How do you use segmentation targeting and positioning to develop marketing strategies?

Market segmentation, targeting and positioning are the three components of what is commonly known as the S-T-P strategy. Each step contributes to the development of a targeted promotional plan. The process begins with brainstorming potential customer types and ends with the formulation of a strategy for promoting value to those customers.

Brainstorming Marketing Segments

1. The segmentation step of S-T-P involves general brainstorming of all of the distinct types of customers that your business could target. During this phase, you can choose from various methods, such as demographic, geographic, lifestyle, psychographic or usage rate factors. A local business with a universal product might target a local geographic market, for instance. A trendy wireless company might focus on younger, tech-savvy customers. The goal is to identify as many substantial, but distinct, market segments as possible.

Targeting Preferred Segments

1. A business typically can't be all things to all people. Small businesses have limited resources to invest in developing and promoting solutions to customer groups. During targeting, you identify the market segment you feel is the most profitable or offers the best long-term value for your business. That segment becomes your company's focal point. Over time, once you have firmly established yourself in one market, you might expand into another profitable market.

Positioning Strategy

1. You apply the positioning step when you develop a strategy that outlines how you intend to offer a solution that is bigger, better or more beneficial to target customers than what competitors offer. This strategy, and your positioning statement, serve as the framework for ongoing product development and promotional messaging. If you emphasize the organic attributes of your brand, which appeal to a health-conscious segment, you would stress these benefits in your promotional communication.

Implementation

1. You apply S-T-P strategically when you consider each component when building a marketing plan. You apply it more directly when you implement the various strategies in your marketing activities. Part of the point of segmentation is to find the right media to connect with the audience. If you want to air a TV commercial, for instance, you need to know which channels and programs those customers watch. The more effectively and consistently you enact your S-T-P plan, the greater your ability to build brand loyalty among your customer base.

The main objective of STP marketing model is to identify opportunities that are profitable and to serve the market accordingly. The STP marketing technique is a process that marketers and businesses use to determine the potential market for their products and services.

What is the STP Marketing?

STP stands for Segmentation, Targeting, and Positioning is a marketing technique that is used to identify potential customers or niche markets that can be as narrow as a certain demographic or as broad as specific issues or needs. It is used to discover groups of people who have the same need or want to fulfill the same need or want.

STP model is a three-step process involving the following:

1- Segmentation

This is the first step of the STP marketing technique. The marketing team identifies which sub-groups or groups of consumers are within their target market.

It can be done by geographic location, demographics, lifestyle, and culture to name a few. Once these key areas have been identified, they must be studied further into more specific attributes.

2- Targeting

This is the second step of the STP marketing technique. The focus starts to narrow and specific groups are identified that share similar interests, needs, and wants.

One important aspect of targeting is identifying what motivates your potential customers to purchase a product or service; this is called motivation mapping.

3- Positioning

This is the third step of the STP marketing technique. The consumer must be made to see that what you offer will satisfy their needs and wants, not necessarily the product or service itself, but how it does it; this is called perceived value.

It is observed that 59% customers are influenced by the personalization. STP marketing characterizes a change from product-focused marketing to customer-focused marketing. It is same like when you plan a go-to-market strategy but here you divide the market in different stages with more details to meet the customer need.

Who created the STP model?

The STP model was developed by Phillip Kotler, currently the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management, Northwestern University.

He is also an influential figure in the marketing world and has written several books including his most notable work “Marketing Management” which is now in its eleventh edition.

Why is STP Model Useful in Marketing Process?

STP marketing process helps make organizations more efficient with their advertising and marketing efforts. Instead of using a broad range of campaigns that appeal to many different sub-groups within the market, STP allows businesses to narrow down their marketing efforts to groups with interests and needs that are more relevant.

Targeting a smaller number of consumers can help increase sales volumes while also helping marketers develop targeted USPs that appeal directly to these specific sub-groups.

What are the main objectives of STP?

The STP marketing model involves identifying niches of potential customers, targeting them individually, and positioning your product accordingly to meet their needs.

Once you have successfully segmented, targeted, and positioned your products or services in the market, it will result in greater customer satisfaction which leads to increased profitability for your business.

How can STP help my business?

With a large amount of competition in today’s market, only a small portion will survive. Suppose you have a small share of a niche market. In that case, it can result in greater profitability for your business because you are catering to a specific group of people with a specific need or want.

