STP analysis is a marketing tool used by businesses to identify and evaluate their target markets and create effective marketing strategies. STP stands for Segmentation, Targeting, and Positioning. These three components of the analysis help businesses to better understand their customers, their needs, and their behavior, and to create products and services that meet those needs.
By breaking down your customer base into smaller, targeted groups, you can create specific marketing strategies that will resonate with each audience. Research shows that personalization is a key factor in driving customer loyalty and repeat business. With STP marketing, you can shift your focus from a product-centered approach to a customer-centred approach, gaining a better understanding of your ideal customers and how to engage with them.
SEGMENTATION
Segmentation is the process of dividing a larger market into smaller groups of consumers with similar needs or characteristics. The goal of segmentation is to create a detailed picture of each group, allowing businesses to tailor their marketing efforts to specific customer needs and preferences.
There are four main types of segmentation:
1. Demographic Segmentation: This type of segmentation divides the target market based on demographic factors such as age, gender, income, education, occupation, and marital status. Demographic segmentation is often used in consumer goods marketing, as these factors are easily measurable and allow businesses to understand the basic characteristics of their target market. For example, a company that sells baby products may target their marketing efforts towards new parents, who are likely to have specific needs and preferences.
2. Psychographic Segmentation: This type of segmentation divides the target market based on their lifestyle, values, attitudes, and personality traits. Psychographic segmentation is often used in marketing to niche markets or luxury products, where customers' interests and values play an important role in their purchasing decisions. For example, a luxury car brand may target its marketing efforts towards customers who value prestige and status and are willing to pay a premium for high-end features.
3. Geographic Segmentation: This type of segmentation divides the target market based on its location. Geographic segmentation is often used in marketing to localize products, as different regions may have different preferences and needs. For example, a restaurant chain may target its marketing efforts towards customers in specific regions, based on factors such as climate, cultural differences, or local preferences.
4. Behavioral Segmentation: This type of segmentation divides the target market based on their behaviour, such as their purchasing habits, usage patterns, or brand loyalty. This type of segmentation helps businesses understand the needs and motivations of their customers. For example, a company that sells athletic wear may target their marketing efforts towards customers who are frequent gym-goers or runners and are more likely to purchase products designed for active lifestyles.
Overall, each type of segmentation has its advantages and disadvantages, and the best approach will depend on the specific business goals and target audience. By understanding the different types of segmentation and using them effectively, marketers can create more effective marketing strategies that resonate with their customers and drive growth for their business.
TARGETING
Targeting is the stage in the STP model where you choose which segments created during the segmentation phase are worth pursuing. To determine which segments to target, you should consider various criteria:
1. Size: The audience segments you target should be of sufficient size to justify your marketing efforts. If your segments are too small, you may not get enough conversions to make your marketing worthwhile. On the other hand, if it's too large, it may be too broad to target effectively. Thus, you should aim for a segment size that is substantial enough to provide value but not too large to be too broad for your marketing efforts.
2. Difference: There should be a measurable difference between any two segments you target. Otherwise, you may end up duplicating your marketing efforts. When there is a clear difference between segments, you can tailor your marketing efforts to better meet the needs of each segment, rather than taking a one-size-fits-all approach. This leads to a more personalized and effective marketing strategy.
3. Reachability: The segments must be easily reachable by the sales and marketing teams without facing any complications. If the segments are not easily reachable, then it will be difficult to reach those customers with your marketing efforts. Thus, it's important to ensure that the segments you choose to target are reachable by your marketing and sales teams.
4. Profitability: The target audience segments you choose should have a low-to-moderate customer acquisition cost (CAC) while also bringing in substantial returns. In other words, the audience must be willing to spend money on your product or service to make it profitable. It's important to evaluate the lifetime value of each customer within a segment and determine if the segment is worth pursuing based on the potential revenue generated.
5. Benefits: Different segments are attracted to different benefits. Your marketing efforts should target the specific benefits that each segment is looking for. For example, if you're selling plant-based milk, you might have one segment that is attracted to cruelty-free options, while another is looking for dairy-free alternatives. Understanding the specific benefits that each segment is looking for will help you tailor your marketing efforts to resonate with that particular audience.
By considering these criteria, you can choose the targetable segments that are most likely to provide the best return on your marketing investment. This will help you create more effective marketing strategies that resonate with your ideal customers and drive growth for your business.
POSITIONING
Positioning is the final stage of the STP model, and it involves creating a unique image and reputation for your brand in the minds of your target audience. This image should differentiate your brand from competitors and make it clear why customers should choose your brand over others. Here are some key strategies for effective positioning:
1. Identify Your Unique Selling Proposition (USP): Your USP is what sets your brand apart from competitors. It's the one thing that your brand does better than anyone else. For example, Nike's USP is "Just Do It," which communicates a message of empowerment and motivation to athletes.
2. Communicate Your USP Clearly: Once you've identified your USP, it's essential to communicate it clearly in all of your marketing efforts. This includes your website, social media, advertising, and more. The messaging should resonate with your target audience and be consistent across all channels.
3. Use Differentiation Strategies: Positioning should involve differentiation, which means highlighting what makes your brand unique. This can be done through product features, pricing strategies, customer service, or other factors that set your brand apart from competitors.
4. Focus on Customer Benefits: Positioning should focus on the benefits that your brand offers to customers. This could be improved performance, better quality, convenience, or any other factor that resonates with your target audience.
Let’s understand better with the help of examples of effective positioning strategies:
Coca-Cola: Coca-Cola positions itself as a fun and refreshing drink that brings people together. Their messaging focuses on happiness, sharing, and social connection, which resonates with their target audience.
Apple: Apple positions itself as a luxury technology brand that offers sleek design, ease of use, and innovation. Their marketing messaging emphasizes their high-end products, which appeal to customers willing to pay a premium for quality technology.
Dove: Dove positions itself as a brand that celebrates diversity and empowers women. Their messaging focuses on natural beauty and self-confidence, which resonates with their target audience and sets them apart from other beauty brands.
Thus, STP analysis is a valuable marketing tool that helps businesses to better understand their customers, create more effective marketing campaigns and build strong brand identities. By segmenting the market, targeting specific segments, and positioning their products or services in a way that appeals to their target audience, businesses can increase sales, profits, and customer loyalty.