Segmentation, Targeting and Positioning 11

SEGMENTATION TARGETING AND POSITIONING

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Segmentation, Targeting, and Positioning

Introduction

Businesses are continuously adopting new strategies and innovations, with the aim of meeting
their customers' expectations. It is a difficult experience to meet the individual requirements of
every person. The market does not have identical preferences and only in rare instances does
one product prove satisfactory to everyone. Therefore, most companies use a target type of
strategy in marketing. It includes the division of the market into various segments. The
company thereafter develops products and services specifically for each of the divided
segments. The strategy focuses on the need of customers and their wants. Therefore, the
prerequisite for the inception of the customer-centered marketing strategy emphasizes on the
specification of products to meet the specific segment.

Segmentation is elaborated as the coupling of consumers on the basis of specific criteria. It

could be location-based, demography among other measures. The method is based on the idea
that the consumers that are grouped together would respond in a similar way to marketing
strategies since they have similar behaviors, characteristics, and needs. Targeting involves
identification of a target market. It includes the determination of the attractiveness of every
segment. Specific segments that are favorable are chosen while the others are ignored.
Positioning is the essential part of the process. It is required that the services and products
appeal to the selected market segments to ensure the consumer gains interest. Branding is an
integral part of the process since it offers an appeal to the audience (Insivia, 2018).

The strategy includes the breaking of the market into groups and significantly targets the
profitable ones. Both the airline and e-commerce industry incorporate market segmentation,
targeting and positioning (STP) as their current strategies for reaching new markets. The
increase in competition in both sectors has resulted in them adopting the STP model to venture
into different market segments after critical analysis of the needs of the specific groups and
clearly understanding the appropriate strategies of advertisement to be used. Market
segmentation is based on four main pillars including demographic, psychographic, geographic,
product and service factors and behavior.

Demographic segmentation includes the division of the market based on the variables such as
gender, age, occupation, race, and nationality (Camilleri, 2018, 73). Geographic segmentation
includes the selection of potential markets based on their location (Camilleri, 2018, 74).
Progressively, psychographic segmentation is a division of the market based on personality
features, motives, values, lifestyle, and interests. Behavioral segmentation is grouping the
market population according to their behaviors in purchasing (Camilleri, 2018, 74). The product-
related segmentation is dividing the market based on their service and products that are
marketed. In the airline industry, it includes variables such as the purpose of the journey, the
length, and host country.

Segmentation, Targeting, and Positioning

Currently, the airline industry is undergoing a significant transformation. Landmark transitions

in the market have resulted in stiff competition in the industry. Low-cost carriers (LCC) have
been introduced and have become established over time through penetration of significant
segments of the market. It has led to significant changes in the competition. The industry was
previously dominated and regulated by government airlines and players, but is now
characterized by competition from companies owned by other parties. In the current setting,
there is a prevalent need for a market orientation domain to product optimization (Teichert, et
al., 2008, 227).

Initially, airline segmentation for customers was categorized into the economy and business
passengers and undertook an aligning of their products with flexibility for the business and
economy passenger price. The increasingly competitive environment and the transparency in
the higher markets have introduced a change in the power of market constellations in favor of
the passengers. The internet is a hub for information that has resulted in customers changing
their behaviors and preferences (Teichert, et al., 2008, 228)

Furthermore, as buying and market behaviors of the passengers change, it is essential to assess
their behavioral nature for the future. The airline industry in the past was characterized by both
government-protected policies and high rates of growth. Teichert et al. (2008, 228) elaborate
that the competition has currently changed in relation to the past, where the industry wholly
relied on business travelers paying high prices in addition to sensitive economy customers.
However, the average fare has rapidly decreased. Business passengers have adopted a new
trend of making choices on tickets based on price.

A survey conducted with short-haul customers showed that 40 percent of the market is elastic
to price and use LCC tickets extensively. The changes in the market have had an effect on the
leisure passenger's behaviors. The incorporation of the LCC has led to the development of a
price-sensitive segment, resulting in an increase in the short breaks popularity. The number of
holiday packages has significantly decreased since the LCC offers their leisure customers the
probability of traveling during times that they deem more attractive. The passengers are given
the opportunity to determine and organize their holidays. In the market upper echelon,
companies offering expensive, but a reliable and effective connection between fundamentally
important cities and regions have made their break out to senior markets (Teichert, et al., 2008,
229).