It allows your business to be more flexible and adaptable to the changing needs of your customers, resulting in greater customer satisfaction. This leads to more revenue for your business and allows it to grow larger with time.

Importance of STP marketing model

• The STP marketing model helps business owners discover the most profitable niches to target and allows them to adapt their products or services as needed.
• An organization needs to identify specifically who its customers are, what they need and want, and how they relate to each other as a group.
• Developing a deeper understanding of the market allows your business to be more effective and efficient in meeting your customers’ needs.
• It is essential for businesses entering the market to understand the STP model because it will provide them with significant insight on how they can compete against larger corporations.
• It can result in greater profitability for your organization if done correctly, resulting in stronger brand loyalty from your customers.

How to use STP Model to develop marketing strategies?

To effectively use the STP mode, follow these steps below:

Define your market

This is the first step in the STP marketing process and involves researching who you will be selling to or what market you will be targeting. This will also remind you about Ansoff Matrix where you define your market for your product.

There are several ways that this can be done, such as:

• Analysis of your customer database.
• Using secondary data (e.g., Census, public information).
• Analysis of your competitor’s customer database.
• Focus groups.
• Secondary research such as the use of data mining and surveys.
• Market research

Segment your audience

This involves dividing your market into distinct groups of people with similar interests, needs and wants.

For example, if you are selling cars, the group would consist of people who prefer sports cars, sedans, or SUVs.

It is essential to find the different characteristics that separate one segment from another.

There may be several ways to segment your market, here are some examples of commonly used methods:

• Geographic

This involves dividing your market according to geographical location. For example, you can target people who live in rural areas or suburbs. Geographic segmentation may also be broken down further by dividing the market into population size, climate, and geography.

• Demographic

This involves dividing your market according to age group, gender, education level, or income level. Several subgroups can be categorized based on these demographics, such as race, religion, or social class, aka lifestyle segmentation.

• Behavioral

This involves grouping your market based on the behavior of their buying process. For example, you can target people who are bargain hunters or early adopters in adopting new products/services in the market.

• Customer lifestyle

This involves dividing your market based on customers’ lifestyles which can help you identify how they live. This may include information such as their hobbies, sports they enjoy, and entertainment type.

• Psychographic

This involves dividing your market based on values, attitudes, or opinions which are not tied to any demographic variables such as age, gender, or location.

• Attribute segmentation

This is similar to behavioral segmentation, which involves dividing your market into groups with similar needs or wants. For example, people who prefer to buy organic produce can be grouped together because they have the same need/want.

Once all of the segments have been identified, determine the size of each group as well as its potential to purchase your product or service.

Build segment profiles

This involves creating a description of each identified segment that will be used to provide insight into the type of customers you are dealing with.

You should include information of customer persona on their demographics, psychographics, and behaviors in order to better understand them.

The main idea behind this step is to gain a much deeper understanding of your customers. It allows you to make marketing decisions with greater accuracy by providing insight into the target market.

Select your target audience

You will only reach the segments that are most likely to purchase your product or service, so it is important to choose one carefully so that right marketing strategy can be made and implemented.

You should select the segment that has the greatest potential for generating revenue for your business.

By choosing the right segment, you will be able to gain greater profits than you would if you had chosen another group of customers.

Create a positioning strategy

Developing a positioning strategy will help you establish your place in the market and determine where you fit compared to your competitors.

It helps customers identify with what you are offering and why they should buy from you.

A great positioning statement answers who, what, when, where, and how. Your positioning statement should also include a unique selling proposition that will highlight what makes your product or service different from the competitors.

Decide on your marketing mix

Your marketing mix consists of the 4Ps: Product, Place, Price, and Promotion.

These are the aspects of your business that you will be marketing.

There are many strategies that can be used for each of these elements; however, it is essential to consider all possible options so you have a greater chance of being successful.

The most common strategies that are used for each of the 4Ps marketing are:

Product Strategies.

This involves evaluating the different aspects of your product or service that may need to be adjusted to better meet your audience’s demands.

For example, if you are trying to reach a specific group, you could offer them extended warranty options.

A good strategy for this would involve reducing the product’s price, so it is more affordable for this group.

Place Strategies.

You can reach your target audience by selling your product in a variety of different places such as:

• In-store.
• Online.
• Catalogue/brochures/magazines.

Promotion strategies

The way that people find information about your business can make a huge difference when it comes to how successful you are at promoting your company.

