Marketing: Strategic and Brand Positioning

A fellow student, who manages the upscale lobby bar in a hotel near the high-speed rail station and office buildings, faces a challenge. Despite recommending premium red wines to customers, sales have not been as expected. Introducing promotional activities during sales boosts consumption temporarily, but customers revert to their previous behavior afterward. How can this issue be addressed?
In tackling this real issue from the perspective of a business student, let’s delve into a universal practical approach.

Firstly, to address the “how to” question, we must understand the essence of the problem.
Is the real goal to sell high-quality red wine? Not exactly. Selling wine is just a means you proposed to improve performance. Over time, focusing on means can lead to losing sight of the actual goal.

So, what is the real goal? It is to enhance the lobby bar’s overall performance. How can one achieve this? Today, we will employ the renowned STP theory (Segmentation, Targeting, Positioning) to unravel this issue.

Concept: STP Theory

STP Theory, pioneered by the prominent American marketer Philip Kotler, is a significant contribution to strategic marketing and brand positioning. The three letters, S, T, and P, represent Segmentation, Targeting, and Positioning, respectively. Its core lies in standing out by employing methods of “1) segmenting users, 2) setting user group targets, and 3) differentiating positioning.”
Let’s illustrate with an example.

In the late 1960s, Miller beer held a mere 8% market share, lagging far behind brands like Budweiser and Pabst. Miller aimed to boost performance, and they turned to the STP theory.

1.Segmenting Users: Miller conducted market research, discovering two segments – light drinkers and heavy drinkers. While light drinkers were numerous, their consumption was only 1/8th that of heavy drinkers.
2.Setting User Group Targets: Miller decided to target heavy drinkers. Further research revealed that this demographic mostly comprised blue-collar workers who enjoyed watching TV and engaging in sports.
3.Differentiating Positioning: Miller repositioned its sub-brand “Lite” as “Tastes Great, Less Filling,” encouraging various blue-collar workers like sailors and oil rig workers to enjoy beer openly.

The result? Miller Lite achieved tremendous success, ranking second in the U.S. by 1978, just behind Budweiser.
Similarly, a German tool merchant, facing performance challenges, analysed the market using STP theory:
1.Segmenting Users: Tool buyers were segmented into left-handed and right-handed individuals.
2.Setting User Group Targets: Recognizing 11% of Germans are left-handed, they decided to cater specifically to this group.
3.Differentiating Positioning: The “Left-Handed Tool Company” was established, thriving in its niche market.

Thus, the power of STP theory became evident.

Application:

How can this theory be applied to resolve the lobby bar issue?

1.Segmenting Users:
Business travellers using the lobby as a “living room.”
Transit passengers treating it as a brief stopover or “inn.”
Corporate clients using it as a “meeting room.”
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2.Setting User Group Targets:
Identify corporate clients from office buildings as potentially the most valuable customers due to their consumption capacity and behavior aligning with the lobby bar’s ambiance.
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3.Differentiating Positioning:
Position the lobby bar uniquely with elevated space, luxurious decor, delightful music, and fragrance.
Differentiate by targeting important clients for special events, introducing a 3-tier high tea for a prestigious touch.
Even the smallest entity can build its brand. Henceforth, corporate clients may associate hosting crucial guests with the lobby bar.

In conclusion, through today’s learning, I hope you not only understand the advice given to the student but also grasp the methodology behind generating such suggestions: STP theory.