Discover one of the most common ways to reach your audience with personalized and relevant messaging.
Some of the most effective and successful marketing efforts are when businesses use personalized and relevant marketing messages to reach their target market. One of these models is known as STP marketing—where STP stands for segmentation, targeting, and positioning—and it’s a very common marketing strategy for understanding and targeting specific audiences.
Three parts of segmentation, targeting, and positioning in marketing communications
To put it simply, the STP marketing model is a way for businesses to narrow down and identify each of their audiences (segmentation), determine which audience they want to reach (targeting), and then develop the actual campaign for that audience (positioning).
STP marketing is a strategy that employs a more consumer-centric approach. Ultimately, it increases the likelihood that an audience will convert, make purchases, and become lifelong customers. These are the 3 components of the STP model:
- Market segmentation: Identify the basis for each audience segment and determine the important characteristics of each target market.
- Target audience identification: Evaluate each segment’s commercial attractiveness and decide which segments are worth targeting.
- Positioning strategy: Create detailed marketing strategies for the chosen segments.
Benefits of segmentation, targeting, and positioning
STP marketing is an incredibly useful tactic for personalized marketing. It has a variety of benefits that digital marketing teams can take advantage of.
Reveals valuable customer segments
STP marketing can help marketers identify their audience segments by breaking down their target audience into smaller groups based on recognizable characteristics. Identifying these segments can also reveal niche markets or other potential customers that could provide value.
Creates satisfied customers
Customers will have more positive experiences if they feel like the brands they use truly care about meeting their needs. With an STP marketing strategy, businesses can provide unique experiences that their audience will respond well to, thus elevating customer experiences and building stronger relationships.
Boosts brand loyalty
When businesses are able to accurately identify their audiences and create personalized experiences, consumers are more likely to return and become repeat customers. In a survey by Accenture, 91% of consumers reported they are more “likely to shop with brands who recognize, remember, and provide relevant offers and recommendations.”
Lowers overall customer acquisition cost
Businesses can also use STP marketing to lower their customer acquisition costs (CAC), which is the amount of money a company must spend to gain a new customer. While there are other factors that impact a business’s CAC—such as a customer retention strategy or a CRM platform—businesses can experience a lower CAC if they create personalized marketing campaigns.
How to build an STP marketing strategy
Building a marketing strategy with the STP model does require a lot of research, but the end result can place you in a valuable position to create unique, personalized content for your audience. To execute this model well, you have to pay attention to the components that make up the name itself: segmentation, targeting, and positioning.
Part 1: Market segmentation
The first step in the STP marketing model is market segmentation—also known as audience segmentation—where digital marketing teams divide their target audiences into smaller groups based on certain characteristics.
Every business can attract different types of customers, which means companies usually don’t limit their marketing campaigns to just one group of people. That’s why this step is so important. Segmentation allows businesses to effectively divide their entire audience into smaller subgroups so they can target each one with personalized content.
Segmentation vs. buyer persona
Keep in mind that market segmentation is different from a buyer persona. Segmentation is the act of identifying and dividing an entire audience into niche segments based on certain characteristics.
Alternatively, the buyer persona is a fictionalized person that represents a business’s ideal customer across a variety of audience segments, creating an emotional connection between consumers and businesses. A buyer persona also contains information on their personalities, what their goals are, who they interact with, and what they do day to day.
Define your target market
Before you start segmenting, you’ll need to define your target market. This means looking at the total available market, identifying which segments align with your brand, and then identifying an audience that you can focus marketing on. Let’s break it down.
Total available market
The total available market (TAM) consists of everyone in your industry or sector. It’s likely going to be big because it’s a very general overview of your market.
Serviceable available market
The serviceable available market (SAM) is a portion of the TAM that is available to you for targeting. You won’t be able to reach everyone, but your product or service is now closer to what everyone in the SAM would ideally want.
Serviceable obtainable market
The serviceable obtainable market (SOM) is the portion of the SAM that you actually will be able to reach. This group contains all of your target audience segments.
Identify your most valuable customer segments
Now you can start segmenting your audience. To do so, you need to take these 4 types of customer segments into account.
