one appreciates the varying needs of customers requires different strategies for them to be met in the most effective way.
Targeting
The theory of segmentation is closely related with the concept of targeting. According to Grimpe (2017), when one has selected a marketer who has classified customers within a market into specific segments, the next step is to identify segments that it can satisfy based on its products and core competencies. Targeting should be done after conducting an internal evaluation and understanding the capacity of a firm vis-Ă -vis that of its market rivals.
The goal at this stage is to identify what a firm can do in such a perfect way that its rivals cannot match it. The firm will select a segment that offers it a potential for growth, while at the same time ensures that it outsmarts rivals in the delivery of products. Todor (2016) argues that it is possible for a firm to select two or more segments of the market. However, it is always advisable to select just one segment and focus on delivering quality products to it. For a smart firm or a company that is new to the market, it is often advisable to avoid having numerous segments, especially if their characteristics vary significantly (Sajid 2016). Doing so makes the STP model irrelevant and such a firm may not deliver on its promise to customers in the most effective way possible.
Positioning
The last stage when using this model is the positioning process. The theory holds that once a firm has segmented the market and identified the right segment, the final process is to position the brand and products accordingly. Sekerin (2018) defines positioning as the way customers view a firmâs product vis-Ă -vis that of the competing companies. The perception that customers have towards a product significantly influences their purchasing decision. In fact, the whole concept of marketing is often meant to influence the perception of customers towards a brand and its products. The positioning process should be based on the segment that a firm chooses to target.
For instance, in case the management of a firm chooses to serve the rich, emphasis should be on quality (Todor, 2016). The brand and its products should be positioned as that which offers the best quality in the market. Such customers are often willing to pay more to ensure that they get the best quality. As such, it is advisable for a firm to ignore the pricing concept when targeting these clients and emphasise more on the superiority of the products. Promotional messages are often based on the on the positioning approach that a firm embraces for its brand and products.
The Conceptual Framework
The analysis above has demonstrated the significant of each of the three concepts in the STP model. It is important to understand the relationship between these models and how a firm can use them collectively to achieve specific goals in the market. The conceptual framework in figure 1 below shows the relationship between these three marketing concepts based on the explanation above. Goncalves, Rodrigues, and Monteiro (2018) contend that success in the subsequent stages depend on the effectiveness of activities in the previous stage. It means that for a firm to develop a unique and effective positioning strategy, the marketing team must conduct accurate market segmentation and target the right segments based on the firmâs core competencies.
Exemplifying the Application of the Concepts in Solving Strategic Issues
Qatar is one of the fastest developing economies in the Middle East and North Africa (MENA) region. The government has developed policies that open up the local market to foreign investors as a way of reducing overreliance on oil and gas sector (Camilleri, 2018). As a result of these policies, foreign firms, especially from Europe, North America, and parts of Asia have made successful entry into this market.
The outcome is a highly competitive market where firms can only survive if they understand market needs and are capable of meeting them effectively. Local firms have to develop unique strategies that would enable them to exceed or at least match what market rivals offer in various industries. It is important to look at how different companies have used segmentation, targeting, and positioning to achieve specific goals in the market.
Segmentation is a common strategy that companies are using to achieve specific goals in the market, especially when characteristics of customers vary significantly. One of the industries where segmentation has become critical is in the apparel. In this industry, customersâ needs vary significantly. As such, it has become necessary for companies to segment their customers based on various factors.
According to Rudiana and Komarlina (2018), in the apparel industry, gender, age, and social class are the main factors that are used to classify customers. Sometimes it may be necessary to use personal preferences to classify customers in the industry. Gucci is one of the leading apparel companies currently operating in Doha, Qatar. The management of this company understands that customersâ needs in this industry vary a lot. A good example is the social class. The poor often want decent clothing that meet basic needs and at reasonably low prices. To these customers, price is an important factor that defines whether they will purchase a product.
On the other hand, rich clients often demand for fancy clothing that would help demonstrate their class in the society. The company must also understand clothing needs for children vis-Ă -vis that of adults. The fashion trends for women also vary significantly from that of men (Hooley et al., 2017). Target is one of the leading retailers in United States, and it has become a major player in the apparel industry. Unlike Gucci that segments the market with the primary aim of serving the rich, Target focuses on the middle class as its main customers. Its segmentation approach is primarily focused on identifying a large pool of the middle class that can afford its products.
Targeting is the next step when different segments have been identified, as discussed in the section above. Qatar International Islamic Bank is an example of a firm that has achieved success in the local market because of its ability to target a specific segment of the market.
