The segmentation, targeting,

positioning (STP) marketing

model
How to use Segmentation, Targeting, and Positioning (STP) to develop
marketing strategies

Today, the STP marketing model (Segmentation, Targeting, Positioning) is

a familiar strategic approach in modern marketing. It is one of the most
commonly applied marketing models in practice, with marketing leaders
crediting it for efficient, streamlined communications practice.

STP marketing focuses on commercial effectiveness, selecting the most

valuable segments for a business and then developing a marketing mix and
product positioning strategy for each segment.

As Martech continues to develop, so do opportunities for segmentation,

targeting, and positioning. So whether you're brand new to STP or a
seasoned veteran, it can be useful to take stock and double-check you're
utilizing every chance you get to reach, interact with, convert and engage
customers.

The STP marketing model

The STP model is useful when creating marketing communications plans
since it helps marketers to prioritize propositions and then develop and
deliver personalized and relevant messages to engage with different
audiences. The three-step funnel consists of market segmentation, market
targeting, and product positioning.

Within your research-based market segmentation phase, you are aiming to

identify a basis for the segmentation of your target customers, and determine
important characteristics to differentiate each market segment.
When creating your targeting and positioning strategy, you must evaluate the
potential and commercial attractiveness of each segment, and then develop
detailed product positioning for each selected segment, including a tailored
marketing mix based on your knowledge of that segment.

STP marketing as a planning tool

Segmentation, targeting, and positioning is an audience-focused rather than
product-focused approach to marketing communications which helps deliver
more relevant messages to commercially appealing audiences.

STP is a critical strategy and planning tool, featured in our RACE Growth
System. Our RACE Growth System supports marketers, managers, and
business owners to create a 90-day marketing plan across each stage of
their marketing funnel.

So, while STP sits within the planning activities, the benefits of effective
segmentation, targeting and positioning can be felt across the types of
customers you reach, interact with, convert, and engage.

You can find out more about all the tools and techniques in our RACE Growth
System when you download your free growth guide today.

Applying Segmentation, Targeting and Positioning to

digital communications
STP marketing is relevant to digital marketing too at a more tactical
communications level. For example, applying marketing personas can help
develop more relevant digital communications as shown by these
alternative tactical email customer segmentation approaches.
 This visual from Dave Chaffey of Smart Insights in his book Digital Marketing:
Strategy. Implementation and practice shows how Segmentation, Targeting
and Positioning apply to digital marketing strategy.

It reminds us how digital channels offer new options for targeting audiences
that weren't available previously, but we need to reserve sufficient budget
for. For example:

 Search intent as searchers type keywords when comparing products they

are interested in buying
 Interest-based targeting in Facebook, e.g. Prospecting for those interested
in Gardening, Gym membership, or Golf
 Targeting through email personalization and on-site personalization based
on profile, behavior (e.g. content consumed)
There are also new opportunities to make a brand more compelling through
offering new types of value to consumers based on a digital value
proposition or what Jay Baer has called Youtility. This can be via content or
interactive tools on websites or mobile apps.

How to use STP marketing?

Through segmentation, you can identify niches with specific needs, mature
markets to find new customers, deliver more focused and effective marketing
messages.

The needs of each segment are the same, so marketing messages should
be designed for each segment to emphasise relevant benefits and features
required rather than one size fits all for all customer types. This approach is
more efficient, delivering the right mix to the same group of people, rather
than a scattergun approach.

You can segment your existing markets based on nearly any variable, as
long as it’s effective as the examples below show:

Well-known ways to segment your audience

include:
1. Demographics
Breakdown by any combination: age, gender, income, education, ethnicity,
marital status, education, household (or business), size, length of residence,
type of residence, or even profession/occupation.

An example is Firefox who sells 'coolest things', aimed at a younger male

audience. Though, Moshi Monsters, however, is targeted to parents with fun,
safe and educational space for younger audiences.

2. Psychographics
This refers to 'personality and emotions' based on behavior, linked to
purchase choices, including attitudes, lifestyle, hobbies, risk aversion,
personality, and leadership traits. magazines read and TV. While
demographics explain 'who' your buyer is, psychographics inform you 'why'
your customer buys.

There are a few different ways you can gather data to help form
psychographic profiles for your typical customers.
1. Interviews: Talk to a few people that are broadly representative of your
target audience. In-depth interviews let you gather useful qualitative data
to really understand what makes your customers tick. The problem is they
can be expensive and difficult to conduct, and the small sample size
means they may not always be representative of the people you are trying
to target.

