The STP Model

To succeed in business, you don’t have to sell your products or service to everyone in the world. There are no products that appeal to every single consumer in the market, no matter how great those products may be. So, rather than trying to sell to everyone, you are actually trying to sell directly to your target market. By figuring out exactly who is likely to buy your product, and then marketing that product directly to that group of people, you will stand a great chance of success.

The STP Marketing Model

It is this concept that is behind the STP Model. The title of this model stands for the following three concepts –

  • Segmentation
  • Targeting
  • Positioning

Marketing is much more effective and efficient when it follows a model such as this one. By segmenting your market, targeting the right customers, and positioning your products/services correctly, you can take big steps forward overall. There are still other factors that will influence your success or failure in the market, but these three concepts play a big role in how well your marketing will be received.

To help you better understand the power of the STP Model, let’s take a look at each of these three concepts individually.

Segmentation

One of the common mistakes made by new business owners is trying to please everyone. If you try to impress every single consumer with your products or services, you are almost certain to fail. It is a much better strategy to market specifically to certain segments of the market, rather than the market as a collective whole. A small company may choose to simply focus all of their offerings within one market segment, while a larger company may be able to develop a range of products to suit the needs of buyers in various segments.

Segmentation

When you begin the process of trying to segment the market in a logical manner, you will quickly find that there are an incredible number of segmentation options. For instance, you could quickly break up the market based on geography. For example, a clothing company is likely going to sell different garments in cold, wet climates as compared to dry, warm parts of the world. In this case, segmenting by geography would make a lot of sense. Selling garments that fit the climate of each local market, rather than trying to sell everything in every market, is a strategy that is likely to succeed.

Demographic segmentation is another option that is commonly used in business. The demographics that people fit into say a lot about their likely buying habits, so researching this area may lead to helpful marketing insights. Continuing on with the example of a clothing company, people in their 20’s and 30’s are unlikely to buy the same clothes as individuals in their 60’s and beyond. Marketing the same clothes to people of all ages would not only be a waste of time, it would be a waste of money as well.

Targeting

Now that you have some attractive segments in mind, the next step involves zeroing in on the segments that you feel will be the most profitable for your business. You likely will not be able to pursue all of the segments you picked out, so targeting is an important part of the process.

Targeting

Obviously, it is profitability that you are going to be concerned with first and foremost. Which of the segments do you believe will provide you with your best return on investment? It is not only the size of the segment that should be considered, but also the financial resources of the individuals within that segment.

Let’s take another look at our example from above to highlight the importance of targeting. As a clothing retailer, you may determine that you are able to sell clothes to both young and old consumers. In fact, you decide that the number of units you could sell to each market is roughly the same, based on your research and past results. However, since older consumers tend to have larger incomes and more spending money available than do young adults, it may be the older segment that makes the most sense. With a higher price point possible, you could turn that older market segment into a larger return on investment than you would find with the younger crowd.

Positioning

In the final step of the process, you are going to figure out how to place your product effectively in front of the market segments you selected. You need to think not only about which marketing channels you are going to use, but also about how you are going to present the products or services you wish to sell.

Positioning

The concept of a unique selling proposition is important at this point. What is it that allows your product to stand out from the rest of the market? Is it more affordable than other options, or is it of a higher quality? Your ability to position your items logically within the market as a whole will go a long way toward determining just how many sales you are able to make.

You will need to define what your ‘value’ proposition is for your target consumers and what its frame of reference is in terms of your competitors.

Then you need to define your:

  • Points-of-difference (POD’s) these are the benefits or attributes your product gives a person that they can’t find with another product.
  • Points-of parity (POP’s) these are features and attributes that may be shared with other brands.
  • Category membership – tells consumers your product benefits through your product description and compares it to other typical products or brands.

Again here, we can understand the important of positioning by looking at our example. The clothes that are to be sold to the older market are going to need to be marketed in places that are likely to be frequented by an older crowd. In addition to picking the right marketing methods, you will want to position the product as a quality item that is worth the premium price you have attached to it. Even wealthy markets want to receive great value for their money, so you can’t take for granted that these buyers are going to open up their wallets for high priced clothes automatically. Only when they are given a good reason for paying more will buyers be willing to make a purchase.

No matter what it is that you are trying to sell, using the STP Model is a great way to find your way directly to your ideal market. Remember, no product or service is attractive to every consumer, so locate your market through segmentation, targeting, and positioning.

You can read more about the STP Model in our free eBook ‘Top 5 Marketing Models’. Download it now for your PC, Mac, laptop, tablet, Kindle, eBook reader or Smartphone.

Key Points

  • The STP marketing model deals with: Segmentation, Targeting and Positioning.
  • Market segmentation involves identifying the basis for segmentation and then determining the important characteristics of each market segment.
  • Market targeting involves evaluating the potential of each segment and then selecting the most appropriate.
  • Product Positioning involves defining the POD’s, POP’s and category membership for your product or service within its competitive framework.
  • No matter what it is that you are trying to sell, using the STP Model is a great way to find your way directly to your ideal market.

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