Market Segmentation, Targeting, and Positioning Red Bull, Uber, Amazon Prime

Introduction

STP or Segmentation, Targeting, and Positioning are the most discussed approaches of the marketing industry.  This is an effective approach that organizations use globally especially when they decide to launch a product or service or enter a new market. This tool is used to prioritize the market propositions and establish a communication process with the customers. In this assignment, the digital TV industry and the taxi industry are the two most significant example, where STP process is used for innovation and create something new than the traditional existing system. Along with this, the energy drink industry is also discussed followed by recommendations for each of them. Below, each step of the STP Process is discussed shortly along with its benefits and criticisms.

Critical Evaluation of STP

Segmentation

According to researcher David Chambers (2019), segmentation is the first process in this approach which involves dividing and subdividing the market into smaller segments, so that marketing can be focused and streamlined. This helps in identifying the exact needs of the market and creates effective strategies so that the need can be fulfilled. This is especially needed because nowadays the expectations and the demands of the consumer are diverse and at such a situation, narrowing down the entire market helps in gaining useful insights. Segmentation can also successfully impact consumer behavior existing within the market.

Benefits and Criticism

The main criticism as pointed out by Flaherty, et al., (2018)is that the diverse customer needs often create instability within the segments. This is because needs and wants will always be changing according to the changing dynamics of the market. In such cases, segments may disappear or may merge to create that need. But despite its criticism one of the biggest benefit as stated by Dolnicar, et al., (2018)is that the segmentation process creates a competitive advantage for the product or service. It also provides a way for further market expansion if carried out effectively. Thus, although criticism exists, this is still considered popular and used by many across the world.

Figure 1: Segmentation process benefits

Targeting

Targeting is the next step in the STP Process, where target consumers are segregated from the segments. Researcher Nella(2016), states that this is the key to determining an organization's success. The targets are the specific consumers that the company wants to market their products. As a result, all promotional, advertising, and other marketing strategies are directed to it. This is the first step in establishing a communication channel with the customer and reaching out to them to fulfill their needs. The targets are different for different companies and understanding their needs is very important.

Benefits and Criticisms

The main criticism is tied to as mentioned earlier, that is, understanding the needs of the targets. Scholars McAlexander, et al., (2015) point out that the choice of the target is also important and it must be carried out by experienced marketers. Most often the companies are too concentrated on the target that they forget the actual mission and vision of the organization they are in. However, the main benefit of targeting is creating a communication channel and fulfilling the demands and wants of the consumer. Researchers Leonidou et al., (2019) state that this is what makes a company successful and increases consumer loyalty and also brand visibility and awareness.

Figure 2: segregating exclusive targets from the segments

Positioning

The last and final step in the STP approach is that of positioning. Positioning strategies give the consumers an idea by which they relate to the product. For example, eCommerce is always associated with Amazon and eBay, selling handmade goods with Etsy and coffee with Starbucks! These companies have created a strong positioning image in the minds of the consumers which dictates the very essence of the product with their brand name. Mission and vision statements are built at this stage and future planning is also done according to the positioning policies.

Benefits and Criticisms

The main benefit of positioning according to researcher Dudovskiy (2016), is that it gives the product or service the Unique Selling Point, by which it is differentiated from its competitors. The main goal of the STP Process has always been creating a competitive advantage and this is where it all forms together. Scholars Ball, et al., (2018) also say that positioning creates a brand image and gives value to the product, which further influences customer loyalty, customer retention, and also increases sales. However, the criticism lies in the fact that positioning is often confused with a differentiation strategy(Du & Wang, 2018). Marketers use them to manipulate the minds of the customers, into buying something that they do not require. Binge purchase or hoarding is hugely credited to positioning statements (Coughlan & Goldman, 2017).

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Figure 3: positioning the products in the right way.

Critical Appraisal of STP

The STP Process of Digital TV Industry

The segmentation, targeting, and positioning are most well defined in the digital TV industry with digital platforms like Netflix, Amazon Prime TV, and YouTube. The concept of traditional TV viewing is slowing down as countries become more digitized due to globalization. Studies have shown than more than 83 million people globally tune into the internet to watch shows, documentaries, mini-series, and much more. Netflix is currently the leader in the industry; the segmentation is done with the help of AI which monitors watch patterns of clients, demographics, and age. Their main targeting is done via a membership fee, where a one-month free trial is offered to the customers. According to researchers Hinterhuber & Liozu (2019), psychographics and behavioral factors are used here, as memberships are always renewed. Similarly, Amazon Prime connects its membership with its eCommerce website, where Prime membership gives exclusive access to Amazon TV and also same-day delivery of products.

According to Johnson(2016) positioning both the companies follow more or less the same positioning statement; that is comfort and convenience. These factors are stressed upon while communicating with the customers. These have a significant impact on the minds of the consumers since everyone wants comfort and convenience within the walls of their home. They do not need to go to the theaters for entertainment, rather entertainment comes to them! Amazon also uses adaptive positioning, by offering special discounts to inactive users. This way, the company can attract the audiences that they had lost for some time!

Coming to YouTube, this is by far the most popular digital platform for videos. There are millions of free movies from all genres and countries and videos are unlimited. According to data by Kim (2010), 500 hours of content are uploaded every minute and the platform has almost 1 month monthly users, higher than Amazon and Netflix. The main targeting strategy used by YouTube is giving the power to create videos in the hands of the subscribers. Thus, unlike its competitors, the videos are not limited to just films and documentaries. This is also by the positioning statement where subscribers are allowed to earn income by making videos. According to Vizard (2016), the company focuses on hyper-growth for its positioning in the market.