The above characteristics resulted from the use of the internet as a distribution channel. The
development of the internet brought down the barriers to competition, availability and the
price information. Costs of distribution have also significantly decreased the number of agents
included in the transaction processes. As a result of the lower costs in research and
transactions, customers directly influence the ticket prices since they have access to the fare
prices of many airlines, the departure times and destinations. Market segmentation is an
essential tool for the development of future private and public policies. It is relevant in airlines
since LCC is a new method for attracting tourists to destinations that are not popular (Teichert,
et al., 2008, 236).

Segmentation, Targeting, and positioning of the E-commerce industry

The market size of Business to Consumer (B2C) in e-commerce was in 2016 valued at an
average of 2,800 billion, owing to an increase in the income global per capita, the rise in
disposable incoming and the rapid growth in the penetration of internet and smartphone use
(Grand View Research, 2017). The increased acceptance of technology has allowed the e-
commerce industry to be more reachable and efficient. The rapid growth in middle-class
citizens and their constant use of social media platforms also have aggravated the online
purchasing demand of different services and products. The internet has resulted in a
transformation of how individuals buy and sell services and goods.

Fueled by the rapid growth of the electronic market currently, the consumers have developed
an unprecedented choice of services and products and the control of the processes of
purchasing (Znote, 2013, 3). With their access to the information on brands, sellers, and
channels, consumers are able to determine where, when and how a purchase is made.
Therefore, it is essential for the B2C and Business to Business (B2B) firms to conduct online
business to enable them to understand their consumers and the various factors that influence
the purchase decisions. Segmentation of customers is an essential approach for the delivery of
the above insights.
Progressively, the marketing basics are significantly essential in recognition of a target market.
It is crucial to elaborate how the social media influence people. The use of various internet
home pages to accommodate substantial imprecise demographic populations is not the right
way. The segmentation of the electronic market includes grouping (Ščeulovs and Gaile-Sarkane,
2010, 281). It is based on the internet, where there exist various aspects that are taken into
consideration while undertaking segmentation. The internet has its own rules in working with
the inclusion of a mutual type of communication. The communication over the internet
includes both the consumer and the company.

Furthermore, Segmentation in the e-market implies that services and goods, the consumers
and customers, or the firms operating in the e-medium are divided into explicit groups via
criteria; where there is the incorporation of methods of marketing associated explicitly with the
groups (Ščeulovs and Gaile-Sarkane, 2010, 281). The segmentation of consumers in the e-
market environment via national, cultural and geographical approaches is a possibility in cases
that are special, such as when a firm plans to export its products to the specific regions or
nations.

With the increase in the competition between businesses in the e-commerce industry, the
existence of conflicts is inevitable and the issue of segmentation of consumers has obtained
more attention. In the recent decades, the applications of segmentation, targeting and
positioning (STP) have become a significant problem (Ma, 2015, 817). To enable the
achievement of a successful STP modeling techniques, inclusive of statistical analysis and the
incorporation of artificial intelligence have been rapidly developed. To emerge victorious in the
intensely competitive industry, businesses should efficiently project the customers' purchase
potential and offer services that are customized in addition to making relevant strategies for
marketing.

Qatar Airways Segmentation, Targeting, and Positioning

The Qatar Airways was launched in 1994 and is the national state carrier of Qatar. The
government and private stakeholders own the airline equally. Qatar does not have a big
network in comparison to major international airlines like the Emirates, but it carried an
average of 2 million travelers in 2003. Qatar Airways is one of the world's fastest-growing
airline that has taken the African continent by storm (Saharudin, 2016). It significantly made its
official presence in South Africa in 2005 with five helicopters to signify its five-star level service
(Surovitskikha and Lubbe, 2007, 75).

Segmentation

Often, the Qatar airlines segment their customers through income. The markets that they
target are individuals that prefer a quiet and nice flight that can afford to make payments for
tickets. The airline does not have segmentation based on age since there is no variance in the
use of words and terms used for reference to various age groups. The concentrated method of
segmentation used by the airlines is incorporated to ensure customers can receive the best
available services.
Targeting

Qatar airlines target the people between 25 and 50 years since they could easily offer to make
ticket payments and since it is a budget airline (Hassan and profile, 2015). The price of the
tickets is competitive. One main advantage for the preference of the airlines is the reasonable
price and high service quality. The Qatar airlines has steadily positioned itself among the Asian
and Arabic nations (Mbaskool, 2017). The statistics below illustrates the total revenues from
2012 to 2017 (Statista, 2018). The airlines generated more than 10 billion American dollars.

