How to use segmentation, targeting and positioning (STP) in developing a marketing strategy

Published on February 04, 2019

How to use segmentation, targeting and positioning (STP) in developing a marketing strategy

    Good evening friends! Today we will talk about traffic, namely STP. This material is timed to the launch of the course "Traffic Manager" , which starts in late February.

    Today Segmentation, Targeting and Positioning (Segmentation, Targeting and Positioning, abbreviated as STP) is a common strategy in Modern Marketing. One of the most frequently used marketing models in practice. In a survey on the most popular marketing models, STP took an honorable second place, second only to the reverend SWOT / TOWs matrix. Such popularity arose relatively recently, because before that marketing approaches were based on the product itself, and not the buyer. For example, in the 1950s, the main marketing strategy was “product differentiation”.



    The STP model is useful in creating a marketing communications plan, as it helps marketers prioritize and then develop and deliver personalized and relevant messages to engage different audiences.



    This approach is focused on the audience, rather than on a product that helps deliver more relevant messages to a commercially attractive audience. The diagram below shows the movement of plans from and to:

    Audience Choices> Audience Choice> Product Positioning



    STP focuses on commercial effectiveness by selecting the most valuable business segments and developing a marketing mix and product positioning strategy for each selected segment.

    The use of Segmentation, Targeting, and Positioning in digital communications

    STP is also related to digital marketing at a more tactical level of communication. For example, the use of marketing personsassists in the development of more targeted digital communications, as shown by alternative tactical approaches to customer e-mail segmentation . The picture below shows a fragment of Dave Chaffey’s Smart Insight book, showing how Segmentation, Targeting and Positioning is used in a marketing strategy:



    It reminds us that digital channels offer new, previously inaccessible audience targeting options, but they require a solid budget. For example:
    • Intent search query. The situation when users drive keywords to compare products they are interested in buying;
    • Targeting on the basis of interests on Facebook, for example, searching for those interested in Gardening, Golf or a fitness club subscription;
    • Targeting using personalization of letters or website based on the profile, behavior (for example, consumed content).

    In addition, new opportunities are emerging to make the brand more attractive by offering consumers new values ​​based on online or digital value proposition , or, as Jay Baer calls it, “Youtility” (a combination of “utility” - utility and “you” - you). This is possible using content or interactive tools on websites and in mobile applications.

    How to use STP?

    Thanks to segmentation, it is possible to identify niches with special needs, develop the market and find new customers, provide more accurate and effective marketing messages.
    The needs of all segments are equally important, therefore marketing messages must be developed for each segment with an emphasis on the relevant benefits and required functions. And do not create one template for all types of clients. This approach is more effective, provides a certain group of people with a suitable complex, unlike the shotgun method.
    You can segment existing markets on the basis of virtually any variable if it is effective, as the examples below show:

    Well-known methods of segmentation of the audience include:

    1) Demographics
    Analysis of any combination: age, gender, income, education, ethnicity, marital status, education, household (or business), size, length of residence, type of residence or even profession / occupation.
    For example, Firefox, which sells the “coolest things”, is aimed at an audience of young men. While the Moshi Monsters is focused on parents with a fun, safe, and educational space for a child’s audience.

    2) Psychography
    This includes “personality and emotions” based on the behavior associated with the choice of purchases, including mentality, lifestyle, hobbies, risk appetite, character and leadership qualities. Demographics explains “who” your buyer, while psychography explains “why” a buyer makes a purchase.
    There are various ways to collect information that will help form the psychographic profiles of typical clients.
    1. Interview : Talk to several people representing your target audience. In-depth interviews will help collect useful, qualitative data on what customers need. The problem is that conducting such interviews is expensive and difficult, and if the sample is not large enough, there is a chance that the result will be bad to represent the audience you are trying to focus on.
    2. Surveys : Surveys, when compared to interviews, allow you to reach more people, but at the same time, the probability of getting a valuable answer is reduced.
    3. Data about the customer : You can have the information that you prefer to buy from customers, coming from the loyalty card if you FMCG-brand, or online purchase history, if you are engaged in e-commerce. This data can be used to understand what products interest buyers, and what causes them to make a purchase. For example, does a discount significantly increase the propensity to buy? In what cases occur spontaneous purchases.

