STP marketing simplifies the market segmentation process and is one of the most commonly used approaches in modern marketing. The core focus of STP marketing is commercial effectiveness. Marketers use the approach to select the most valuable segments from a target audience and develop a product positioning strategy and marketing mix for each.
Component
Description
Definition
STP Marketing, which stands for Segmentation, Targeting, and Positioning, is a strategic approach used by businesses to identify and engage with specific customer segments effectively. It involves dividing the market, selecting target segments, and positioning products or services to meet their needs.
Segmentation
Segmentation is the process of dividing a broad market into smaller, homogeneous customer segments based on shared characteristics, needs, behaviors, or demographics. It helps businesses understand their diverse customer base and tailor marketing efforts.
Targeting
Targeting involves selecting one or more customer segments that align with a company’s goals and resources. It’s about identifying the most attractive and profitable segments to focus marketing efforts and allocate resources effectively.
Positioning
Positioning is the strategy of creating a unique and compelling image or perception of a product or service in the minds of the target audience. It aims to differentiate the offering from competitors and communicate its value and benefits effectively.
Market Research
Market research is a critical component of STP Marketing. It involves gathering data and insights about customer preferences, behaviors, pain points, and market trends. This information guides segmentation, targeting, and positioning decisions.
Customer Persona
A customer persona is a detailed, semi-fictional representation of an ideal customer within a specific segment. It includes demographic information, goals, challenges, and preferences. Personas help in creating personalized marketing campaigns.
Target Audience
The target audience consists of the individuals or groups selected for focused marketing efforts. It represents the customers most likely to purchase the product or service. Businesses tailor messages and promotions to resonate with this audience.
Value Proposition
A value proposition is a concise statement that communicates the unique benefits and value a product or service offers to the target audience. It addresses the “why buy” question and helps in positioning the offering effectively in the market.
Competitive Analysis
Analyzing competitors in the selected segments is crucial. It involves identifying their strengths, weaknesses, market share, and positioning strategies. This information informs how a business can differentiate itself and offer superior value.
Marketing Mix
The marketing mix, often represented as the 4Ps (Product, Price, Place, Promotion), is tailored to suit each target segment. It ensures that product features, pricing strategies, distribution channels, and promotional tactics align with segment-specific preferences.
Messaging
Effective messaging involves crafting messages, content, and advertising that resonates with the selected segments. It addresses their pain points, needs, and aspirations, showcasing how the product or service can fulfill those desires.
Customization
Customizing marketing efforts for each segment is key. This may include segment-specific campaigns, content, product variations, or pricing strategies. The goal is to create a personalized experience that appeals to the unique characteristics of each segment.
Examples
– Apple: Segments its market based on factors like device type (iPhone, Mac), user behavior, and demographics, then positions products accordingly. – Nike: Targets different market segments, such as athletes and fashion-conscious consumers, with tailored products and marketing. – Coca-Cola: Adapts its product offerings and messaging to cater to various regional preferences and demographics. – Amazon: Customizes product recommendations and shopping experiences based on individual user behavior and preferences.
Benefits
– Improved targeting and relevancy in marketing efforts. – Enhanced customer satisfaction and loyalty. – Higher conversion rates and sales. – Efficient allocation of resources. – Competitive advantage through differentiation. – Better understanding of customer needs.
Drawbacks
– Requires substantial market research and data analysis. – Complex marketing strategies for multiple segments. – Potential for increased costs due to customization. – Risk of overlooking emerging segments or market shifts. – Maintaining consistent brand identity across segments can be challenging.
Applications
STP Marketing is widely used across industries, including consumer goods, technology, fashion, automotive, and hospitality. It is applicable to any business looking to optimize its marketing efforts and create more targeted and effective campaigns.
Table of Contents
Understanding STP marketing
STP marketing is a model that increases the relevance and personalization of marketing messages to a target audience.
When used in the way it is intended, STP marketing fosters communication with a customer segment that is clear, focused, relevant, and most importantly, personalized.
It can also be used to discover new customers and niches or market opportunities that increase the efficiency and ROI of marketing efforts.
The three stages of the STP marketing model
The STP model is an acronym for three stages which are explained below.