(Statista, 2018)

The company, however, expects to make massive losses as a result of various neighboring
nations shutting down their airspace for the national airline of Qatar. Political issues that
resulted in Qatar being declared to be a terrorist sympathizer has resulted in a deviation of
customers. It lost access to major Saudi Arabian cities, Egypt, the United Arab Emirates, and
Bahrain.

Positioning

Positioning and service quality of the airline is represented mainly by a multinational staff and
crew. Skytrax voted the airline's cabin crew to be the best in the Middle East and ranked fifth in
the world overall in 2004. Furthermore, the inception of 13 new destinations to the
international global network in 2016 expanded the airways network route to approximately 150
more destinations (Qatar, 2016, 10). The airline launched new flights to various high-end
destinations in the same period inclusive of daily flights to Los Angeles flights and Sydney. The
company increased its connectivity to the U.K by 73 flights weekly, with the incorporation of
Birmingham as a new destination in the region. The new additional destinations included
Boston, Amsterdam, Durban, Multan, Ras Al Khaimah, Zanzibar, Faisalabad and Abha (Qatar,
2016, 10). It also launched a Dubai-Doha shuttle that is responsive to the nature of traffic
between the two cities.

The networking strategy of the company is determined by being relevant, as they add cities and
towns relevant to the customers they currently have and in places of cultural familiarity and
regions without commercial linkages (Qatar, 2016, 10). The largest demand in the market is
expected to be in Africa, China, South America and India. The underdevelopment of the
aviation industry in Africa reflects the underservice of the national airlines in the countries.

Product

The services of meal satisfaction, dietary and medical requirements reflect the airline's
customization. The crew is able to assist children, mothers traveling with their children and
young travelers. Augmenting products is a means of the airline to focus on people in terms of
service delivery. The company offers extra services inclusive of check-ins priorities, the latest
technology in their lounges, among other services for customer satisfaction.

Progressively, product in the market mix includes first-class services that have a leg room of 6.5
inches, with massage functionalities. The seats can unfold to beds and the company offers
various entertainment options to the passengers (Bhasin, 2018). The seats in business class can
unfold to horizontal beds and subsequently have massage services and beverages such as wine
and champagne. The seats in the economy class have a 34-inch pitch and individual screens
with touch functionality. The Qatar Airways accommodates a global audience and has spread its
services to include various global routes. The headquarters are based in Doha. The airline
operated via a spoke-and-hub network and had lined more than 150 destinations by 2013 in
regions across Oceania, North America, South America, the Middle East, Europe and South Asia
(Bhasin, 2018).

In comparison to Qatar Airways, Jet Airways is an Indian based company serving international
and domestic routes. It connects approximately 49 destinations globally and more than 44 in
India, Kuala Lumpur, Kathmandu, Colombo and Singapore (IBEF, 2006, 1). The market
segmentation of the airline includes travelers with preference in comfort more than economy
(Mbaskool, 2018). The targeting of the company includes the preference for the Corporate
Class, and the Upper Middle Class (Mbaskool, 2018). Jet Airways positioning is as a premium
airline that is based outside India serving both the international and domestic sectors.

British Airways Segmentation, Targeting, and Positioning (STP)

The British Airways (BA) STP refers to the methods in which the airways identify various
individuals among the public to offer them services. It includes the division of the people into
groups in accordance with various features. Targeting is the choice of specific groups that have
been identified, while positioning is the marketing mix selection that is most suitable for the
specific customers (Dudovskiy, 2016). The British Airways undertakes a multi-segment market
concentration strategy through offering four service packages to the individual passenger
segments. The company's targets are the economy, executive, premium economy and first
class.