    As an example, we give Virgin Holidays, who divided the holidays into 6 groups.



    3) Lifestyle
    This includes hobbies, entertainment, recreation and other non-work related activities.
    Companies like online and offline magazines will focus on an audience with special interests, for example FourFourTwo is a magazine for football fans.
    Some hobbies are extensive and well-established, such enthusiasts easily target, for example, football fans. However, some were able to achieve great success, focusing on small niches. As an example, the flourishing of companies associated with “survivalism”, which in recent years has evolved from a little-known entertainment into a multi-billion dollar industry, is suitable. Today, about 3.7 million Americans consider themselves survivals.. A good way to start searching and targeting such niches is to go to Reddit, where people create subreddits to share information about these interests and hobbies.

    4) Religion and Values
    This includes religious, political, nationalist and cultural beliefs and values.
    The Islamic Bank of the United Kingdom offers banking services for Sharia, subject to special religious conditions.
    You could not even think about one strange but interesting example of the influence of religious demography on marketing - Mormons are very fond of network marketing . Much more than all other groups in the United States. Delving into the demographic research, you can find new marketing opportunities and start thinking outside the box. For example, did you know thatThe most likely age group to buy a car - people aged 55 to 64 years ? At the same time in advertising cars, we see them very rarely. An opportunity that needs to be urgently missed!

    5) Life stages
    Life stages are a chronological comparative analysis of people's life at different stages.
    For example, Saga holidays, which are available only to people over 50. The segment is large enough to focus only on it.

    6) Geography
    Split by country, region, region, living in metropolitan or rural areas, population density, or even climate.

    7) Behavior
    This includes the nature of the purchase, brand loyalty, level of consumption, the benefits pursued, distribution channels used, the response to the marketing factor.
    In a B2B environment, the pursued benefits are often associated with “how fast will it be delivered?”, Which includes the “momentary” segment - the planning segment in advance.
    For example, Parcelmonkey.co.uk offer same-day, next-day, and international shipments.

    8) Benefits
    Benefits - the benefits and satisfaction received by the client.
    Smythson Stationery offers the same products as other stationery companies, but customers see an advantage in their original packaging — bright blue boxes tied with a dark blue ribbon!

    Market Targeting The

    list below shows what is needed to assess the potential and commercial attractiveness of each segment.
    • Size Criterion : The market must be large enough to justify the segmentation. If the market is small, it can make it even smaller.
    • Differences : There should be measurable differences between the segments.
    • Money : Expected profit should exceed the cost of an additional marketing plan and other changes.
    • Accessibility : Each segment must be accessible to your team. Each segment should be able to receive your marketing message.
    • Focus on different benefits : Different segments require different benefits.


    Product positioning Positioning

    maps are the last element of the STP process. To make it work, we need two variables to illustrate the market review.
    In this example, I took several cars available in the UK. This is not a detailed product positioning map, but rather an illustration. If there are no cars in any segment, this may mean a market opportunity.



    We expand the extremely simple example above and decompose the market by distributing competitors in a matrix based on the key factors affecting the purchase.



    This chart does not pretend to the accuracy of the picture of the car market, it simply illustrates the possibility of using the product positioning map to analyze the current position of businesses in the market and search for new opportunities. For example, as seen in the gap below, we found a potential opportunity in the low-cost family car market.



    We do not say that the gap really exists, I am sure you will remember the cars that fit this category, because the car market is very developed and competitive. However, it is clear how you can use this tool to find gaps in your market.

    An example of a company using STP?

    Every time you feel a significant, measurable change in your market, think about STP. Especially if you create different messages for different groups.



    A good example of segmentation is BT Plc, the largest telecommunications company in the UK. BT uses STP for its diverse client groups: from individual consumers to B2B services for its competitors.

    What to watch out for

    Ensure that the market is big enough to make a difference, and customers can be easily contacted.

    Put a plus if you consider the article useful and sign up for an open lesson , which the instructor of the course will conduct on February 11 - Representative of the Netherlands Institute of Marketing (NIMA) in Russia - Andrei Gavrikov .