Demographic
Demographic segmentation is the easiest and most common way to segment your audience. It’s based on general demographics, such as:
- Age
- Income
- Job type
- Religion
- Ethnicity
- Education
- Marital status
- Industry
Geographic
Geographic segmentation tells you where your audience is located and the specific traits of that location. These are some geographic segments:
- City, state, country, zip code
- Time zone
- Language
- Culture
- Climate
Behavioral
Behavioral segmentation relates to consumer and purchase behavior, allowing you to see how customers interact with your brand. Here are some examples of behavioral segments:
- Purchase and usage behavior
- Stage in customer journey
- Customer loyalty, satisfaction, and engagement
- Benefits sought
Lifestyle traits
Also known as psychographic segmentation, analyzing your audience’s lifestyle traits can help you understand how their interests and hobbies affect their purchasing habits. These lifestyle traits are based on:
- Attitudes
- Values
- Social status
- Lifestyle
- Opinions
Collect your consumer segments
Now that you know how to segment your audience and you’ve chosen certain characteristics to look out for, you can start collecting your audience segments in a number of ways.
Interviews and surveys
Some common ways to collect audience segments are through in-depth interviews and surveys. This can help inform you on what your customer base does and doesn’t like as well as how they spend money.
There are multiple, effective surveys that you can use to collect information on each of your customer groups. You can conduct surveys over the phone, after a customer makes a purchase online, or even conduct something more thorough, like a conjoint analysis survey.
Customer data
Another way to collect audience segments is by compiling customer data, which you can gain from social media and website analytics. You can also use artificial intelligence (AI) or marketing automation to do the compilation for you.
Create audience segments
With the information and data you’ve collected from audience segmentation, you can now start to organize them into segments. Try to notice patterns as you put your segments together and ask yourself questions about the trends you’re seeing.
Do certain customers like your brand because of your prices? Which customers have been loyal the longest and why? Is there a group of customers that interacts with your brand for reasons you weren’t aware of before?
Once you are able to divide your audience into groups, name each segment and label what they have in common. Try to segment your audience into 5-10 groups in total. Here are a few examples:
- Segment 1: Customers who use your product for A purpose
- Segment 2: Customers who use your product for B purpose
- Segment 3: Customers who like your brand for E, F, and G reasons
- Segment 4: Customers who have been loyal for X many years
- Segment 5: Customers who prefer your prices over Competitor Z
Part 2: Target audience identification
The next step in the STP model is targeting. Keep in mind, this isn’t the act of targeting an audience with a campaign just yet. Instead, this step is about deciding which of your 5-10 audience segments you believe are worth targeting.
Evaluate each segment’s commercial attractiveness and competitive edge
Before you choose your audience segments, ask yourself these questions:
- How big is each segment size?
- Are you looking to reach more than one target segment?
- Are there enough potential customers to yield a profit?
- How does this segment differ from the others?
- How can your business serve that segment?
- Have you identified a new, niche market?
Once you’ve asked yourself enough questions regarding which market segment(s) you want to target, you should have an idea of which ones you want to start positioning your marketing toward. However, if you’re still not sure, you can conduct a further PESTLE analysis.
Conduct a PESTLE analysis
A PESTLE analysis is a framework that helps businesses understand which external positioning factors would impact the opinions of their target audience. When deciding which segment you want to target, think about these external factors.
Political
Political issues may impact the timing or message of your campaign—which can be either a good or bad thing. Politics are often taken very seriously, so be sure to keep checking that your campaign does or doesn’t align with recent political issues.
Economic
This has to do with how much your products and services cost, because you should know whether or not your target segment can afford buying from your company. Geographic segments can help with this one, as they can tell you if your ideal segment is based in wealthier or lower-income communities.
Social
Social issues such as pop culture, education, and social media trends can also impact your audience’s decisions. Sometimes these trends can come and go, but others may be rooted in your segment’s identity, which you should absolutely keep in mind.
Technological
Technology encompasses nearly every aspect of our modern lives, so you should definitely consider how your campaign may be digitally received. Do you have an audience segment that doesn’t interact with technology often, or a segment of people who use it every day? Whatever your answer is should be factored into how you market your campaign.
Legal
If your campaign clashes with any legal limitations of your audience segment, you should definitely pivot. This would include making sure that your product or service is in line with consumer regulations, safety standards, labor laws, or international rules.
