Segmentation, Targeting and Positioning (STP) in Modern Marketing
STP is one of the most commonly applied marketing models. The model helps prioritise propositions and develop messages that are meaningful to the target audience. Central to the model is the audience and not the product.
Segmentation is all about understanding your target market. Can you identify specific needs where you can communicate focused, and therefore more meaningul and effective marketing messages?
Segmentation can be on pretty much any variable, as long as it’s meaningful.
Popular segmentation models:
Demographics is about key facts on your audience. For example age, gender, income, marital staus, occupation.
Psychographics is looking at the segment personality by looking at their behaviour. For example hobbies, risk aversion, media choices. Popular ways of developing psychographic profiles are:
A great example of psychographic segmentation in action is how Virgin Holidays segment their market:
For example hobbies, holidays, entertainment.
It’s simple to target people with a specific hobby if it is popular and well established, however some organisations have found great success by targeting small segments. Have a look at Reddit for ideas.
4. Belief and Values
For example religious or political beliefs and values.
5. Life Stages
Life Stages is segmenting people by their stage of life. For example Center Parcs targeting people with young families.
Segment by country, region, area, population density or even climate.
To logically identify market attractiveness of the segment you will need to be able to identify:
- Criteria Size: The market must be large enough to justify segmenting.
- Difference: Measurable differences must exist between segments.
- Money: Anticipated profits must exceed the costs of additional marketing plans and other changes.
- Accessible: Each segment must be able to be reached. For example there is no point targeting leaders of each country if you don’t have access.
- Focus on different benefits: Different segments must need different benefits.
The final element is positioning maps. To be of value, you need two variables to illustrate the market overview.
In the example here, I’ve taken some cars available in the UK. This isn’t a detailed product position map, more of an illustration. If there were no cars in one segment it could indicate a market opportunity.
Expanding on the extremely basic example above, you can go into more detail by mapping your competitors onto a matrix based on key factors that determine purchase.
The objective is to identify a gap in the market. For example, as you can see in the gap below, we’ve identified from this analysis a market for low-priced family cars.
An example of a company using STP?
Any time you suspect there are significant, measurable differences in your market, you should consider STP. Would different messages for different groups add value to your marketing success?
A good example of segmentation is British Telecom (BT), the UK’s largest telecoms company. BT has adopted STP for its various customer groups which range from individuals to enterprise wide organisations to services for their competitors.
Know your customer and youy won’t go far wrong.