There are many strategies that you can use for promotion, which include:

• Advertising.
• Publicity.
• Personal selling.
• Selling through agents/distributors/dealerships.

Price Strategies.

The prices of your products or services will depend on the strategies you use to reach them, as well as the location where you will be selling them.

For example, you will be able to charge more for your product if you are selling in New York City than if you were selling in Iowa.

Consider all possible options when deciding on your marketing mix to have a greater chance of success.

What are the Benefits of STP marketing?

STP marketing has several benefits, including:

1. Think Differently

STP marketing encourages businesses to think differently and find new ways to differentiate themselves from established competitors. They must find ways to differentiate themselves or establish a unique selling proposition (USP).

Doing this will allow them to develop a specific marketing campaign that appeals directly to their target market and will help them stand out from larger corporations.

2. Increase Market Share

When done correctly, STP marketing allows organizations to increase their market share by allowing them to target smaller niches within the market.

This can be done by finding ways to appeal directly to specific groups of consumers that have similar needs, wants, and interests through creating relevant products, services, and campaigns.

Increasing your market share gives you a larger audience from which to draw potential customers, which can lead to more sales.

3. Reduced Costs

STP marketing can lead to reduced costs for businesses if their campaigns are successful. Since the USP is helping them appeal directly to smaller groups of consumers, it can help reduce marketing costs.

It also allows marketers to focus on just specific parts of the market rather than trying to target everyone within the general market which can be very expensive.

Reduced costs translate into more profits for businesses if their marketing efforts are successful.

4. Increased Loyalty

By targeting specific groups of consumers, businesses can increase their loyalty. When they identify specific needs and wants for each group, they will be able to develop products, campaigns, and services that appeal directly to them.

This can help create brand loyalty, leading to repeat customers and higher revenue in the long term.

5. Attracting the Right Customers

STP allows businesses to attract the right customers. By identifying niches within their target market, organizations can begin to mold their marketing campaigns based on what these sub-groups are looking for in specific products or services.

By developing relevant campaigns that appeal directly to them, STP can help create larger sales volumes.

Attracting the right customers also allows businesses to create brand loyalty, leading to more sales down the road.

What Are Some Examples of STP Marketing Campaigns?

STP marketing campaigns allow organizations to appeal directly to different sub-groups within their broad target market. The most relevant example of STP marketing is the Cola Wars of the 1980s. After the introduction of the New Coke, Both Pepsi and Coca-Cola used STP model to increase their sales.

This type of marketing usually includes some sort of segmentation and targeting with a specific positioning strategy.

Below are some common types of STP marketing campaigns:

Vertical Market Marketing

This form of STP marketing targets specific sub-groups within the market based on their unique needs, wants, and interests. It is commonly used in larger corporations to help them appeal to different aspects of the market.  Businesses can use vertical market marketing in order to reach several smaller groups of consumers.  It is usually based on a specific product or service and can help create unique USPs that appeal directly to these different segments within the larger target market.

Horizontal Market Marketing

This form of STP marketing targets similar sub-groups rather than different groups with unique needs, wants, and interests.  It is commonly used by small businesses that want to appeal to larger groups of consumers within their broader target market.

This allows them to increase sales volumes and also helps create a USP (unique selling proposition) for each sub-group targeted as part of the campaign.

Product Line Extensions Marketing

This is another form of STP marketing that allows organizations to reach several sub-groups within their target market through appealing to specific product needs, wants and interests.

Larger corporations commonly use product line extensions in order to expand their customer base.  It can help create USPs that appeal directly to different sub-groups within the larger market.

Positioning Marketing

STP marketing may also involve a positioning strategy. This form of STP marketing allows organizations to market their products and services in a unique way that appeals directly to small groups of consumers within their target market. It can help create USPs that appeal directly to the different sub-groups identified as part of the campaign.

Positioning is often associated with a specific product or service while targeting and segmentation are more involved in broader marketing strategies.

You want your product or service to have a unique position in the market. In marketing terms, this is called your value proposition.

You may take position by solving problem or providing benefit to the customers, or you can instill them to feel to have your product by touching the emotions, increase the self-image or feel to have your product as luxury.

Wrap Up

STP marketing is a highly effective way for organizations to appeal directly to different sub-groups within their target market.

It allows them to increase sales volumes and develop targeted USPs that appeal directly to these sub-groups’ specific needs, wants, and interests.

STP campaigns can be used in various types, including vertical market, horizontal market, product line extensions, and positioning marketing.

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