Environmental
Your audience’s environment can also impact your campaign, especially for those in the tourism, hospitality, and agriculture industries. For example, a sunscreen campaign would have much better luck targeting consumers who are in warm, sunny locations instead of cold, stormy ones.
Part 3: Positioning strategy
This is the last part of the STP process. At this point, you should know who your audience segments are and which ones you want to target. Now you can start creating marketing messages that provide each segment with an attractive value proposition.
Understand the 3 types of positioning
Your positioning model will be the way you plan to target your audience and, ideally, stand out from your competitor(s). All product positioning strategies fall under one of these models.
- Functional positioning: As the most common approach, this positioning model identifies the functionality of your product or service in solving a problem.
- Symbolic positioning: Identifies the symbolic worth of your brand, speaking to your audience’s ego, self-image, or sense of belonging.
- Experiential positioning: Identifies the emotional experience your audience has with your brand.
Develop a positioning strategy
Now that you have an understanding of positioning model types, it’s time to actually develop a positioning strategy. Remember, each of these marketing strategies will cater to either the symbolic worth, functionality, or emotional experience of your brand.
Consumer-based positioning
This strategy is more audience based as it targets your audience’s preferences and purchase behavior. It’s a functional position strategy because it aims to align your product or service with what consumers are looking for.
Competitor-based positioning
This strategy focuses on your competitors. It’s mostly a functional strategy as it attempts to separate yourself from your competitor and list ways that prove your products or services are better.
Technically, this could also be an experiential strategy if you wanted to emphasize that your brand is better than a competitor due to your mission or company values.
Benefit-based positioning
As another functional strategy, this approach focuses on the benefits of buying from your company. It’s different from the consumer-based strategy because it focuses on your company’s benefits regardless of everything your customer base might prefer.
Price-based positioning
This approach focuses on how your audience perceives your prices and if they believe your product or service is cheap, average, or expensive.
This strategy can be functional if you focus on the value that customers can get when they spend money on your product or service. It can also be a symbolic strategy: If people see you charging more money for your products or services, they could perceive your brand as a high-value one.
Prestige-based positioning
This is a symbolic strategy that targets your audience’s ego, making them believe that if they buy from your company, they can elevate their status or align it with other high-value people.
Attribute-based positioning
This is one of the most important positioning strategies for the STP model, and it can be functional, symbolic, or experiential. It aligns with very specific needs within one of your segments, regardless of your competitors, benefits, or price.
Create a competitor product positioning map
A great way to understand how your business relates to a competitor is with a product positioning map.
Start by taking two identifiable characteristics of your brand and putting them on an X and Y axis. For example, if you sell clothing, this could be quality and price. If you run a quick-service restaurant, this could be taste and health. If you own a car-washing service, this could be timeliness and cleanliness.
Next, based on market research, identify your competitors and place them somewhere along your X and Y axis. Then identify where your company lands and compare.
Ask yourself if there’s a gap in the market that you can fit into. Try to think about why consumers should choose you over a competitor based on what you know your audience likes. If you’re not happy with your product positioning, come up with a campaign that could help you move in the direction you want the company to be.
Choose a marketing mix from the 7 P's
A marketing mix consists of several focus areas that you can pick and choose from to create an effective marketing campaign for each segment. Formerly known as the 4 P’s of marketing, the 7 P’s take multiple factors into consideration with the goal of successfully targeting your audience. Here’s a brief breakdown of the 7 P’s.
- Product offering: The attributes of the product or service that you’re trying to sell, including design, quality, features, and options.
- Price: How much you plan to sell your product or service for.
- Promotion: How you want to advertise or promote your company, such as through scheduled discounts or sales, social media strategies, display ads, digital marketing efforts, or public relations.
- Place: Where you plan to sell your product or service—in store, online, or both.
- People: The people from your company who interact with your customer base, from salespeople to customer support to social media managers.
- Packaging: How you package your product so that you can catch the attention of new or returning customers.
- Process: The way your company runs and how it can impact your customers’ experiences.
Wrapping up: Enhance your digital marketing campaigns with STP marketing
In summary, STP marketing is one of the most effective ways to reach your audience with personalized content. It helps create successful marketing efforts by identifying attractive segments within your target audience and developing a strategy for each one.
While going through each step of the segmentation, targeting, and positioning approach may take some time, we’re sure you’ll come out the other side with an effective campaign that everyone in your audience will appreciate.