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Marketing-Insider
  • Home
  • Updates
  • Marketing Explained
    • I: Marketing and the marketing process
      • Definition: What is Marketing?
      • The Marketing Process
      • The 5 Marketing Concepts
      • The Marketing Strategy
        • Market Segmentation
        • Market Targeting
        • Differentiation and Positioning
          • Differentiation
          • Positioning
      • The Marketing Mix – The 4 Ps
      • Marketing Instruments
      • Portfolio Analysis: Boston Matrix
      • Portfolio Planning: Growth and Downsizing
      • SWOT Analysis
      • Definition of Product and Service
    • II: Understanding the marketplace
      • The Macro Environment
      • The Buyer Black Box – Buyer’s Characteristics
      • The Buyer Decision Process
      • B2B Market Characteristics
      • Customer Lifetime Value
      • Customer Relationship Groups
    • III: Designing a marketing strategy
      • How to create a Marketing Plan – 8 Steps
      • The Consumer Product
        • Three Levels of Product
        • 4 Types of Consumer Products
        • Different Types of Consumer Products
      • Product Line and Product Mix Decisions
        • Individual Product Decisions
        • Product Line Decisions
        • Product Mix Decisions
      • New Product Development (NPD)
        • The New Product Development Process
        • New Product Development Strategies
      • Pricing Strategies
        • What is a Price?
        • 3 Major Pricing Strategies
          • Customer Value-based Pricing
          • Cost-based Pricing
        • Additional Pricing Considerations
          • New Product Pricing
          • Product Mix Pricing Strategies
          • Price Adjustment Strategies
          • Initiating price changes
      • Product Life Cycle (PLC)
        • Product Life Cycle Stages (PLC)
        • Product Life Cycle Strategies
      • Branding Decisions
      • Characteristics of Services
    • Interesting
      • New View on Marketing
      • Next-Gen Marketing Tool: Virtual Reality
      • Advertising Evolution
      • The 5 Don’ts of Presentations
      • Successful Mobile Marketing
      • Why Most Marketing Strategies Fail
      • How to create a Marketing Plan – 8 Steps
      • How to write a good Marketing Plan
      • 5 Don’ts of LinkedIn
      • Using Social Media in Marketing
    • SEO
      • What is SEO?
      • How Search Engines work
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      • SEO Rules for 2016
  • About Marketing-Insider
Monthly Archives

April 2019

    STP Model - Segmentation, Targeting and Positioning done right - Marketing-Insider
    Marketing Explained

    The STP-Model – Segmentation, Targeting, Positioning done right

    by Maximilian Claessens 30th April 2019
    written by Maximilian Claessens

    The STP model is a central concept in marketing that is absolute key to serving a market successfully. STP refers to three activities: segmentation, targeting, and positioning. Marketers segment markets and identify attractive segments to target, before developing suitable positioning strategies and allocating resources to prioritise marketing activities. The use of the STP model has become more and more popular because of the increasing prevalence of mature markets, greater diversity in customer needs, and the ability to reach niche segments.

    Components of the STP Model

    STP Model - Segmentation, Targeting and Positioning done right
    STP Model

    Segmentation

    The STP model starts with dividing up the market, which is called market segmentation. Market segmentation refers to the division of a mass market into identifiable and distinct groups (segments). Each of these segments has common characteristics and needs, and displays similar responses to marketing actions. Various segmentation criteria can be used to divide up the market, including demographic, geographic, psychographic and behavioral variables.

    Targeting

    The second part of the STP model is targeting. This refers to determining which, if any, of the segments uncovered should be targeted and made the focus of a comprehensive marketing programme.

    According to the popular “DAMP” approach to targeting, as defined by Philip Kotler (1984), for market segmentation to be effective, all segments must be:

    • Distinct: each segment must clearly differ from other segments, which makes different marketing mixes necessary.
    • Accessible: buyers must be able to be reached through appropriate promotional activities and distribution channels.
    • Measurable: the segment must be easy to identify and measure.
    • Profitable: the segment must be sufficiently large to provide a stream of constant future revenues and profits.

    Positioning

    The last part of the STP model is positioning, which means to ensure that a brand occupies the right spot in the mind of target consumers. Positioning is the means by which goods and services can be differentiated from one another and thereby give consumers a reason to buy. It encompasses two key elements. The first concerns the physical attributes, functionality, and capability that a brand offers, such as a car’s engine specification and design. The second element concerns the way in which a brand is communicated and how consumers perceive the brand relative to competing brands in the marketplace.

    Benefits of using the STP Model

    The key benefits of using the STP model include:

    • enhancing a company’s competitive position
    • providing direction and focus for marketing strategies (including targeted advertising, new product development, and brand differentiation) by allocating resources to target segments
    • identifying market growth opportunities through identification of new customers or product uses
    • effective and efficient matching of company resources to target market segments which promise the greatest return on marketing investment (ROMI)

    Companies should thus always use the STP model as a starting point instead of simply developing a product and then finding the right customers to sell it to. By following the process of segmentation, targeting and positioning, a clear picture of the needs and wants of the customers is obtained, which serves as a foundation for developing suitable solutions to unique customer problems.

    30th April 2019
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