CHARLES AMBROSE
COMPILED BY: CHARLES AMBROSE
STP stands for “segmentation, targeting, and positioning”. In simpler terms, the
STP process combines three separate marketing approaches into one model. In
practical application, STP marketing means creating market segmentation, targeting the
selected segments, and adjusting product or service positions accordingly.
COMPILED BY: CHARLES AMBROSE
What Is STP Marketing
The process in which a brand discovers and targets its customers is known as
STP marketing. The acronym, STP, stands for
S: Segmentation
T: Targeting
P: Positioning
For Example, Not everyone wants to buy a particular product, and brands
must realize this rather than trying to sell to everyone. Instead, brands must
focus on finding their target markets and sell their products accordingly.
Finding these target audiences that are most likely to buy a brand’s products
eases the sales process. The process in which a brand discovers and targets
its customers is known as STP marketing.
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Three Vital Steps of STP Marketing
•Segmentation
The process of dividing a market into subsets of customers, based on shared
characteristics is known as segmentation. To simplify, segmenting a market
in essence, is the division of prospects into different groups based on
standard features. Segmentation facilitates easier targeting with custom
advertisement campaigns. While this approach may take longer, it is more
effective.
COMPILED BY: CHARLES AMBROSE
COMPILED BY: CHARLES AMBROSE
MARKET SEGMENTATION CAN BE CLASSIFIED INTO THE
FOLLOWING FOUR CATEGORIES.
a. Demographic Segmentation
This is the segmentation of a market based on personal attributes such as age, gender, ethnicity,
education, etc.
b. Geographic Segmentation
This segmentation of a market is based on country, region, state, or city.
c. Psychographic Segmentation
This segmentation is based upon an individual’s personality, values, lifestyle, or beliefs.
d. Behavioral Segmentation
This is the process of segmentation that is based on the target individual’s purchasing behavior.
Dividing your audience based on how they interact with your business: What they buy, how often
they buy, what they browse, etc.
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Targeting
Upon successfully segmenting the target audience into different groups, brands must target the segments that are most
attractive to them with customized ad campaigns. To select the best segment to target, brands must evaluate the
commercial potential of every segment. The evaluation comprises a consideration of the following factors.
a. Profitability
Brands must ensure that the segment they choose to target is profitable. The anticipated profit must exceed the costs
incurred during the STP marketing campaign.
b. Size and Growth Potential
The market, first and foremost, must be big enough to justify the segmentation. Segmenting already small markets will
only adversely affect business. Secondly, marketers must think about whether the segment has the potential for
sustained growth.
c. Accessibility
Communication of the marketing message with the target market segment must be possible. Marketers must also think
about any social, technological, or legal barriers that might prevent access to the segmented target market.
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Positioning
How a brand presents itself or its products to different segments of its target market is known as positioning.
Effective positioning is aimed at providing the target segment with something more valuable than the offerings
of a brand’s competitors. Marketers keep the following points in mind to position their brand in such a way that
they target the most attractive market segments and rope in the most substantial profits.
a. Problem Solving Offer Innovation
Marketers must create an offer that solves the problem of the target market segment. This is possible by
examining the needs of each of the target market segments. Once the problem is identified, the target segment
should be shown how a brand’s product solves the problem.
b. Brand’s USP Identification
To understand what a brand’s unique selling proposition (USP) is, marketers need to find out why customers
buy a particular product from them and not their competitors. This is possible by interacting via social media.
c. Segment-Specific Marketing Campaign
Marketers must develop a segment-specific marketing campaign that presents a brand’s solution to the target
segment in a manner that they appreciate. Make the offer compelling enough for them to accept it.
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Advantages of STP Marketing
•Allows brands to increase sales by defining a particular target market
•Enables brands to position products directly at precise target markets
•Helps in the identification of gaps in the market
•Avoids unnecessary expenditure by not advertising to the whole market
•Enables small-sized businesses to find success in niche markets
•Helps marketers spot and compare marketing opportunities
•Improved allocation of marketing budgets
•Allows identification of profitable segments
•Provides development of appropriate service packages for each market segment
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Disadvantages of STP Marketing
•Costs increase if brands produce multiple versions of a product/ service
•Each market segment requires the creation of different marketing campaigns
•A change in market segment characteristics leads to investments becoming
useless
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What are the Examples of STP
marketing?
Cola wars
The cola wars between Coca-Cola and Pepsi in the 1980s are a great example of STP marketing. These
companies were fighting to become the most popular soft drink, so they had to position themselves
correctly when it came to targeting.
Coca-Cola replaced their Coke with a “new” Coke. They also started advertising by hiring big stars
such as Michael Jackson and Madonna.
Pepsi continued with sustained marketing and positioned itself as a new generation soft drink. They
also targeted loyal Coke drinkers after Coke introduced the “new” Coke. They did this by positioning
themselves as the reason why Coke introduced the “new” Coke. They were able to attract the Coke
loyalists who preferred the “old” Coke.