2. Surveys: Surveys let you reach more people than interviews, but it can
be harder to get as insightful answers.

3. Customer data: You may have data on what your customers tend to
purchase from you, such as data coming from loyalty cards if an FMCG
brand or from online purchase history if you are an e-commerce business.
You can use this data to generate insights into what kind of products your
customers are interested in and what is likely to make them purchase. For
example, does discounting vastly increase their propensity to purchase?
In which case they might be quite spontaneous.

An example is Virgin Holidays who use segmentation, positioning and

targeting to promote their holidays to 6 different audiences.

3. Lifestyle
This refers to Hobbies, recreational pursuits, entertainment, vacations, and
other non-work time pursuits.
Companies such as on and off-line magazine will target those with specific
hobbies i.e. FourFourTwo for football fans.

Some hobbies are large and well established, and thus relatively easy to
target, such as the football fan example. However, some businesses have
found great success targeting very small niches very effectively. A great
example is the explosion in 'prepping' related businesses, which has gone
from a little heard-of fringe activity to a billion-dollar industry in recent years.
Apparently now 3.2 million Americans identify as doomsday preppers. A
great way to start researching and targeting these kind of niches is Reddit,
where people create subReddits to share information about a given interest
or hobby.

4. Belief and values

Refers to Religious, political, nationalistic, and cultural beliefs and values.

The Islamic Bank of Britain offers Sharia-compliant banking which meets

specific religious requirements.

A strange but interesting example of religious demographics influencing

marketing that you might not have guessed is that Mormons are really into
'multi-level marketing'. They're far more likely to be engaged in the practice
than any other US group.

Going the extra mile with demographic research can lead to discovering new
marketing opportunities and thinking outside the box. For example, did you
know the median age of Cadilla Blackwing customers is 10 years
younger than that of “regular” Cadillac customers?

5. Life stages
Life stages are the Chronological benchmarking of people’s lives at different
stages.

An example is Saga holidays which are only available for people aged 50+.
They claim a large enough segment to focus on this life stage.

6. Geography
Drill down by Country, region, area, metropolitan or rural location, population
density or even climate.
 An example is Neiman Marcus, the upmarket department store chain in the
USA now delivers to the UK.

7. Behaviour
Refers to the nature of the purchase, brand loyalty, usage level, benefits
sought, distribution channels used, and reaction to marketing factors.

In a B2B environment, the benefits sought are often about ‘how soon can it
be delivered?’ which includes the ‘last-minute’ segment - the planning in
advance segment.

An example is Parcelmonkey.co.uk who offers same-day, next day and

international parcel deliveries.

8. Benefit
Benefit is the use and satisfaction gained by the consumer.

Smythson Stationery offer similar products to other stationery companies,

but their clients want the benefit of their signature packaging: tissue-lined
Nile Blue boxes and tied with navy ribbon!

Market targeting
The list below refers to what’s needed to evaluate the potential and
commercial attractiveness of each segment.

 Criteria size: The market must be large enough to justify segmenting. If the
market is small, it may make it smaller.
 Difference: Measurable differences must exist between segments.
 Money: Anticipated profits must exceed the costs of additional marketing
plans and other changes.
 Accessible: Each segment must be accessible to your team and the
segment must be able to receive your marketing messages
 Focus on different benefits: Different segments must need different
benefits.
Product positioning
Positioning maps are the last element of the STP process. For this to work,
you need two variables to illustrate the market overview.

In the example here, I’ve taken some cars available in the UK. This isn’t a
detailed product position map, more of an illustration. If there were no cars
in one segment it could indicate a market opportunity.

Expanding on the extremely basic example above, you can unpack the
market by mapping your competitors onto a matrix based on key factors that
determine purchase.
This chart is not meant to be any kind of accurate representation of the car
market, but rather just illustrate how you could use a product positioning map
to analyze your own business's current position in the market, and identify
opportunities.

For example, as you can see in the gap below, we've identified a possible
opportunity in the market for low-priced family cars.
We're not saying this gap actually exists, I'm sure you could think of cars that
fit this category, as the car market is an extremely developed and competitive
market. However, it does show how you can use the tool to identify gaps in
your own market.

An example of a company using STP marketing?

Any time you suspect there are significant, measurable differences in your
market, you should consider STP. Especially if you have to create a range
of different messages for different groups.
A good example of segmentation is BT Plc, the UK’s largest telecoms
company. BT has adopted STP marketing for its varied customer groups;
ranging from individual consumers to B2B services for its competitors.

Identifying and defining your target audience is key to efficiently growing your
customer base. But to fully benefit from your strategy, you need to set
objectives and optimize your marketing activities to achieve your goals.
That's where our RACE Growth System comes in, as we have tools and
templates to support at each stage of your marketing funnel. Download your
free RACE Growth System guide to get started today.