STP marketing refers to using the STP (Segmentation, Targeting, and Positioning) model to create marketing strategies that focus on customers, discovering, and optimizing marketing towards your target audience and segment.
Since its inception, the STP model has proven to be one of the essential marketing models that marketers can use to refine their marketing strategies, planning, and results.
Firstly, let’s dive into more in-depth about what is the STP Model in marketing. Secondly, we’ll explain each of the STP model parts individually, explore its role in digital marketing, and finally discover how you can use it to make better marketing decisions in your business.
What is The STP (Segmenting, Targeting, and Positioning) Model?
STP model is for creating marketing segments where companies can achieve a competitive edge to use in their marketing strategies.
The model helps us discover our most optimal target audiences and segments, determine which segments are the best for us, and help us position our business to the said segments.
The STP model derives from three steps of creating a segment: Segmentation, Targeting, and Positioning.
The STP model’s goal and its use in marketing are to discover profitable marketing segments and identify our target audiences for marketing activities.
Creating a marketing strategy using the STP model, we build marketing strategies that focus on the target audiences we want to reach and develop and position products in the most optimized way.
The model’s benefit is that it paints a picture of our most valuable customers and the methods we can use to create better products and marketing strategies.
When it comes to digital marketing, understanding our online audience is essential for online marketing strategies; the STP model helps us deliver marketing wins more consistently.
What Is Segmenting in STP In The STP Model
In a nutshell, segmenting in the STP model refers to the methods and actions we use to divide a more extensive market opportunity into more detailed segments, either through research or analytics.
As a business, we have a more realistic chance of gaining a competitive edge through our products or a purely marketing edge perspective when we understand to whom we are selling.
And the reason we need segmentation is clear; a business can’t offer its products to everyone equally.
While segmenting is powerful for understanding your chosen segments’ core characteristics, the way we create the segments can restrict our potential market opportunity if we choose to dilute the segments too much.
For example, the smaller the segment, the more unrealistic it is for a company to achieve, especially an unprofitable and small segment. On the other hand, starting on small or niche segments can offer a place to start from and grow for starting companies.
Before segmentation, we need to understand the business goals’ role and whether a segment can get us there.
We need to create realistic segments that a business can serve.
Identifying and Creation Of Customer Segments
But first, we need to identify the customer segments. We can use various ways to mold a segment through demographic, geographic, psychographics, behavior characteristics, and data.
- Age, marital status, gender, employment and education, income
- Geographic And Online presence
- Country, regions, cities, neighborhoods
- Online channels: what channels do the segments mostly use (social media, search, etc. )
- Values, personality, lifestyle, attitudes, interests
- Behavioral characteristics
- How does the segment use products
- What do they want from the products?
- How they behave on your online platforms (website analytics)
For measuring how realistic a segment is in our case, we use targeting of the STP model.
What Is Targeting In The STP Model
After creating our segments, then we have to choose which ones work best. Targeting in the STP model refers to choosing the right segments to target and plan its marketing activities.
The goal of targeting is to research each segment’s business opportunities and choose the one that aligns with our goals.
While it is tempting to achieve growth through multiple segments simultaneously, it is rarely possible. Hence, we must pinpoint the best segment before.
By targeting one segment at a time, we can build more measurable strategies to determine whether the segment provided the results we thought it would. Especially as online marketing moves as fast as possible, it enables us to target different segments quickly.
To analyze the segments we create, we can use the following questions to determine how good they are and whether it is worth it to us.
- What is the size of the segment?
- Purchase behaviors
- Needs of the segment
- Can we communicate (advertising, for example) with the segment?
- How often we can communicate
- How costly is it?
- The required marketing channels
- Is the segment profitable enough to sustain marketing efforts?
- Does the segment align with our business goals?
- Can we realistically offer value to the segment sustainably?
- Can we maintain a competitive edge for the segment?
- Can we communicate the way the segment wants?
What Is Positioning In The STP Model
Position in STP is all about creating products and its marketing to fit a marketing segment you created. And it’s the final step in the process of the model.
And as the last step, it’s the most essential. Because if we don’t understand how to position our offering to the chosen segments, we can’t succeed with our marketing strategy.
Tools you can use to figure out the positioning:
Through your customers’ problems (and the segment) have, and the solutions you provide should answer the wants and needs of the segments you target.
What is your value proposition that drives the competitive edge against your competitors in the segment?
When we understand how to position ourselves in the segments and modify the offering to our target audience’s needs, we’ll create a solid base from where we can drive marketing efforts forward to achieve growth.
In the positioning phase, you can introduce competing companies and brands to the mix to determine where you stand against them when looking at the chosen segments. It should help in identifying your USP more clearly and whether you need to think about it again.
As the company that can fulfill the needs and wants of the segment will achieve better results from marketing.
How Useful Is STP in Digital Marketing?
Especially in digital marketing with online marketing methods, the STP model can help figure out the best audiences and market segments to target.
What digital marketing allows is fast experimentation with data for segment determination as we can construct either by research or mold a segment of the data we have at hand.
It offers a quick way to experiment to see whether a segment reacts to our marketing efforts the way we intended.
It means we can go through many real-life marketing segments rather quickly and decide whether we have found a target audience properly.
Using STP in digital marketing enables creating more segments through its methods to have more accurate marketing data.
Whether you create market segments with research or with in-depth analytics, the STP model can help us develop decisions more precisely.
Another great point is that we can experiment with smaller segments in digital marketing because of the cost of entry and the time it takes to run the test. We can discover new opportunities within market segments we didn’t see to be large enough before or to find profitable.
Like traditional marketing, digital marketing segments also have to be data-driven, precise, and profitable in large-scale use.
To conclude, STP marketing does bring many use cases in digital marketing.
Experimenting With Segments
As a company starts to discover their main customer segments, many companies will find a few worth it and properly position themselves.
How do we discover the working segments, in reality, comes down to experimentation.
When we start planning our segments, we must rely on experimentation to discover the best segments if we don’t have any existing customer data to fall back on.
Luckily, in many digital marketing strategies, you will have the opportunity to test different segments through several targeting options effectively.
The experimentation goal is to give you a better idea of how to find your best segment.
If we take it back to the model, you can experiment while creating the segments to test the feasibility. And if you experiment with many different segments together, you can pinpoint the best ones through the targeting method.
Word of caution, though, as we are talking about using advertising methods to extract data, the more initial data (like web behavioral data) you have about your segments, the better results you will have.
Which means, to gain the most, you should identify the best segments first using the STP model and only then experiment further, to test whether you were correct in assuming that the segments work for you.
It would be helpful to have plenty of customer data available, to create data-based segments for further experimentation.
For example, pinpointing the top 10% of your customer base and creating a segment that utilizes the top customer base’s characteristics.
Using the segmentation, targeting, and positioning (STP) model to construct target audiences for marketing, whether for traditional or digital marketing, is an effective strategy for marketers to experiment to get more marketing results.
The core is to find the most profitable segments and position your products and the surrounding marketing to fit the segment’s needs.
In essence, a large company can utilize the STP model to discover market segments that are profitable and embeds its competitive advantages to the core marketing strategies.
Startups and small companies can use the model to find segments to excel in and discover a growth path.
In modern marketing, where experimentation leads to increased marketing results, having a clear picture of your potential customers, and verifying it with data, the STP model helps identify it.