Segmentation (S)
The idea of the STP model is to start with a broad, anonymous audience and then determine how different products (or components of the one product) relate to each customer segment.
Market segmentation may be based on:
Demographic – gender, income, education level, marital status, or occupation.
Psychographic – political affiliation, hobbies, opinions, personality traits, or attitudes.
Geographic – neighborhood, city, province, state, shire, country, or region.
Behavioral – how does the market use the product? This includes how the product was financed, how much it is used, brand loyalty, and the key product benefits sought.
Targeting (T)
The second stage aims to analyze each segment created earlier to determine which is most likely to generate the desired conversion.
Depending on the campaign, a conversion may encompass the sale of a product or a user signing up for an email newsletter.
The attractiveness of a given segment depends on:
Size – how large is the segment and what is its potential for growth?
Difference – there must be a measurable difference between one segment and the next. Without difference, efforts are unnecessarily duplicated.
Profitability – which segment is willing to spend the most money? Calculate the customer lifetime value (CLV) and compare it with others.
Ease of reach – to what extent can the segment be reached with a marketing effort? Will it be easy or difficult? Customer acquisition cost (CAC) is an important metric here.
Benefits – are the benefits specific to the segment? For example, one customer segment of a dairy company may prefer lactose-free milk, while another may prefer goat milk.
Positioning (P)
Given what it has learned so far, the marketing team must now decide how it wants to communicate with customers.
To make the company’s products and services stand out, it is important to perform competitor analyses and determine the value proposition.
A brand positioning map can also be used to clarify the brand’s unique or desirable attributes.
In terms of product positioning, there are myriad techniques. Some of these include:
Functional positioning – where a product or service offers a benefit that solves a genuine customer problem.
Experiential positioning – where the focus is on the emotional connection between the customer and the product, service, or brand.
Symbolic positioning – where the product is positioned to enhance the self-image, social status, or ego of the customer. Luxury brands touch on these points frequently when marketing to consumers.
Case Studies
Apple’s Product Line Segmentation:
Segmentation: Apple divides its customer base into segments based on various factors such as lifestyle, preferences, and technology usage.
Targeting: Apple targets different segments with specific product lines like the iPhone, iPad, and MacBook. For example, the iPad is positioned as a versatile tablet for both work and leisure, targeting professionals and students.
Positioning: Apple positions its products as premium, high-quality, and user-friendly, emphasizing innovation and design.
Coca-Cola’s Regional Marketing:
Segmentation: Coca-Cola tailors its marketing strategies to different regions and countries, considering cultural differences, taste preferences, and local traditions.
Targeting: The company targets specific markets with variations of its products, such as Coca-Cola Classic, Diet Coke, and Coke Zero, to cater to diverse consumer tastes.
Positioning: Coca-Cola positions itself as a refreshing beverage for moments of happiness and celebration, emphasizing its role in bringing people together.
Luxury Fashion Brands:
Segmentation: Luxury fashion brands like Gucci, Chanel, and Louis Vuitton segment their customers based on income, lifestyle, and brand affinity.
Targeting: These brands target high-net-worth individuals who seek exclusivity and luxury experiences.
Positioning: Luxury fashion brands position themselves as symbols of prestige, craftsmanship, and timeless style, appealing to the desire for status and elegance.
Toyota’s Hybrid Cars:
Segmentation: Toyota segments the automobile market based on environmental consciousness and fuel efficiency.
Targeting: The company targets eco-conscious consumers with its hybrid models like the Prius, aiming to reduce carbon emissions.
Positioning: Toyota positions its hybrid cars as environmentally friendly and technologically advanced, emphasizing fuel efficiency and reduced environmental impact.
McDonald’s “Happy Meal”:
Segmentation: McDonald’s segments its customers based on age, specifically targeting children and their parents.
Targeting: The “Happy Meal” targets children with small toys and kid-friendly food options.
Positioning: McDonald’s positions the “Happy Meal” as a fun and enjoyable dining experience for children, making it a popular choice for family outings.
Fitness Brands and Wearables:
Segmentation: Fitness brands like Fitbit and Garmin segment the market based on health-conscious individuals and fitness enthusiasts.