Pepsi invested in advertising via different channels. They also did a lot of guerilla marketing that
involved using different tactics to lure their target audience into drinking Pepsi instead of Coke.
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What are the Examples of STP
marketing?
STP marketing has been around for a long time – and it has been effective for just as long. We’re going
to take a look at a real-world example of STP marketing so you can see how it has worked historically in
increasing conversions and revenue.
Back in the 1980s, when Pepsi-Cola was trying to claim some of the market share from Coca-Cola,
Pepsi used segmentation to target certain key audiences. They focused on an attitude and loyalty
segmentation approach and divided the market into three consumer segments:
[Link] with a positive attitude to the Coke brand who were 100% loyal to Coke.
[Link] with a positive attitude to the Pepsi brand who were 100% loyal to Coke.
[Link] with a positive attitude to both brands, with loyalty to both, who switched their purchases
between both brands.
Pepsi had always focused their marketing efforts on the third segment, as it was the most attractive
and had the highest return on investment. Focusing on customers loyal to Coke was considered a
waste of time and money, as they were unlikely to change their purchasing habits.
However, that all changed with the launch of New Coke in 1985…
COMPILED BY: CHARLES AMBROSE
COMPILED BY: CHARLES AMBROSE
The new iteration of Americas’ favorite beverage missed the spot with a lot of loyal
consumers, so Pepsi swopped in. In fact, “Coke’s headquarters received upwards of
1,500 calls a day, up from the usual 400, with virtually all of them complaining about the
change.”
Sensing the change in consumer sentiment, Pepsi began targeting loyal Coke
drinkers. The rival brand also refocused its positioning – Pepsi started drumming up
the fact that Coca-Cola, supposedly, changed its classic Coke with New Coke to
resemble more the taste of Pepsi. Their marketing campaigns were brutal.
That same year, Pepsi announced a 14% spike in overall product sales. Pepsi was
able to use STP marketing strategies to increase their market share and convert Cola-
loyal customers to Pepsi-lovers.
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What are the Examples of STP
marketing?
McDonald’s
McDonald’s uses targeting by offering different menu items for different demographics. A
teenager or a student would go to McDonald’s for a burger, while people who work their
morning shifts might go for breakfast meals.
This makes it easier for customers to choose what they want and makes them feel more satisfied
with their meal. This way, the company can attract a wider audience that will most likely return
as customers.
These are just three examples of STP marketing. Plenty of other successful companies have used
this marketing strategy to attract new loyal customers. As you can see, this is a very effective
marketing strategy that you should consider when planning your next campaign.
COMPILED BY: CHARLES AMBROSE
COMPILED BY: CHARLES AMBROSE
What are the Examples of STP
marketing?
iPhone
Apple is another brand that uses STP marketing by giving the best user experience out there.
The iPhone was launched in 2007, and people loved it. It came with a brand new design, and
people were looking for the new Apple product.
Apple did heavy marketing its product by positioning itself as an innovative product. Everyone
wanted to get their hands on the iPhone and learn more about its features.
Today, Apple is one of the biggest companies globally, and this is thanks to constant innovation
and a strong brand.
COMPILED BY: CHARLES AMBROSE
COMPILED BY: CHARLES AMBROSE
COMPILED BY: CHARLES AMBROSE
COMPILED BY: CHARLES AMBROSE
Conclusion
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The requisites for effective market segmentation
•Measurable • The size, needs, purchasing power, and characteristics of the customers in the segment should be
measurable. Quantification should be possible.
• The segments should be differentiable. There must be the clear-cut basis for dividing customers into
•Divisible meaningful homogeneous groups. They should respond differently to different marketing mixes.
There should be differences in buyer’s needs, characteristics, and behavior for dividing into groups.
• The segment should be reachable and serviceable. It should be accessible through existing marketing
•Accessible institutions, such as distribution channels, advertising media, and sales force. There should be
middlemen to distribute the products.
•Substantial • The segment should be substantial. It should be large enough in terms of customers and profit
potential. It should justify the costs of developing a separate marketing mix.
•Actionable • It should be actionable for marketing purposes. Organizations should be able to design and
implement the marketing mix to serve the chosen segment.
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COMPILED BY: CHARLES AMBROSE
For example, back when Airbnb was
starting to pitch investors, they used
the TAM, SAM, SOM model to explain
their business potential. Their total
available market (TAM) then was
valued at $1.9 billion dollars and
included any type of accommodation
that travelers were booking worldwide.
Because their service offering was
targeted more at the budget travelers
who were using online booking
engines to find their stay. In this case,
the SAM was valued at $532 million
dollars. Lastly, their SOM came in at
$10.6 million dollars and signified the
revenue obtainable for Airbnb.
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CONSUMER BEHAVIOR :
The Consumer Behavior is the study of how an individual decides to purchase a
particular product over the other and what are the underlying factors that mold such
behavior.
According to Solomon, “ Consumer behavior is the process involved when individuals
or groups select, purchase, use, or dispose of products, services, ideas or
experiences to satisfy needs and wants.”
