When it comes to the discipline of marketing, there are core concepts that one has to understand, and the STP model is one of them. If you speak to any marketing professional, they will tell you that this term is crucial in marketing for any product or service offered – Segmentation, Targeting, Positioning.
In marketing terminology, these three steps form a marketing strategy. It enables businesses to define, reach, and speak to their desired customers.
But what is the essence of STP in marketing?
This article focuses on each of these key components or building blocks. Instead, we’ll concentrate on the marketing effort as a whole and how its composition works.
If you’re in marketing, business, or even as a student, STP assists you in your marketing activities. This is important as it makes your relationship with customers more relevant.
So, this marks the beginning where we get to understand what STP is and, throughout this article, understand its usefulness in drafting marketing strategies.
What Is STP In Marketing
STP is a systematic process in marketing; it’s not merely a theoretical concept whose purpose is to be studied. It makes servicing decisions. We can say that it makes SERVING decisions. Why focus on these three words only? One reason is that the marketplace has options, choices, and competitors. Marketers can focus and narrow their target. So, how do marketers do it? Answer: STP
Segmentation cuts the pie into pieces with different requirements; targeting defines which segments would be served, and positioning focuses on the key message for the chosen segment. In other words, they combine a complete package that matches customers’ expectations and the business’s objectives. They also prove helpful in facilitating market entry or in achieving a competitive advantage.
Step1 : Market Segmentation
Market segmentation is dividing a more significant market into smaller markets. Those smaller markets are described by their needs or characteristics. Segmentation is important because it allows the firm to concentrate on a few selected customers.
The starting point for segmentation is the recognition that customers have different characteristics. This enables products and marketing to be developed, which was all the selling efforts. The proper segmentation can save effort and money.
Geographic, demographic, psychographic, and behavioral are standard bases for segmentation. Each base gives a specific view of the customers’ habits and willingness to buy the product. This information can be beneficial when a firm intends to develop marketing strategies.
A market that has been segmented will likely identify segments with great potential. These segments will be the ones that will be more inclined to respond to the marketing push. Targeting such segments for growth and enhancing the customer experience is an effective strategy.
In short, market segmentation is the first key step in implementing the STP approach. It assesses the extent of the differences between the consumers and specifies the appropriate mix for each market. Here are the primary types of segmentation:
- Market Segmentation
- Demographic segmentation
- Geographic segmentation
- Behavioral segmentation
- Psychographic segmentation
- Geographic Segmentation
Geographic segmentation is a method that is based on geographical areas. It makes distinctions based on continents, countries, states, provinces, regions… Such segmentation is often used to respond to specific geographic demands. For example, snow gear advertising in snow areas of the regions.
Demographic Segmentation
Demographic segmentation refers to variables such as age, gender, religion, education, income, nationality, or ethnicity. One can use it to develop appropriate messages directed at members of specific demographic groups. For example, firms may market their products to high-income earners differently than college students.
Psychographic Segmentation
Psychographic segmentation is about such factors as the consumer’s lifestyle and personality types. Ultimately, this area examines how a consumer thinks and feels. This type of segmentation assists in developing messages with greater emotional appeal. It is frequently employed to ensure congruence with the consumers’ values and interests.
Behavioral Segmentation
Behavioral segmentation is concerned with the observable behavior of the consumer. It includes the purchase pattern and the brand patronage or loyalty. This view of segmentation caters for the targeting of people according to the way they have behaved towards a product. Such knowledge is instrumental in developing effective marketing campaigns.
Step 2: Selecting the Appropriate Audience
This segmentation is not arbitrary; it indicates the key target for market positioning and targeting. The focus shifts to determining which segments to serve. Targeting brings enhanced customer satisfaction and practical engagement.
This does not mean that all segments will be equally attractive. They assess the size, growth potential, and other compatibilities with the company objective and develop segments. Targeting properly ensures that marketing resources are focused on the most attractive opportunities.
Yes, there are several ways to approach targeting. These strategies affect the way resources are allocated. In other words, one needs to pick the right strategy to know what will work best.
The primary targeting strategies include:
- A Concentrated Targeting Strategy
- A Differentiated Targeting Strategy
- An Undifferentiated (Mass) Targeting Strategy
- A Concentrated Targeting Strategy
This strategy revolves around a single dominant segment or a cluster of similar segments. Resources are targeted toward this segment to service this segment’s needs. This approach is common among players in a niche market. This can result in the monopolization of a narrow market segment.
Differentiated Targeting Strategy
The differentiated strategy will target several segments with different marketing mixes. This includes the development of various marketing strategies for all segments of the target market. This helps companies to fulfill various needs and increase the number of customers. This is common in the markets where the consumers need different things.
Undifferentiated (Mass) Targeting Strategy
Unlike the differentiated strategy, the undifferentiated or mass marketing strategy considers the target market homogeneous. This strategy intends to manufacture and sell as many products as possible, allowing for a broader market reach appeal.
More common marketing strategies, in this case, include introductory advertisements that will enable the mass markets to understand them. Such a marketing approach is less costly, though it demonstrates a lack of personalism in the marketing, which decreases the chances of getting more customers.
