What Is The STP Process In Marketing? (Elements And Tips)

Updated 30 September 2022

The use of marketing models makes business ideas and sales strategies easier to organise and communicate. Marketing through segmentation, targeting and positioning (STP) helps companies identify their customers and plan marketing campaigns accordingly. You can gain valuable career skills by understanding the principles of this technique and its potential benefits. In this article, we answer 'What is the STP process in marketing?', discuss its importance, outline its core elements and share tips for using this model effectively.

What is the STP process in marketing?

The answer to 'What is the STP process in marketing?' is that it is a marketing strategy that can help businesses create market segments, create advertising campaigns for those segments and adjust the position of their products and services accordingly. With this strategy, the focus of a marketing campaign is on the customer, rather than on the product. Marketing teams use this model to segment their customer base by attributes such as interests, needs and demographics.

By determining which group of customers to target in their marketing efforts, they can optimise their marketing. This allows the team to develop campaign strategies and approaches specific to their target audience.

Elements of STP marketing

The STP marketing approach includes the following elements:

Segmentation

Segmentation is the first step in STP marketing. This involves categorising your customer base into different segments. Market segmentation helps you divide your customers into groups that have similar needs, likes, dislikes or purchasing habits so that you can create different marketing messages for different groups. Methods for segmenting audiences include:

Demographic segmentation

Companies may segment their customers based on demographics, such as age, gender and education level. This helps them divide their consumer market into smaller categories. Companies can better understand their markets by focusing on those smaller segments. This can help them allocate their resources more efficiently. Marketers can study how different demographic groups react to different products and services and develop and update their marketing strategies accordingly.

Psychographic segmentation

Psychographic segmentation seeks to create customer segments based on consumers' perceptions, opinions and activities. As a marketing strategy, psychographic segmentation allows you to understand how much value a product or service is offering to your different consumer groups. By incorporating different functionalities into the product, they can attract a wider audience and expand their customer base.

Geographic segmentation

Using geographic segmentation, you can segment your customers into different groups or categories based on their location. This type of market segmentation not only considers the physical location of customers but factors such as climate, population, clothing and food habits. This method helps companies identify how trends and patterns impact the market's demand for a product. Geographical segmentation can also provide useful insights for creating more effective marketing strategies and positioning your brand effectively.

Segmentation based on lifestyle

The concept of this segmentation refers to dividing an overall market into segments according to lifestyle factors, such as buying preferences, hobbies, social life, community involvement and wellness. A lifestyle segmentation approach can benefit companies because it enables them to take into account the lifestyles of their customers when developing products and in their marketing strategies. Businesses can use this strategy to connect with their customers and create customised products for them.

Behavioural segmentation

Behavioural segmentation is the categorisation of target markets based on behavioural patterns, which involve grouping customers by monitoring how they interact with a business. Companies may also survey customers to learn what they think about a product or service. A variety of factors can influence consumer behaviours, including their level of education, marital status, race or employment status.

Value segmentation

Businesses can also segment the market based on their customers' spending patterns. For instance, marketers can consider the frequency with which customers make purchases and the amount they spend. This helps them create different types of products for different customer groups.

Targeting

Targeting is the second step in STP marketing. The main objective of this step is to review the different customer groups you previously formed and choose the ones that you think are more valuable for your business. Then you can focus on a particular customer group for a marketing campaign. A host of factors can strongly influence your targeting decisions. When Here are a few important factors to consider when deciding which customer segment to target:

Size: Consider the size and future growth potential of each segment.
Profitability: Identify customer segments that are likely to spend the most on your product or service, and estimate the lifetime value of each customer segment. The lifetime value (LTV) estimates how much revenue a customer generates for a company over a time period.
Reachability: Make sure the marketing efforts reflect the needs of each segment. For each segment, take into account customer acquisition costs (CACs), where higher CACs mean lower profitability.

Positioning

The positioning process involves developing a unique, personalised marketing plan based on customer data. An organisation's positioning statement is important in helping customers identify with its brand, product or service. Providing products or services as a solution to a consumer's problems can help fulfil their needs. Using this strategy can lead to a boost in sales because consumers may find targeted advertisements more appealing in comparison to advertisements meant for the general audience. Businesses can use the following approaches when positioning a product:

Symbolic positioning: Focus is on developing a brand image that fosters a feeling of belonging and helps improve the self-identity of your customers.
Functional positioning: Make sure your advertisement focuses on a critical customer problem and provides a solution to that problem.
Experiential positioning: Focus is on re-branding and repositioning to change the way people perceive a product.

How to apply the STP model in an organisation

Here are the steps you can follow to effectively apply the STP model:

1. Segment the market

Identifying consumers with similar attributes and needs requires segmenting the market. In this way, businesses can meet the needs of each group. Some factors to take into consideration are age, gender, occupation, lifestyle, behaviour and others.

2. Target a customer group

Find out which customer groups contribute most to the business by considering each segment's profitability. Consider the size and potential growth of each customer group. You can conduct a PEST Analysis (political, economic, social and technological) to identify the opportunities and threats that may affect each segment. Targeting a segment successfully requires a lot of effort, therefore the key is to focus on one segment at a time.

3. Position your products

Position your brand, products and services in the places where your target customers are more likely to find them. By creating a positioning map, you can determine how each segment perceives the brand, product or service. This can help you target your advertisements to specific segments which can help boost sales and increase revenue. For instance, if your target customers often shop online, you can spend more on online advertising or social media campaigns.

4. Create a marketing mix

A marketing mix is an advertising plan that enables the creation of a cohesive promotional strategy by overseeing multiple advertising elements. It helps support the positioning of the product and reaches the target audience more effectively. Using the marketing mix as a guide to developing an STP marketing strategy can help companies focus on the customers' needs more effectively.

5. Conduct surveys

By conducting surveys among your customer base, you can gain a deeper understanding of their background and preferences. You can segment your customers into different groups based on their feedback specific feedback and create targeted advertisements for each group. Depending on your preferences and requirements, you can conduct physical surveys or online surveys.

6. Use a brand identity

Creating a brand identity and incorporating that into your marketing campaigns can help enhance the effectiveness of your STP marketing. Having a brand identity helps you identify and segment your target audience more easily. This also helps your customers recognise your products and services, most often because of the brand's appearance, accompanying slogans and value proposition. Customers can better identify and familiarise themselves with a product that has a clear brand identity.

Importance of STP

Businesses benefit from segmentation, targeting and positioning (STP) because it allows them to effectively target their customers. By categorising customers, a marketing team can develop specific advertising approaches for each group. This can help businesses increase their marketing efficiency by creating advertisements in accordance with the segment's characteristics.

A company can also use STP marketing to better understand the preferences of its target audience and the appropriate ways to communicate with them. This personalised method of persuasion may influence their purchasing decision. This often increases the customer's interaction with the business and may help in retaining more customers. As a final step, choosing a target audience helps a brand communicate its identity and message.

What Is The STP Process In Marketing? (Elements And Tips)