Segmentation Targeting Positioning – STP Model

What is the STP Process in Marketing?

Segmentation Targeting and Positioning (STP) is a strategic approach to modern marketing techniques and demonstrates a link between the overall market and how any business plans its marketing activities to compete in that market. Many times STP is referred to as a process where segmentation is developed initially, one or more target market is selected and then the positioning of the final product or services takes place. The overall purpose of STP is to guide the business to the planning and implementing a marketing mix program which is appropriate for both the company and the targeted group of people.

The STP model is very useful in the development of marketing communications plan as it allows the marketers to prioritize their propositions and then aim in delivering relevant and personalized messages so as to get intact with a different type of audiences.

How to Apply Segmentation Targeting Positioning "STP" to a Business

There are basic steps in the STP model which are very useful in analyzing the products or services being offered along with the way in which the value and benefits of the offering are conveyed to target groups. In this marketing tutorial, we will learn how to apply segmentation, targeting and positioning model in any business organization include the following steps to follow:

Step 1: Segment the Market

Whatever a business is offering, it cannot be everything for everyone. This is the main concept behind market segmentation which involves dividing various customers into different groups that have common needs and characteristics. In this way, organizations can tailor-make their marketing approaches so as to meet the requirements of every group cost-effectively along with providing an edge over your competitors.

Segmenting customers can be based on different aspects like demographic, behavioral, psychographic and geographic factors. For example, a travel agency online arranges adventure vacations worldwide. Its customers are divided into three groups as it is very costly to make diverse packages for additional groups.

The first segment includes people who are young and married couples and who are interested in eco-friendly and affordable vacations at exotic places. The second segment includes middle-income families who are willing for a family-friendly and safe vacation plan and which also makes their trip fun and easy with children. The third segment includes wealthy retirees who want to go for a luxurious and stylish vacation in the well-known cities.

Step 2: Target your Customers

At this step, companies need to determine which segment they have to target. Here, companies to analyze different factors such as the profitability and effectiveness of every segment, analyzing the potential growth and size of every segment and understand how well the company can serve to the needs of particular segments. This step can be explained from the previous example where the online adventure company examines the market size, revenues and profits of every segment.

The first segment reported profits of $9,520,000, the Segment B generates profits of $5,460,000, whereas, Segment C profits are expected to $4,360,000. Analyzing this, the company decides to give attention more to the first segment because of the size of this segment.

Step 3: Position the Offering

The final step is positioning strategy that requires companies to determine how they want to place their offerings to the targeted and most important customer group. After this, the most appropriate marketing mix can be selected. Business should initially determine why the customers will avail the offering rather than from its competitors. This can be done by identifying the unique selling proposition (USP) and then depict a positioning plan for understanding how the different segments will perceive the products or services. In this way, companies can find the best marketing model to position its offerings.

In addition to this, companies should also understand the needs and wants of every segment or understand the problem which the offering will solve. This can be done by creating value proposition which explains how the product or service will meet the expectations of the group better than other products.

For example, the travelling company presents itself as the ‘finest service for eco-vacation trips for newly young married couples’. The company tends to hold a contest on social media platforms for reaching its audience as this medium is preferred by this segment. The competition asks participants to send pictures of previous eco-vacations; the best picture will win a trip. This marketing campaign was a big hit and helped the company create its mailing list for the e-newsletter on monthly basis including profiles of different destinations.

Conclusion

A very important concept of segmentation targeting and positioning model is that all the three steps should be in alignment with one another so as to develop a fluid plan. Segmentation allows reaching the right target market which paves way for an appropriate positioning strategy. If any step within the STP model changes, it is important that the whole work from segmentation should be done and the strategy needs to be re-worked or else the market strategy will be destined to fail.

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