Modern marketing is built around harnessing the full capabilities of a great business strategy. If you were asked to think of an example of successful marketing, you’d recall something you saw that was clever, inspired, and unique.
Why did it stand out to you? The answer is most likely segmentation, targeting, and positioning (sometimes called segmentation-targeting-positioning or STP marketing). It’s a core concept in modern-day marketing and essential to creating a successful digital marketing strategy.
The STP model can even reveal niche markets you were unaware of, unlock new customer and market opportunities, and make your existing marketing efforts more powerful.
This guide on the magic trio of marketing will help you understand the power of STP as a marketing strategy and how to use it for explosive business growth.
The foundation of successful marketing
The foundation of successful marketing is a solid marketing strategy. Examples of marketing strategies include marketing flywheels, the StoryBrand Framework, and content marketing, but no matter the strategy, it can be summed up as a collection of choices. It’s a plan to achieve a goal that’s created by answering questions such as:
- Who is your target market?
- What are your business goals?
- Where will you be marketing? Which platforms suit your goals?
- How will you be reaching your target customers and meeting your goals?
- When would you like to reach your goals?
All the best marketing strategies focus on answering these questions and more like them in depth. Chief among these answers is the who of marketing.
While it would be great if everyone wanted to buy your product or service, that’s not a realistic goal. Any good marketing strategy hinges on defining your target audience and market.
The STP marketing model focuses on making communications customer-centric. It aims to deliver audiences relevant, personalized messages that will better target your marketing and better serve your customers.
When you effectively reach target audiences and form an emotional connection with customers, you can build brand loyalty, enjoy unique product positioning, and more.
Before we dive into STP marketing, here’s a handy glossary for market terms just in case you need it so you don’t need to head to Google every five minutes while reading this.
Alright, let’s get started!
Understanding the power of segmentation, targeting, and positioning
The STP marketing model is no stranger to the marketing world. It’s quite the opposite, enjoying fame and popularity because of its impressive efficacy.
STP marketing is a customer-centric marketing strategy that breaks down a business’ most valuable customer segments and creates a clever marketing and product-positioning strategy for each segment.
Doing this helps a business position itself uniquely and appropriately across consumer segments, with slightly different marketing messages and brand positioning from one segment to another.
You can see how and why STP marketing works. It’s all about connection.
But what exactly is segmentation, and how does it work?
Unraveling market segmentation
Market segmentation divides your target audience into smaller groups based on specific characteristics.
Individual audience members are placed into similar groups so that you can more effectively show them services, products, features, and benefits that are likely to be more relevant.
Why market segmentation matters
Let’s say you have a company that sells wigs. Perhaps you create an incredible marketing campaign that’s a total hit with older women who have lost their hair due to battling cancer, but that same campaign wouldn’t be the right fit if you were also trying to sell wigs to teenagers who enjoy cosplaying.
You didn’t have a lousy campaign; you couldn’t use it for both groups.
Market segmentation allows you to split your audience into any number of groups based on segmentation variables so that you can then target marketing messages to each of these different segments uniquely. It may sound slightly like creating buyer personas, but they differ. While a buyer persona isn’t real, a segment very much is.
When you successfully define a marketing segment, the people in it can enjoy a marketing campaign tailored to them and their needs, and you can enjoy a competitive advantage.
The more targeted, personalized, and personal your marketing efforts are, the more successful you can be.
Types of market segmentation
The main goal in the segmentation section of the process is to create your audience segments based on your chosen criteria and traits.
The main types of audience segmentation are:
1. Demographic segmentation
The division is based on age, gender, education level, occupation, income bracket, etc.
2. Geographic segmentation
The division is based on country, region, state, city, etc.
3. Psychographic segmentation
The division is based on the kind of person your potential customers are, e.g., based on cultural beliefs, personality traits, hobbies, activities, lifestyle, opinions, etc.
4. Behavioral segmentation
The division is based on how they might interact with your business, such as what they buy, why they buy it, how often they buy, what they browse, etc.
The Art of Targeting
After creating your various segments, you can move on to the targeting stage of the STP process. The first step is deciding on which market segments are worth targeting specifically.
A segment worth specific targeting will be:
measurably different from other segments
accessible by your entire marketing and sales team
big enough to yield a justifiable amount of profits by conversion
small enough that your company is equipped and able to serve them meaningfully.
Here are some tips on how to form the best strategy for targeting.
Identifying your ideal customer
Depending on your product or service offerings, you might naturally have ideal demographic variables in mind already. If you’re selling affordable, fashionable clothing, it makes sense to target younger audiences. The ideal customer is the specific segment that will benefit from, and most desire what your business offers, which aligns with your business strategy.
Utilizing data-driven insights
Data is king. You may have data on your customers’ purchasing habits, behaviors, and desires. This data can come from loyalty cards, purchase history, and surveys. You can generate insights to decide which segments are most profitable and worthwhile and which segments to promote products to.
Tailoring your marketing efforts for each segment
Different groups will use different platforms, digital channels, and payment methods. Different benefits will be sought in each market segment, so you must tailor your market targeting to suit each segment uniquely. This is especially true if you have more than one product category.