Another company that needs to be mentioned is Tik-Tok, which has received immense popularity in the lockdown scenario. According to an article in The Guardian (Khan, 2020), the organization faced a surge of visibility as everyone in-home quarantine started using the platform, out of sheer boredom. The Covid-19 situation has been used as a positioning statement by the company, as most people are forced to spend their time at home. Moreover, the biggest advantage of Tik-Tok is that the subscribers do not need a follower base for videos to go viral!

The STP Process of the Energy Drink Industry

In the energy drink industry, the biggest market leaders are Red Bull and Monster beverage. Red Bull is a very famous energy drink that was first manufactured by Dietrich Mateschitz in Austria in the early 1900s (Quincey, 2016). The biggest market gap that was identified by the company is that during the 1900s, there was no energy drink for the athletes, which would provide them nutrition and energy while at sports. Moreover, he also wanted to create a drink that would act as a supplement as lives were getting busier by the day. According to researcher Brito (2019), the main targeting and positioning methods were the Buzz marketing strategy of the Red Bull. This strategy had the maximum impact on the minds of the consumers as the European market during its initial stage was an immature market. As a result of which, the minds of the users could easily be manipulated. Researchers Baker & Hart (2016), also state that Red Bull has very strong advertising features when it comes to positioning. The slogan and logo have a great impact on the users; the tagline, 'Red Bull gives you wings' is the most popular that is used even today. Another popular slogan, 'Red Bull vitalizes body and mind' is also indicative of the fact that there are added nutrients in the drink to make the drinkers energetic. This was a major influencing factor which impacted customer loyalty and retention for the company.

Monster Energy drink is a product of Hansen Corporation and distributed by the Coca-Cola Company in various parts of the globe. Red Bull's competitor Monster also was successful as an energy drink but had a different customer segment than Red Bull. The target groups were more focused on youth sports like skateboarding, surfing, motocross, wakeboarding, and others. The company also uses demographic factors and as a result is most popular in Australia and New Zealand, unlike Europe in the cases of Red Bull(Masek, et al., 2016). Monster used a lot of campaigns with sports stars for its positioning statement. Greg Lutzka, a very popular skateboarder was used in several of its campaigns and received huge popularity between its fans and followers. These campaigns were also cleverly conducted in summer, to give a feeling of relief in the minds of the viewers that they would associate Monster drink with a sense of relief and relaxation in the summer heat.

The STP Process of the Taxi/Cab Industry

The taxi industry is one of the traditional industries that has undergone massive changes much like the Digital TV industry as discussed earlier. The most popular being companies like Uber and Ola, who have popularised their positioning by ride-sharing economy model. According to the researcher (Cohen, et al., 2016) Uber has the most successful of the STP Process in this economic model. Segmentation and targeting is a very important part, where the company uses demographics, age, behavioral factors, and others to develop pricing strategies, sharing rides, and more. Through this strategy, the company has introduced Uber Pool and Uber Share and also Uber Premium for various segments of customers with varying income levels. Bike Sharing is also a very popular medium with cost-conscious consumers. 

Much like its competitors Ola Cabs has positioned itself with a strong targeting and positioning strategy by venturing out in many rural parts of the world. According to researchers Panigrahi, et al., (2018) Ola is focused on eCommerce business models like Amazon and Flipkart where a lot of local resources are used. Social media is used extensively to create awareness in the minds of the consumers and pricing strategy is less than the regional taxi service industry. However, researchers Tendulkar & Singh(2019), say that while Uber is modeled on an international basis, Ola operates regionally and is the most popular in India. One important segments that are used by both these two companies are leisure and business travelers, who can travel anywhere without their car. Tourists and business persons form a considerable percentage of their segments.

Uber's Careem buy shows a pivot in international strategy - Business Insider

Much like its digital TV counterpart, comfort and convenience are the two strong positioning words that are used by the company. Additional services like AC, radio, film viewing is also provided to users, where comfort is taken to the next level, but with the decent fare. This is the most important part of the STP process that is used by these companies. There are many other companies like them like Meru Cabs, Gojek, Lyft, Easy Taxis, Gett, Careem and others which are also using the STP in sharing economy model in various regions of the world.

Conclusion

After discussing various industries and companies, it is evident to note that the STP approach depends on the situation an organization is in. There are also many influencing factors, both internal and external according to which a company needs to mold its strategies.

Generic Recommendations

Recommendation 1

As seen in the digital TV industry, Netflix has the maximum influence, and often the word 'Netflix' and spending time at home is seen in the same sentence. One recommendation that both Netflix and Amazon Prime TV can take is giving the feature to make their videos to the subscribers, like YouTube and TikTok. The company can also allow access for viewers to watch shows and films in other locations. Usually, the shows are as per demographics and one particular country may not have access to films and shows as other countries would have. This is one of the ways, Amazon Prime and Netflix can increase their popularity further, to keep users engaged in their platform. This will also be a very strong positioning statement!

Recommendation 2

The main recommendation here would be for Monster drink, to expand its customer base like Red Bull. With marketing strategies and powerful positioning statement, Red Bull can gain a stronghold in the international market, while Monster is still concentrated in certain areas. The main focus for Monster needs to be growth and market expansion through the STP approach.

Recommendation 3

Uber's marketing strategy is the most discussed academically and the most sought after by other companies. Uber has formed an inspiration to many companies like Ola, Lyft, Meru Cabs, and others. Almost every country has its form of sharing cab service and bike services at convenient costs. However, visibility and awareness are not the same for many and this is where the difference lies. Smaller companies must follow Uber's strategy to stay ahead of the competition.

 

 

 

 

 

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