Marketing is a very broad term. Many formulas and methods have been tried and tested, and the three most common strategies are 5Cs, STP and 4Ps. Each of these focuses on different aspects of the market.
STP stands for: Segmentation, Targeting and Positioning. STP is the most commonly applied marketing model in practice, for obvious reasons. It is more of a consumer centric approach, unlike the 4Ps (Product, Price, Place and Promotion). This three-step approach allows a company to define and identify its market, and set up further plans to expand its reach by implementing an appropriate marketing mix.
Segmentation is simply splitting a market into smaller groups having similar needs, to select an appropriate target market. Segmentation makes one question ‘Why is anyone going to buy my product’. For example, Funskool’s major products are suitable for the age group 3-14. The variable here is age, as the market is segmented based on the age group. Well, age is just one of the many ways to segment the market into. Factors like demographics, psychographics, lifestyle, beliefs and values, geography etc. are taken into account too.
Harvey Norman, a leading Australian-based company has segmented its products majorly based on demographics, geography (as it has stores in more than 7 countries) and lifestyle (because it deals in entertainment and bedding goods). Nike has made its presence felt in every country and it has products for every age group; and behavior.
Once the segments are sorted, Targeting (or market selection) comes into the picture. Focusing on particular market segment/s to decide the company’s marketing offers towards this group of customers is what targeting is all about. Targeting plays a major role in product placement, because once the target audience is identified, there is a wide opportunity of further introducing new related products.
As simple as it may sound, targeting requires a lot of planning, analyzing and evaluation. Firstly, the profitability of the respective segment has to be judged. ’is this segment large enough to be taken into account?’ ‘Is this segment going to generate maximum profit?’ ’Is this segment going to provide steady growth over time?’ are some questions to be pondered upon.
Dove has successfully targeted the lifestyle and healthcare segment. Women require certain products which focus on, say, hair fall reduction, or anti-ageing fairness creams. It’s more like, name it and dove has it. Sports companies like Nike and Puma have made everything from shoes and socks to sweaters and t-shirts available. Their stores are kind of a one stop shop for brand enthusiasts-with products ranging from sports accessories to water bottles.
Okay, so now that segmentation and targeting have cleared out things, and the product is good to go, is that it?
No, it is not.
The last step of the STP i.e. (product) Positioning plays a vital role in deciding why a particular product will sell and why it’ll outweigh its competitors. Identifying the most valuable customer segment is the key to effective product positioning.
‘Why will consumers by my product rather than opting for my competitors’? What’s going to be MY unique selling point?’ The best way to find out how a particular segment perceives a product is to draw a positioning map.
The above image and video give brief illustration on how to draw a product positioning map. The product can be selected based on what’s required.
Developing a marketing mix for each selected segment is as good as giving it the final touch.
A positioning statement communicates the parameters of a position. The more succinct, the better it conveys the USP of the product.
With proper planning and implementation, STP can yield desired results!
BY: NIRAJ GOSWAMI
STUDENT ID NUMBER: 214415989
Smith, W. (1956). Product Differentiation and Market Segmentation as Alternative Marketing Strategies. Journal of Marketing, 21(1), p.3.
Lancaster G. and Massingham, L. (1988) Essentials of Marketing. Maidenhead, Berkshire, England. McGraw-Hill.