Step 3: Positioning Your Brand
Brand positioning is a great challenge to most marketers, notwithstanding its importance. It certainly assists in product or service differentiation from extreme competitors. A strong position of the consumed good or service is necessary for many business opportunities.
Positioning concerns what the product means to the consumers and how it differs from competing products. This implies that marketing experts should have proper knowledge and skills about the target customers. It is pronounced that the better the consumers understand a product, the more recall and customer loyalty are gained.
There are other determinants of a brand’s position. These include the product’s characteristics, what it offers, and the intended competition. Besides brand vision, positioning must be consistent with other marketing strategies and industry developments.
The following are the most relevant components of positioning:
- Articulating the brand’s differentiating factor (USP)
- Choosing the appropriate positioning strategy
- Marketing the positioning to the market
- Developing a unique selling proposition (USP)
A USP is what sets one brand apart from others. It conveys the core benefit that consumers will take from the brand. One of the successful usps meets a specific need or a gap in the market in some way. They assist in constructing an appealing narrative around the brand that can drive consumers to pay attention to it.
Positioning Strategies
However, not all brands use the same positioning strategies. Pricing, product attributes or even the audience may be factors for positioning. For instance, an upscale brand may position itself around luxury and rarity. Another might focus on offering low prices and saving money, appealing to the budget-conscious shopper.
Communicating Your Positioning
However, to effectively position a product, communication is essential. In positioning, a unified and succinct message must reach everyone who requires contact with the brand. This includes ads, social networking, and interactions through telephone calls. Through consistent communication, brands can enhance their competitiveness and grow consumer confidence.
Real-World Examples of STP in Action
Coca-Cola is among the corporate brands whose STP is strategically implemented to achieve market dominance. For instance, it can be noted that the company’s segmentation extends its range of products, such as Diet Coke and Coke Zero, so that each advert targets a particular group of consumers.
That said, Nike is another stellar company in terms of effective targeting. The company has recognized three target markets that involve a lot of segmentation. Issues of marketing include Nike’s approaches as a sportswear market leader.
On the other hand, Apple excels by making innovation and quality a central focus. By continuing to communicate these points, Apple always seems to retain the glow of a top technology brand. Every one of these companies teaches how STP can further business goals and build a strong brand appeal.
The Benefits and Challenges of STP
Some of the business risks posed by STP are mitigated, which, in turn, creates many STP advantages for the company. Marketing resources are well-spent, as STP integrates its efforts into profitable segments. Most importantly, it helps build good marketing communications for the target audiences.
In the same light, however, STP poses those risks. There is the threat of disaffection of the segments that must be targeted. In addition, a lot of vigilance must be applied to the market to implement changes and maintain market relevance.
A summary would be a look at some advantages and also some disadvantages:
- Greater customer loyalty and enhanced brand awareness.
- Expanded market share and advantageous competitiveness with an edge that can be sustained.
- Has required attention in the direction of shifts in the market and in consumer behavior.
With these factors in mind, an organization can handle the complexities associated with the STP more efficiently.
Conclusion: STP As Part Of Your Marketing Strategy
Adopting STP in the existing business strategy can change how this business relates to the customers. This method adjusts the offering to suit the specific profile of the customers.
As the markets develop, looking back at the STP strategy helps to stay in sync with the recipients’ behavior patterns. Continuous improvements emphasize and contribute towards the competitive edge and the market share.
Wildnet Technologies is a leading digital marketing company in India that has had the pleasure of nurturing 4100+ clients and generating more than USD 150 million in revenue over our 17-year-long journey.
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Faq
What is STP in marketing, and what is its importance?
STP is short for segmentation, targeting, and positioning. It is an approach often employed by marketers in determining specific groups of audiences, choosing the most suitable group, and positioning a product or service in such a way that it meets the requirements of the selected group. STP enhances the effectiveness of marketing activities and ensures that marketing messages reach the most appropriate groups of people.
What is the essential difference between segmentation, targeting, and positioning?
- Segmentation subdivides the market into several relatively homogeneous and smaller groups with common characteristics.
- Targeting is the decision to concentrate on one or more marketing segments.
- Positioning creates in the target audience’s minds a brand image or some value for the new product that is different from other products.
What are the types of segmentation used in marketing?
The principal types of segmentation are:
- Demographic segmentation is based on age, gender, income, and educational level. Social demographic segmentation focuses on geographical location, region, and climate.
- Psychographic segmentation focuses on lifestyle, values, and interests.
- Behavioral segmentation considers a consumer’s purchasing behavior, loyalty, and product use.
How is positioning a brand different from the competition?
Positioning is all about designing a particular space in the minds of consumers for the brand that makes them explicitly comprehend its salient features, advantages, or the value it adds. It helps distinguish the brand from its competitors by stating its reasons for being superior or different, which is more attractive for the intended market.
Can you give an example of an effective STP strategy in marketing?
One of the famous examples is Coca-Cola:
- Segmentation: Coca-Cola targets markets based on age, lifestyle, and preferences.
- Targeting: They seek a broad spectrum from teenage to adult with separate campaigns.
- Positioning: Coca-Cola advertises its product as a drink always associated with happiness, friendship, and family.