The airline serves an approximate 45 million people annually. The British Airways was merged
with Iberia in 2011 to form the International Airlines Group (IAG) (Bhasin, 2017c). The IAG is
ranked third globally and second in Europe. BA incorporates psychographic and demographic
strategies of segmentation in the identification and determination of the essential features of
the market, aiding the firm in the evaluation of the nature of the individual segment of
customers. The attractiveness of every sector is identified through loyalty programs. Therefore,
BA uses different strategies in targeting the segments. BA has positioned itself as a leader in
alliances, strategic markets and customer groups characterized by diversity. In positioning, it
categorizes customers based on class (British Airways Segmentation, 2011).

In undertaking market segmentation, positioning, and targeting of the customers, the British
Airways has incorporated various aspects of the PESTEL analysis to identify their specific niche.
Political

Measures of air control concerns of security have been a major political factor in influencing the
industry since the inception of attacks. The industry is fragile due to rise in terrorist attacks.
There are various regulations that determine the airline schedule. Customers necessitate an
airline that they feel safe in. The BA takes advantage of that to instill customer confidence in
using the airline (Dozier, 2015)

Economic

The international economic crisis that was experienced in 2008 to 2009 had significant effects in
the industry (Dozier, 2015). In the process of world recovery, the global economy has been
steadily increasing. The oil price fluctuation has had enormous implications in the airline sector.
There has been a significant weakness in the pound in comparison to the Euro. BA has had
significant growth during the adverse economic times.

Social

The BA has an impact socially in the U.K and other regions of its operationalization. The BA has
had significant benefits for the aging population that are willing to visit other nations as
tourists. The high rate of unemployment and the competition increase result from the
reduction of customers (Dozier, 2015). It shows that the airline needs changes and an essential
strategy to ensure it remains competitive.

Technology

The technology revolution in BA has helped in developments that render it more competitive.
The company has experienced customer growth since they can make bookings online. It is
significantly a marketing tool for mobile and web applications (Dozier, 2015). Online platforms
also enable the customers to make a comparison of prices to other leading companies, and
hence, make an appropriate decision on the available choices.

Amazon's Segmentation, Targeting, and Positioning

Amazon is a United States based company in the e-commerce industry. The firm provides a
retail platform online that ensures merchants can trade their wares in the online market. The
firm makes its revenue via charging a specific fee for the hosting of the advertisement of the
merchants and a commission on each sale that is made. Despite the online business on retails,
Amazon is considered a manufacturer of electronic products, including the Kindle tablet and
the eBook reader.

Amazon offers a huge range of products and services and has been able to exploit many market
segments at the same time successfully. Amazon is an online retail company, selling
approximately more than 500 million products in North America alone and caters to the needs
of a broad segment of customers. The company monitors the external changes in the
marketplace and significantly addresses the increase in the expectations of the customers
through the periodical repositioning of their services and products in relation to the segment
change.

Segmentation

The segmentation of the market is the initial stage in the process of segmentation, positioning,
and targeting. The marketing process includes the division of various customers into multiple
groups that have unique features (Dudovskiy, 2017). The customers that have similar
characteristics are categorized in one group. Segmentation of the market aids in the
understanding of the market. The process followed in the system is based on the argument that
clients with the same features demonstrate a similar response to the sales and marketing
strategies. One specific advantage of Amazon is the company's ability to identify the essential
marketing strategy for the multiple markets. The segmentation ensures that Amazon
understands and defines the customer features (Ries, 2016).

Targeting

The second strategy in the STP is targeting. Targeting has been enabled as the marketing
strategy of the firm. It is the procedure of selection of the market segments that in turn are the
main focus of the marketing programs of the company (Brown, 2013). The segmentation plan
could result in the identification of various segments. Targeting ensures that Amazon can
overcome the challenge of budget limitation to focus on fewer segments instead of the whole
population. It enhances efficiency and the increase in returns and the effectiveness of the
activities in the market.

The customers of Amazon comprise of middle and upper-class groups that have an inclination
to portals of e-commerce and are enthusiasts of online shopping (Bhasin, 2017b). Most of the
customers are businesspersons or professionals that are busy and find it convenient to
purchase products online instead of visiting outlets physically to save money and time.

Positioning

Amazon operates in a highly competitive market. It is essential for the company to stand out in
the market to enable its survival. Amazon incorporates cost leadership and differentiation. Cost
leadership includes the positioning of a firm through the promotion of its operational efficiency.
It results in the reduction of cost through enhancement of efficiency (Brown, 2013). The
decrease in costs enables the companies to offer services and products at low prices, hence
attracts a considerable customer base.

