It is the first step of the STP model where the customers possessing similar set of wants are grouped under a particular segment (Kotler, 2012). The market segments are not created by a marketer instead; it is identified and decided on which consumers to target. Mass marketing is different from segmentation marketing and the later is considered more beneficial in terms of market strategy. The organization can implement a much precise and targeted marketing mix in case of segmentation marketing. The automobile sector is classified into the following:
Although most of the developed countries are major hub for the premium cars, the growth rate of the budget car segment is also moving up the ladder as the consumers are becoming more aware of the financial and economic changes in the market leading to cost consciousness. The target customers of this sector are generally young adults and the retired consumers. Car brands which come under the small car segments are Maruti 800 and Tata Nano. The price of this car segment ranges from 2.5 lacs – 3 lacs (Kotler, 2012).
This segment constitutes to a very limited market, creating its own niche and the cars are all priced above 15 lakhs. The premium car segment targets the high income group and the elite classes. The car brands are Mercedes, BMW, Audi, Porsche and Jaguar (Kotler, 2012).
The second stage of the STP model is the selection of the target market. It is the customer bases which are targeted by a company to maximise its profit and revenue. Targeting means analysing different segments of the market and identifying the specific customer group as well as the sub markets where the company should compete. The estimation of the specific segment and the target market is done by comparing the financial attractiveness of the segment with the company’s objectives and capital to invest. Emphasis is given on the size of the segment, the resources required for market penetration, the ...