Targeting: They target consumers who prioritize tracking their physical activity, heart rate, and health metrics.
Positioning: These brands position their wearables as tools for achieving fitness goals, promoting an active and healthy lifestyle.
Netflix’s Content Recommendations:
Segmentation: Netflix segments its subscriber base by analyzing viewing habits, genres, and preferences.
Targeting: The platform targets viewers with personalized content recommendations, suggesting movies and TV shows based on individual tastes.
Positioning: Netflix positions itself as a provider of tailored entertainment experiences, enhancing user satisfaction and engagement.
Key takeaways:
STP marketing is a model that increases the relevance and personalization of marketing messages to a target audience.
STP marketing fosters communication with a particular customer segment that is clear, focused, relevant, and most importantly, personalized.
STP marketing is an acronym for three stages: segmentation, targeting, and positioning. The three stages help explain how each segment requires a custom marketing mix and positioning strategy for the best results.
Key Highlights of STP Marketing:
Definition: STP marketing, which stands for Segmentation, Targeting, and Positioning, is a widely used approach in modern marketing aimed at enhancing commercial effectiveness. It involves selecting valuable customer segments, developing personalized marketing messages, and creating product positioning strategies.
Enhancing Relevance and Personalization: STP marketing is designed to make marketing messages more relevant and personalized for specific target audiences. It facilitates clear, focused, and relevant communication with customers.
Discovering Opportunities: STP marketing can help businesses discover new customer segments, niches, or market opportunities, improving the efficiency and return on investment (ROI) of marketing efforts.
Three Stages of STP Model:
Segmentation (S): In this stage, marketers divide the broader audience into distinct segments based on criteria such as demographics, psychographics, geography, behavior, and more.
Targeting (T): Marketers then analyze these segments to identify which ones are most likely to lead to desired conversions, considering factors like segment size, difference from others, profitability, ease of reach, and benefits.
Positioning (P): The final stage involves determining how to communicate with the chosen target segments. It includes competitor analysis, defining the unique value proposition, and deciding on product positioning techniques.
Factors Affecting Attractiveness: When targeting specific segments, marketers consider factors like segment size, differentiation, profitability, ease of reach, and the relevance of benefits offered.
Positioning Strategies: Product positioning can involve various strategies, including functional positioning (solving customer problems), experiential positioning (emotional connections), and symbolic positioning (enhancing self-image or social status).
What does market segmentation comprise in STP marketing?
In STP, marketing segmentation comprises:
Demographic.
Psychographic.
Geographic.
Behavioral.
What does targetimng comprise in STP marketing?
In STP, targeting comprises:
Size.
Difference.
Profitability.
Ease of reach.
Benefits.
What does positioning comprise in STP marketing?
In STP, positioning comprises:
Functional positioning.
Experiential positioning.
Symbolic positioning.
What is a Market Segmentation?
Market segmentation is the process of dividing the market into sub-groups. Market segmentation can be based on characteristics such as age, behaviors, income levels, and more. This process helps to understand what your key customers want, where they are, and how to talk to them effectively.
What is meant by marketing segmentation?
Market segmentation is the process of breaking down the market in potential segments that have specific features and characteristics. Those segments help to drive sales and marketing activities, business experimentation, grow the distribution channels of a business, and build successful marketing strategies that help build strong brands in the marketplace.
Account-based marketing (ABM) is a strategy where the marketing and sales departments come together to create personalized buying experiences for high-value accounts. Account-based marketing is a business-to-business (B2B) approach in which marketing and sales teams work together to target high-value accounts and turn them into customers.
Ad Ops – also known as Digital Ad Operations – refers to systems and processes that support digital advertisements’ delivery and management. The concept describes any process that helps a marketing team manage, run, or optimize ad campaigns, making them an integrating part of the business operations.
Venture capitalist, Dave McClure, coined the acronym AARRR which is a simplified model that enables to understand what metrics and channels to look at, at each stage for the users’ path toward becoming customers and referrers of a brand.
Affinity marketing involves a partnership between two or more businesses to sell more products. Note that this is a mutually beneficial arrangement where one brand can extend its reach and enhance its credibility in association with the other.