E-bay's Segmentation, Targeting, and Positioning

The primary focus for eBay is the customers. The firm would only be successful when the
merchants and users that are enabled experience success. Whether physically, via a mobile
channel or online, the company is a transaction based organization that makes revenue through
payments and transactions (United States Securities and Exchange Commission, 2014). Revenue
is significantly generated via marketing services such as advertisements and classifieds. eBay
developed an open platform for software development and commerce solutions. The eBay
market segment by 2014 was an approximate 155 million buyers and an average of 800 million
global listings (United States Securities and Exchange Commission, 2014). The payment
segment of the company had more than 160 million accounts registered (United States
Securities and Exchange Commission, 2014).

In an interview with Wall Street analysts, the CEO iterated that the company is sharpening their
focus and target market (Steiner, 2014). He explained that the company would be more
aggressive in regions where it can compete, emerge victoriously and ensure sustainable growth.
eBay describes its primary purpose as the pioneering of new societies in the globe on a
commerce platform opportunity inspired and sustained by the trust (Chaffey, 2018).
Progressively, segmentation is essential for eBay for various reasons. It is a big ecosystem
within North America. The critical customer segments at eBay relate to sellers and buyers
(CustomerSegments, 2018). The relation is based on the concept that a seller could be a buyer
and vice versa. Since the company was one of the first to be developed, it has a substantially
colossal market share. Therefore, eBay has to balance the desires and needs of one segment in
relation to the other.

One major advantage of online platforms is cost since the company does not have expenses for
retail and motor setup. Customers visiting eBay can make a comparison of specification,
products, price and the appearance of the product. Therefore, they are able to obtain
everything available in retail shops. eBay has centers for delivery strategically located and can
make distribution within 3 days. In the metro places, the company can make a delivery in one
day. eBay has been able to grow over time by word of mouth (Bhasin, 2017a). The company
packages the products to ensure the customer is satisfied since shipping takes a significantly
longer period. It offers guarantees for a replacement to ensure the customers are attracted to
their products.

STP Comparison of the E-commerce and Airlines' Industries

Conclusively, both Amazon and eBay have expanded their market segments globally to reach
markets that were previously unreachable. Both companies serve the different customer base.
Amazon serves a huge market base while eBay specializes in customer segments more
(Salehoo, 2018). eBay is an auction site and caters to the people with a specific and a staunch
interest in certain products such as dealers, resellers, and hobbyists. The individuals selling and
buying over eBay are merchants, bargain hunters, and entrepreneurs, while those at Amazon
are simply normal consumers. However, both companies use artificial intelligence and other
similar digital marketing concepts in their marketing strategies.

STP in both industries is similar since they engulf both international and global markets based
on the markets targeted. Global comparisons of the industries in relation to STP show that the
E-commerce industry is bigger than the Airline industry. The Airline industry is segmented
based on the preference of the customers. The place and region of operations are determined
by the economy classes of the customers. The E-commerce industry has developed fast due to
the advancement of technology. Currently, the majority of entities in the world incorporate e-
commerce. Consumers also have access to e-commerce platforms. The global population in
2015 was approximately 7.3 billion. 1.4 billion made a purchase of services and goods online
once. In that year, the consumers spent up to 2,227 billion (Ecommercefoundation, 2018, 11).
Both Industries are positioned in highly competitive environments. They are based on the
preference of consumers hence they are customer based and affected by social and political
factors.

Recommendations

Qatar Airlines faced a major decline in sales resulting from the regional blockades imposed on
the country (Turak, 2018). The country was declared to have sympathy for terrorists and hence
the blockade was implemented (Bryan, 2018). The airline management embarked on an
expansion strategy to counter the losses incurred. The airline made a strategy for undertaking
long-distance flights. The CEO elaborated that the company began to target an increase of
frequencies into Southeast Asia and Eastern Europe (Turak, 2018). The government of Qatar
dismissed the allegations with the management of the Airline determined to ensure the
blockade is revoked. The company additionally increased their capacity for cargo services. The
E-commerce industry targets market regions with access to internet services and reliability in
the transport networks. However, as a result of technological advancements, there is a need for
the e-commerce companies to aid in the development of network services globally. Giving the
consumers a way of accessing the e-commerce sites would result in an increase of the size of
the target market.

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