STP Marketing Model

Jul 17, 2024

STP Marketing Model Lecture Notes

Introduction

  • STP Marketing Model: Stands for Segmenting, Targeting, and Positioning.
  • Common mistake: Assuming everyone can be a customer; difficult to tailor solutions that way.
  • Example: Coca-Cola targets different products to different types of people.

STP Overview

  • Segmenting, Targeting, Positioning: Framework to improve marketing.
  • Steps:
    1. Segment market into groups.
    2. Target the most attractive segment(s).
    3. Position product in the marketplace to appeal to selected segment(s).

Segmenting

  • Purpose: Divide market into groups based on specific criteria.
  • Types of Segmentation:
    • Demographic Segmentation: Age, gender, income level, education, marital status.
    • Geographic Segmentation: Country, region, state, urban vs rural.
    • Psychographic Segmentation: Lifestyle, hobbies, opinions, political affiliation, personality traits.
      • Demographic = Who the customer is.
      • Psychographic = Why they buy.
    • Behavioral Segmentation: Product usage, financing, brand loyalty, usage levels, key benefits or features.
  • Focus: Increases success as opposed to a one-size-fits-all marketing approach.

Targeting

  • Purpose: Decide which segment(s) to focus on.
  • Factors to Consider:
    • Size and Growth: Current size and potential for future growth.
    • Profitability: Willingness to pay, lifetime value.
    • Ease of Reach: Distribution network capability, cost of acquiring customers.
  • Overall Focus: Assess overall profitability rather than just the segment size.

Positioning

  • Purpose: Map out variables and position the product differently than competitors.
  • Value Proposition: Unique position in the market.
  • Types of Positioning:
    • Functional Positioning: Solving problems or providing benefits.
    • Symbolic Positioning: Enhancing self-image, ego, or sense of belonging (e.g., luxury cars).
    • Experiential Positioning: Emotional connection with customers.
  • Goal: Combine all three positioning factors for competitive advantage.
  • Market Positioning Map: Visual tool to identify gaps and opportunities in the market.

Example: The 4-Hour Workweek

  • Comparative Analysis: Generic book on left vs. targeted 4-Hour Workweek on right.
  • 4-Hour Workweek: Successfully segments, targets, and positions:
    • Segmented market for small business owners/aspiring entrepreneurs.
    • Targeted this specific segment.
    • Positioned with all three factors:
      • Functional: Provides a process.
      • Symbolic: Ego boost by joining the "New Rich".
      • Experiential: Emotional appeal with business owner in hammock.

Advantages and Disadvantages of STP Model

  • Advantages:
    • Increases sales by defining a precise target market.
    • Avoids wasteful advertising to the entire market.
    • Identifies gaps in the market.
  • Disadvantages:
    • Higher costs for producing multiple versions of product/service.
    • Multiple marketing campaigns increase costs.
    • Different distribution channels may be needed for various segments.

Conclusion

  • STP Model Summary:
    1. Segment: Divide market.
    2. Target: Identify most attractive segments.
    3. Position: Tailor product/service to the target audience.
  • Importance of precise targeting and unique positioning to dominate chosen segment.