As the name suggests, ambush marketing raises awareness for brands at events in a covert and unexpected fashion. Ambush marketing takes many forms, one common element, the brand advertising their products or services has not paid for the right to do so. Thus, the business doing the ambushing attempts to capitalize on the efforts made by the business sponsoring the event.
Affiliate marketing describes the process whereby an affiliate earns a commission for selling the products of another person or company. Here, the affiliate is simply an individual who is motivated to promote a particular product through incentivization. The business whose product is being promoted will gain in terms of sales and marketing from affiliates.
The bullseye framework is a simple method that enables you to prioritize the marketing channels that will make your company gain traction. The main logic of the bullseye framework is to find the marketing channels that work and prioritize them.
Brand building is the set of activities that help companies to build an identity that can be recognized by its audience. Thus, it works as a mechanism of identification through core values that signal trust and that help build long-term relationships between the brand and its key stakeholders.
According to inbound marketing platform HubSpot, brand dilution occurs “when a company’s brand equity diminishes due to an unsuccessful brand extension, which is a new product the company develops in an industry that they don’t have any market share in.” Brand dilution, therefore, occurs when a brand decreases in value after the company releases a product that does not align with its vision, mission, or skillset.
The brand essence wheel is a templated approach businesses can use to better understand their brand. The brand essence wheel has obvious implications for external brand strategy. However, it is equally important in simplifying brand strategy for employees without a strong marketing background. Although many variations of the brand essence wheel exist, a comprehensive wheel incorporates information from five categories: attributes, benefits, values, personality, brand essence.
The brand equity is the premium that a customer is willing to pay for a product that has all the objective characteristics of existing alternatives, thus, making it different in terms of perception. The premium on seemingly equal products and quality is attributable to its brand equity.
Brand positioning is about creating a mental real estate in the mind of the target market. If successful, brand positioning allows a business to gain a competitive advantage. And it also works as a switching cost in favor of the brand. Consumers recognizing a brand might be less prone to switch to another brand.
Business storytelling is a critical part of developing a business model. Indeed, the way you frame the story of your organization will influence its brand in the long-term. That’s because your brand story is tied to your brand identity, and it enables people to identify with a company.
Content marketing is one of the most powerful commercial activities which focuses on leveraging content production (text, audio, video, or other formats) to attract a targeted audience. Content marketing focuses on building a strong brand, but also to convert part of that targeted audience into potential customers.
One of the first mentions of customer lifetime value was in the 1988 book Database Marketing: Strategy and Implementation written by Robert Shaw and Merlin Stone. Customer lifetime value (CLV) represents the value of a customer to a company over a period of time. It represents a critical business metric, especially for SaaS or recurring revenue-based businesses.
Customer segmentation is a marketing method that divides the customers in sub-groups, that share similar characteristics. Thus, product, marketing and engineering teams can center the strategy from go-to-market to product development and communication around each sub-group. Customer segments can be broken down is several ways, such as demographics, geography, psychographics and more.
Developer marketing encompasses tactics designed to grow awareness and adopt software tools, solutions, and SaaS platforms. Developer marketing has become the standard among software companies with a platform component, where developers can build applications on top of the core software or open software. Therefore, engaging developer communities has become a key element of marketing for many digital businesses.
A digital channel is a marketing channel, part of a distribution strategy, helping an organization to reach its potential customers via electronic means. There are several digital marketing channels, usually divided into organic and paid channels. Some organic channels are SEO, SMO, email marketing. And some paid channels comprise SEM, SMM, and display advertising.
Field marketing is a general term that encompasses face-to-face marketing activities carried out in the field. These activities may include street promotions, conferences, sales, and various forms of experiential marketing. Field marketing, therefore, refers to any marketing activity that is performed in the field.
interaction with a brand until they become a paid customer and beyond.
Funnel marketing is modeled after the marketing funnel, a concept that tells the company how it should market to consumers based on their position in the funnel itself. The notion of a customer embarking on a journey when interacting with a brand was first proposed by Elias St. Elmo Lewis in 1898.