Examples of effective targeting strategies
SEO – search engine optimization, or SEO, is a fantastic targeting tool because it helps make you organically discoverable by your target audience rather than directly advertising to them.
Event tracking – tracking events such as sales and specific actions on your website can help you understand how visitors interact with your site to build a more compelling online presence.
User research – listening to the people who use your product or service and getting their feedback can help you understand who your offering serves best and how to make it even more targeted.
Identifying a worthwhile segment takes time, but targeting it takes longer. However many segments you’ve identified, focus on one at a time to give each segment the care and attention they need. Remember that what works for Segment A may not work for Segment B, Segment C, etc.
Crafting Your Positioning Strategy
We’re two-thirds of the way through understanding the segmentation-targeting-positioning model. Once you’ve understood your chosen segments’ demographics, motivations, pain points, and psychographics, it’s time to tackle market positioning.
Market positioning refers to how you present yourself to your customers by creating an identity or image of your brand, located in your industry and nestled in amongst your competitors.
You must consider your competitors’ positions and customers’ needs before creating your identity. Whatever that identity is, the whole point of positioning is that you must be different.
Differentiating your brand from competitors
There are many ways to differentiate yourself from the competition. These include:
Attribute-based – you have a standout selling proposition that makes your offering different/better than the rest
Benefit-based – customers enjoy certain benefits from purchasing your offering
Category-based – what you offer is better than existing market solutions
Competitor-based – you are better than your competitors
Consumer-based – aligning your offering with your target audience’s behaviors
Prestige-based – showing and proving that your offering will boost customer status when purchased
Price-based – there is value for money when purchasing your offering
Product positioning map – using a visual display of your company’s offerings against your competitors to understand where you are situated.
You can create an effective positioning strategy by doing the following.
Identifying your unique selling proposition (USP)
Look at your offerings from the point of view of your target market. Why would they choose your product over your competitors? What features and benefits are most relevant to them, and what are their motivations and pain points?
Creating a compelling brand story
Craft a compelling brand story using your motivations for creating your brand, your unique selling point, and what you hope to achieve with your company. Did you come from humble beginnings? Are you passionate about luxury products? This helps your customers feel connected to and invested in your success.
Aligning positioning with customer needs and desires
Your positioning must resonate with your target customers. You have to consider the benefits sought so that you can put them front and center when positioning yourself. This makes you more visible, memorable, and relatable to them. They will be able to look at your brand and think this is a brand I want to buy from.
Challenges and solutions in the segmentation-targeting-positioning model
While the STP process is tried-and-true, it isn’t without its challenges. Let’s discuss some of the most common challenges and some ways to avoid or even solve them.
Overcoming data limitations
The STP model is data-powered. There’s no way to use it successfully without high-quality data, so data limitations come into play for new and smaller businesses that don’t have the budget and capability to do things like market research or businesses without robust data collection and analysis in place.
Data limitations can be overcome by emphasizing data collection and analysis, hiring the right staff to handle and interpret the data, and using free online resources to make decisions when a company is too new or small to create and use adequate data.
Balancing customization and scale
Customization is the heart of the STP model, but as a company scales up, it can be more complex and harder to achieve. As market size increases, companies will need to put in a lot of effort to ensure that the customers in each segment can enjoy a personalized experience.
The key here is (as always) data. If your company has gotten to a scale where customization is starting to feel impossible, you need to do what you’ve always done. Uncover meaningful insights about your customers and then translate them into practical actions.
Of course, how you do that is much more complex. You must hire the right individuals, use the correct data and analytics tools, create excellent content, and place a continued, focused emphasis on analytics. There are also new concepts and practices to understand concerning data all the time, like dark social, and you must keep up with them.
The short of it is that it’s possible to scale up customization, but you need to ensure that you can handle your growth. Avoiding scaling up too quickly ensures your marketing and business models stay customer-centric.
Customers’ evolving preferences and expectations
As time passes, customers will have different needs and wants, and you’ll have to keep your data updated and current. This can be both difficult and costly, but it can be handled by regularly monitoring and updating your data and insights on customers in each segment.
While the STP marketing model has proven itself as time has passed, it’s essential to keep in mind that it evolves alongside technology and consumer trends, needs, and wants.
For example, the rise of artificial intelligence and machine learning has revolutionized how data can be used in STP. You can use machine learning techniques to analyze customer data and identify patterns and behaviors.
This saves time, money, and effort, allowing the humans you employ to do things only they can.
Separately, the ease of obtaining personal data is declining as data restrictions grow and consent levels shrink. More and more people are concerned about sharing personal data online and agreeing to sites and companies using their data.
Don’t worry, though. Like in real life, people are generally fine giving you the information you need if you ask nicely, are clear about what you need it for, and allow them to decline.
The bottom line is whatever challenges and changes might come up; there’s always a solution!
Taking the first steps toward effective segmentation, targeting, and positioning
The STP model allows you to identify your most valuable customer groups and create products, services, and marketing messages that target and serve them best.
It empowers you to create engaging, personalized, and personal marketing campaigns that convert visitors to customers and casual customers to loyal customers.
If you’re considering using this strategy, know it will always succeed when done right, but getting it right takes time and effort.
That being said, STP is a win for you and your customers, so it’s worth it.