American Marketing Association (AMA): Consumer behavior is the study of
individuals, groups, or organizations and the processes they use to select, secure,
use, and dispose of products, services, experiences, or ideas to satisfy needs and the
impacts that these processes have on the consumer and society.
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COMPILED BY: CHARLES AMBROSE
Psychological Factors
The human psychology plays a crucial role in designing the
consumer’s preferences and likes or dislikes for a particular
product and services. Some of the important psychological
factors are:
Motivation
Perception
Learning
Attitudes and Beliefs
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Social Factors
The human beings live in a complex social environment wherein they
are surrounded by several people who have different buying
behaviors. Since the man is a social animal who likes to be
acceptable by all tries to imitate the behaviors that are socially
acceptable. Hence, the social factors influence the buying behavior
of an individual to a great extent. Some of the social factors are:
Family
Reference Groups
Roles and status
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Cultural Factors
It is believed that an individual learns the set of values, perceptions,
behaviors, and preferences at a very early stage of his childhood
from the people especially, the family and the other key institutions
which were around during his developmental stage. Thus, the
behavioral patterns are developed from the culture where he or she
is brought up. Several cultural factors are:
Culture
Subculture
Social Class
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Personal Factors
There are several factors personal to the individuals that
influence their buying decisions. Some of them are:
Age
Income
Occupation
Lifestyle
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Economic Factors
Economic factors have a significant influence on the buying decision
of an individual. These are:
Personal Income
Family Income
Income Expectations
Consumer Credit
Liquid Assets of the Consumer
Savings
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Technological Factors
Technological factors: This includes the availability and influence of new technologies on
consumer behavior.
Technological advancements have greatly impacted consumer behavior. The rise of the
internet, e-commerce, and mobile devices has transformed the way consumers research
and purchase products and services. Technology has made it easier for consumers to
access information, compare prices, and make informed decisions, leading to a shift in
the traditional power dynamic between consumers and businesses.
For example, the widespread use of smartphones has made it possible for consumers to
shop online at any time, anywhere. This has led to the growth of mobile commerce and
increased competition in the marketplace. Technology has also enabled businesses to
gather and analyze large amounts of data on consumer behavior, allowing them to better
understand their target markets and improve their marketing strategies.
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Political and Legal Factors
Political and legal factors can also impact consumer behavior. Government
regulations and laws play a role in shaping consumer attitudes and behaviors,
particularly in areas such as product safety, environmental protection, and
privacy.
For example, regulations regarding food labeling and advertising have influenced
consumer behavior by providing them with more information about the
ingredients and nutritional content of the products they purchase. Similarly,
laws regarding data privacy have led to greater concern among consumers about
how their personal information is collected and used by businesses, causing
many to be more cautious about providing their personal data online.
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The buying decision process is the series of steps that a consumer goes
through in order to make a purchasing decision. The steps in the buying
decision process include:
[Link] Recognition: The consumer becomes aware of a need or problem that they wish to solve. This may be due to
internal or external factors, such as a change in circumstances, a desire for something new, or an advertisement.
[Link] Search: The consumer seeks information to help them identify and evaluate potential solutions to their
problem. This can include online research, asking friends and family, or consulting experts.
[Link] of Alternatives: The consumer compares the various options they have found and evaluates their relative
advantages and disadvantages. They may consider factors such as price, quality, convenience, and brand reputation.
[Link] Decision: The consumer makes a decision to purchase a particular product or service. At this stage, they may
consider additional factors, such as delivery options and payment methods.
[Link]-Purchase Evaluation: After making a purchase, the consumer evaluates whether it has met their expectations. This
can influence their future purchasing decisions and their overall attitude towards the brand.
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It is important to note that the buying decision process is not
always linear and may vary from consumer to consumer. For
example, a consumer may skip the information search stage if
they are already familiar with the product, or they may revisit
earlier stages if they encounter new information or have
second thoughts. Understanding the buying decision process
can help businesses to develop marketing strategies that
effectively reach and influence consumers.
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An example of the buying decision process in action:
[Link] Recognition: Sarah is in need of a new vacuum cleaner as her old one has stopped
working. She recognizes this as a problem that needs to be solved.
[Link] Search: Sarah begins her search for information on vacuum cleaners by asking friends
and family for recommendations and checking online reviews. She also visits a few local home
goods stores to see the different options available.
[Link] of Alternatives: After gathering information, Sarah evaluates the different options
available and compares their features, such as suction power, maneuverability, and price. She also
considers the reputation of the brands she is considering.
[Link] Decision: Based on her evaluation, Sarah decides to purchase a high-end vacuum
cleaner from a well-known brand. She takes into consideration factors such as the product's
features, its reputation, and its price.
[Link]-Purchase Evaluation: After using the vacuum cleaner for a few weeks, Sarah is pleased with
her purchase as it meets her expectations. She feels that it was worth the investment and is happy
with the product's performance. This positive experience will likely influence her future purchasing
decisions, and her overall attitude towards the brand.
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