Funnel marketing typically considers three stages of a non-linear marketing funnel. These are top of the funnel (TOFU), middle of the funnel (MOFU), and bottom of the funnel (BOFU). Particular marketing strategies at each stage are adapted to the level of familiarity the consumer has with a brand.
A go-to-market strategy represents how companies market their new products to reach target customers in a scalable and repeatable way. It starts with how new products/services get developed to how these organizations target potential customers (via sales and marketing models) to enable their value proposition to be delivered to create a competitive advantage.
The term “greenwashing” was first coined by environmentalist Jay Westerveld in 1986 at a time when most consumers received their news from television, radio, and print media. Some companies took advantage of limited public access to information by portraying themselves as environmental stewards – even when their actions proved otherwise. Greenwashing is a deceptive marketing practice where a company makes unsubstantiated claims about an environmentally-friendly product or service.
Grassroots marketing involves a brand creating highly targeted content for a particular niche or audience. When an organization engages in grassroots marketing, it focuses on a small group of people with the hope that its marketing message is shared with a progressively larger audience.
Growth marketing is a process of rapid experimentation, which in a way has to be “scientific” by keeping in mind that it is used by startups to grow, quickly. Thus, the “scientific” here is not meant in the academic sense. Growth marketing is expected to unlock growth, quickly and with an often limited budget.
Guerrilla marketing is an advertising strategy that seeks to utilize low-cost and sometimes unconventional tactics that are high impact. First coined by Jay Conrad Levinson in his 1984 book of the same title, guerrilla marketing works best on existing customers who are familiar with a brand or product and its particular characteristics.
Hunger marketing is a marketing strategy focused on manipulating consumer emotions. By bringing products to market with an attractive price point and restricted supply, consumers have a stronger desire to make a purchase.
Integrated marketing communication (IMC) is an approach used by businesses to coordinate and brand their communication strategies. Integrated marketing communication takes separate marketing functions and combines them into one, interconnected approach with a core brand message that is consistent across various channels. These encompass owned, earned, and paid media. Integrated marketing communication has been used to great effect by companies such as Snapchat, Snickers, and Domino’s.
Inbound marketing is a marketing strategy designed to attract customers to a brand with content and experiences that they derive value from. Inbound marketing utilizes blogs, events, SEO, and social media to create brand awareness and attract targeted consumers. By attracting or “drawing in” a targeted audience, inbound marketing differs from outbound marketing which actively pushes a brand onto consumers who may have no interest in what is being offered.
Integrated marketing describes the process of delivering consistent and relevant content to a target audience across all marketing channels. It is a cohesive, unified, and immersive marketing strategy that is cost-effective and relies on brand identity and storytelling to amplify the brand to a wider and wider audience.
The marketing mix is a term to describe the multi-faceted approach to a complete and effective marketing plan. Traditionally, this plan included the four Ps of marketing: price, product, promotion, and place. But the exact makeup of a marketing mix has undergone various changes in response to new technologies and ways of thinking. Additions to the four Ps include physical evidence, people, process, and even politics.
Marketing myopia is the nearsighted focus on selling goods and services at the expense of consumer needs. Marketing myopia was coined by Harvard Business School professor Theodore Levitt in 1960. Originally, Levitt described the concept in the context of organizations in high-growth industries that become complacent in their belief that such industries never fail.
Marketing personas give businesses a general overview of key segments of their target audience and how these segments interact with their brand. Marketing personas are based on the data of an ideal, fictional customer whose characteristics, needs, and motivations are representative of a broader market segment.
Meme marketing is any marketing strategy that uses memes to promote a brand. The term “meme” itself was popularized by author Richard Dawkins over 50 years later in his 1976 book The Selfish Gene. In the book, Dawkins described how ideas evolved and were shared across different cultures. The internet has enabled this exchange to occur at an exponential rate, with the first modern memes emerging in the late 1990s and early 2000s.
Microtargeting is a marketing strategy that utilizes consumer demographic data to identify the interests of a very specific group of individuals. Like most marketing strategies, the goal of microtargeting is to positively influence consumer behavior.
