Segmentation, Targeting and Positioning (STP) Model
Posted on January 16, 2018
What Is the STP Process in Marketing?
Sofia has just started a new job as a marketing manager for a fashion outlet. She conducts a careful analysis of sales data within the first few weeks, and quickly identifies a profitable opportunity with a particular group of high-value customers.
So, she brainstorms several ideas with her team, and they come up with an exciting new product which has the potential to be a real success for the company.
Sofia has identified a profitable segment of the market, but how has she done it? How can her team members develop a perfect product for these people? And how should they communicate its benefits?
In this article, we’ll look at the Segmentation, Targeting and Positioning (STP) Model*, an approach that you can use to identify your most valuable market segments, and then sell to them successfully with carefully targeted products and marketing.
Examples of Targeting in Marketing
The STP Model consists of three steps that help you analyze your offering and the way you communicate its benefits and value to specific groups.
STP stands for:
- Step 1: Segment your market.
- Step 2: Target your best customers.
- Step 3: Position your offering.
This model is useful because it helps you identify your most valuable types of customer, and then develop products and marketing messages that ideally suit them. This allows you to engage with each group better, personalize your messages, and sell much more of your product.
Marriott International® owns a number of different hotel chains that target specific consumer groups.
For example, Courtyard by Marriott® hotels focus on travelers on the road, who want a nice, clean place to stay during their trip; Ritz-Carlton® hotels target those who don’t mind paying a premium for luxury; and Marriott ExecuStay® hotels are aimed at professionals who need a longer-term, comfortable place to stay.
As you can imagine, Marriott International doesn’t communicate the same marketing message to all its customers. Each hotel is designed and positioned to appeal to the unique wants and needs of a specific group.
Applying the STP Model
Follow the steps below to apply the STP Model in your organization.
Step 1: Segment Your Market
Your organization, product or brand can’t be all things to all people. This is why you need to use market segmentation to divide your customers into groups of people with common characteristics and needs. This allows you to tailor your approach to meet each group’s needs cost-effectively, and this gives you a huge advantage over competitors who use a “one size fits all” approach.
There are many different ways to segment your target markets. For example, you can use the following approaches:
- Demographic – By personal attributes such as age, marital status, gender, ethnicity, sexuality, education, or occupation.
- Geographic – By country, region, state, city, or neighborhood.
- Psychographic – By personality, risk aversion, values, or lifestyle.
- Behavioral – By how people use the product, how loyal they are, or the benefits that they are looking for
The Adventure Travel Company is an online travel agency that organizes worldwide adventure vacations. It has split its customers into three segments, because it’s too costly to create different packages for more groups than this.
Segment A is made up of young married couples, who are primarily interested in affordable, eco-friendly vacations in exotic locations. Segment B consists of middle-class families, who want safe, family-friendly vacation packages that make it easy and fun to travel with children. Segment C comprises upscale retirees, who are looking for stylish and luxurious vacations in well-known locations such as Paris and Rome.
Step 2: Target Your Best Customers
Next, you decide which segments to target by finding the most attractive ones. There are several factors to consider here.
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