According to Baabood (2017), the financial sector in Qatar has gone through a period of rapid growth. Many local and international financial institutions are often attracted by the impressive growth of the countryâs economy. The growth of the industry has led to massive competition in the market. Qatar International Islamic Bank realised that the best way of overcoming the issue is to target specific customers.
After a thorough analysis of the market and effective segmentation, this firm decided to target women with Islamic banking products. The management realised that strict Islamic principles that require women to avoid being in physical contact with men who are not their spouses cannot be implemented in conventional banking halls. As such, the management announced in 2016 that it was opening women banking halls in the city. HSBC Bank Middle East is another player in this industry that has taken a different approach to targeting from that taken by Qatar International Islamic Bank. Instead of focusing on female clients, HSBC primarily targets corporate entities (International Business Publications, 2015). Although the firm also serves individual customers, its main focus is corporate clients.
Positioning is the last aspect of the model, and it is necessary to look at how some firms in the local market have applied it to address issues that they face in their operations. According to Sekerin (2018), Qatar is one of the countries with the highest gross domestic product (GDP) per person in the world. It means that the majority of the locals are often willing and capable of paying high prices for quality healthcare services in the country.
As such, the healthcare industry in the country has attracted a significant number of firms in the country. Al-Ahli Hospital is one of the leading hospitals in the country. The firm has managed to position itself as the brand that offers superior quality services in the market. As Ortiz and Rosenthal (2019) explain, perception is critical when operating in the healthcare sector. Understanding this marketing concept, the management of Al-Ahli Hospital developed a unique brand in the market that is based on quality. The firm rarely focuses on pricing in its marketing campaigns. Instead, it often remind its customers of the start-of-art medical equipment that it has, highly qualified medical staff, clean environment, and the commitment to meet clientsâ needs at all times.
Hamad Medical Corporation operates in the same industry as Al-Ahli Hospital but its positioning strategy is different. The institution is positioned as one that offers quality health services to all residents of Qatar irrespective of their financial capacity. As a not-for-profit entity, its main focus is not to attract a pool of financially empowered clients but to serve everyone who is in need of their services (Baabood, 017). It wants its customers to understand the fact that its mandate is to provide affordable but high-quality healthcare to everyone in the country, especially the residents of Doha.
Generic Management Recommendations for Qatar Airways
Qatar Airways is operating in one of the most competitive and highly volatile industries in the world. According to Talavera, Al-Ghamdi, and Koç (2019), the aviation sector is not only competitive but also sensitive to events happening locally and in the international arena. For instance, the recent CoronaVirus (COVID-19) outbreak that started in China before spreading to different parts of the world has had a massive impact on the aviation sector.
The restricted movement of people has crippled many airline companies, which is an indication of the sensitivity of this industry to various forces in the external environment, including those that may not be directly linked to the aviation sector. Qatar Airways must find a way of overcoming these challenges to ensure that it remains successful in the market. Using STP model, the following are the recommendations that can help it achieve sustainable growth in the local and global market:
The management of Qatar Airways should understand and appreciate the significance of market segmentation in the aviation industry. As Gualtieri and Topic (2016) puts it, travellers using air transport have significantly varying needs. One section only needs a safe movement from one place to the other at the cheapest cost possible. They often use the economy class. There are the middle class travellers who are often willing to pay a little extra for improved comfort when travelling. They fall under the category of business class travellers. The third category includes the first class travellers who want luxury when travelling.
They want unique experience when on board and they often do not mind paying extra for superior services. These unique characteristics of passengers must be understood for this firm to achieve success. Of interest during the segmentation process is to determine the viability of each segment (Baabood, 2017). It is normal for a plane to have all the three classes, but the management of this airline should select the most viable class based on their number, frequency with which they travel, cost effectiveness of servicing them, and such related factors. During the process of segmentation, the management should have a clear outline of pros and cons of each segment.
The next step is to target specific segment of the market. Instead of targeting the entire market, it can focus more on one specific segment. Given the growing number of millionaires around the world, it may be advisable for the firm to focus on the business class and first class travellers. The economy class travellers should be the minority in each of their planes. The focus should be to offer high quality services and charge premium prices (Gualtieri and Topic, 2016). It will help the firm to concentrate on quality instead of a broad range of issues.
Conclusion
Qatar Airways should consider embracing the right positioning strategy based on the chosen target. Its brand and products should be promoted as those that offer quality instead of focusing on cost effectiveness. As Baabood (2017) suggests, the positioning of the brand and products should be accompanied by the delivery of what is promised. It means that as this firm positions its brand and products as that of high quality, there should be a deliberate effort to ensure that indeed the firm offers superior services. The strategy will help it overcome the stiff market competition.
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