Multichannel marketing executes a marketing strategy across multiple platforms to reach as many consumers as possible. Here, a platform may refer to product packaging, word-of-mouth advertising, mobile apps, email, websites, or promotional events, and all the other channels that can help amplify the brand to reach as many consumers as possible.
Multi-level marketing (MLM), otherwise known as network or referral marketing, is a strategy in which businesses sell their products through person-to-person sales. When consumers join MLM programs, they act as distributors. Distributors make money by selling the product directly to other consumers. They earn a small percentage of sales from those that they recruit to do the same – often referred to as their “downline”.
The Net Promoter Score (NPS) is a measure of the ability of a product or service to attract word-of-mouth advertising. NPS is a crucial part of any marketing strategy since attracting and then retaining customers means they are more likely to recommend a business to others.
Neuromarketing information is collected by measuring brain activity related to specific brain functions using sophisticated and expensive technology such as MRI machines. Some businesses also choose to make inferences of neurological responses by analyzing biometric and heart-rate data.
Neuromarketing is the domain of large companies with similarly large budgets or subsidies. These include Frito-Lay, Google, and The Weather Channel.
Newsjacking as a marketing strategy was popularised by David Meerman Scott in his book Newsjacking: How to Inject Your Ideas into a Breaking News Story and Generate Tons of Media Coverage. Newsjacking describes the practice of aligning a brand with a current event to generate media attention and increase brand exposure.
A microniche is a subset of potential customers within a niche. In the era of dominating digital super-platforms, identifying a microniche can kick off the strategy of digital businesses to prevent competition against large platforms. As the microniche becomes a niche, then a market, scale becomes an option.
We can define pull and push marketing from the perspective of the target audience or customers. In push marketing, as the name suggests, you’re promoting a product so that consumers can see it. In a pull strategy, consumers might look for your product or service drawn by its brand.
Real-time marketing is as exactly as it sounds. It involves in-the-moment marketing to customers across any channel based on how that customer is interacting with the brand.
Relationship marketing involves businesses and their brands forming long-term relationships with customers. The focus of relationship marketing is to increase customer loyalty and engagement through high-quality products and services. It differs from short-term processes focused solely on customer acquisition and individual sales.
Reverse marketing describes any marketing strategy that encourages consumers to seek out a product or company on their own. This approach differs from a traditional marketing strategy where marketers seek out the consumer.
Remarketing involves the creation of personalized and targeted ads for consumers who have already visited a company’s website. The process works in this way: as users visit a brand’s website, they are tagged with cookies that follow the users, and as they land on advertising platforms where retargeting is an option (like social media platforms) they get served ads based on their navigation.
Sensory marketing describes any marketing campaign designed to appeal to the five human senses of touch, taste, smell, sight, and sound. Technologies such as artificial intelligence, virtual reality, and the Internet of Things (IoT) are enabling marketers to design fun, interactive, and immersive sensory marketing brand experiences. Long term, businesses must develop sensory marketing campaigns that are relevant and effective in eCommerce.
Services marketing originated as a separate field of study during the 1980s. Researchers realized that the unique characteristics of services required different marketing strategies to those used in the promotion of physical goods. Services marketing is a specialized branch of marketing that promotes the intangible benefits delivered by a company to create customer value.
Sustainable marketing describes how a business will invest in social and environmental initiatives as part of its marketing strategy. Also known as green marketing, it is often used to counteract public criticism around wastage, misleading advertising, and poor quality or unsafe products.
Word-of-mouth marketing is a marketing strategy skewed toward offering a great experience to existing customers and incentivizing them to share it with other potential customers. That is one of the most effective forms of marketing as it enables a company to gain traction based on existing customers’ referrals. When repeat customers become a key enabler for the brand this is one of the best organic and sustainable growth marketing strategies.
360 marketing is a marketing campaign that utilizes all available mediums, channels, and consumer touchpoints. 360 marketing requires the business to maintain a consistent presence across multiple online and offline channels. This ensures it does not miss potentially lucrative customer segments. By its very nature, 360 marketing describes any number of different marketing strategies. However, a broad and holistic marketing strategy should incorporate a website, SEO, PPC, email marketing, social media, public relations, in-store relations, and traditional forms of advertising such as television.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
