Marketers use various strategies to increase sales. But the most tried and tested method is to segment the market into groups, focus on the right groups, and focus the services and products towards your target audience. A common mistake that most companies make is to think every individual can be turned into a prospective customer. A framework that is used to simplify the process of market segmentation is termed as STP Marketing model. (Jun, et,al,2011)This marketing model can be used to achieve easy sales. As stated above STP divides the market into segments, help in selecting segments, and further positions the product in the market place.
In this article we are going to talk in details about the benefits of STP Marketing.
Process Of STP
The first step of STP process is Segmenting a market. This is a process where the market is divided into groups based on specific criteria. (Ashari,et.al,2013)
Factors On Which Segmentation Depends
- Demographic factor- When the market is divided based on a combination of age, income level, gender, marital status of an individual, his occupation, education level and ethnicity.
- Geographic Factor- When the market is divided based on a specific region, state, province, city, neighborhood etc including urban and rural areas.
- Psychographic- When the target audience is divided based on their lifestyle, activities, opinions, hobbies, political affiliations, religious views, entertainment choices along with personal choices and nature of attitude.
- Behavioral- Here market segmentation is based on the nature of use of the product or service. It is based on the following factors including whether or not the product or service was financed or not, level of usage of the product, and loyalty towards the brand.
Targeting helps identify the most attractive segments. Marketers determine the commercial viability of each segment individually through STP analysis.
Factors On which Targeting Depends
- Targeting depends on the potential of the segment to grow along with its size.
- Targeting also depends on the amount of profit made by a segment. It further depends on the segments that are willing to pay the most for a particular product or service and the overall value of a permanent customer.
- Targeting also depends on the easy accessibility of the target customers. i.e., how fast does a product or service reach a customer? It also depends on whether the distribution network is able to reach a customer. And the CAC ( cost of acquisition of a customer for this segment.
End of the day it is not just the size of the segment that matters but the overall profitability of each segment that matters because the focus is to grow a highly profitable segment with a large lifetime value and a low cost of acquisition. Students can use STP marketing model to learn various strategic tools to help students understand the opportunities that might come up with new marketing methods and on the other hand detect threats that might affect the marketing methods.
The final step of STP Marketing model is positioning where marketers map out different variables that are considered in the first two steps. It helps in better place the products and services in front of the competitors and creates a separate image in the mind of the customer. The process of placing a product to gain a position in the market is called value proposition.
Factors On Which Positioning Depends
- The process of coming to a particular solution keeping the customer’s benefit in mind is functional positioning.
- Every customer has ego, sense of belongingness, and a self-image and needs . The process of boosting these needs to the benefit of the marketer is called symbolic positioning.
- The process of focusing on elements that connect emotionally with the customers is called experimental positioning. This is also done to re-establish or form new brands.
For any product or service to cut an ice in the market and attain success in a short time a combination of all three positioning factors is required to put it a competitive advantage to the competitors in that segment. The positioning market map helps marketers know what their customers are thinking.
Advantages Of STP Marketing Model
- STP marketing model helps increase sales
- It helps identifies the gaps in marketing strategies.
- Helps startups find success in their niche markets who cannot otherwise compete with the big fishes in the world of marketing. (Geissler,et.al,2001)
Disadvantages Of STP Marketing Model
Like other marketing frameworks STP also comes with certain disadvantages. The disadvantages of STP Marketing Model are listed below-
- Production of multiple products using STP framework can increase costs. (Liao,et.al,2014)
- Separate marketing campaigns need to be created along with separate collaterals for individual target segments which further increases the overall expenditure.
- Different distribution channels need to be used to reach different customer segments.
Therefore it can be said that STP Marketing model is a three step process that has been designed to identify prospective customers and tailor the products and services to the needs and requirements of the customers. Namely the three step process is segmentation where the market is divided into groups based on demographic, geographic, psychographic, and behavioral factors. The second step is targeting where the marketers determine the commercial viability of each segment individually. The factors that affect targeting are potential of the segment to grow along with its size, amount of profit made by a segment, segments that are willing to pay the most for a particular product or service and the overall value of a permanent customer, easy accessibility of the target customers, speed at which the product reaches the target, whether the distribution network is able to reach a customer and the CAC ( cost of acquisition of a customer for this segment and positioning where marketers map out different variables that are considered in the first two steps. Positioning depends on functional positioning, symbolic positioning and experimental positioning. Students should remember that For any product or service to cut an ice in the market and attain success in a short time a combination of all three positioning factors is required to put it a competitive advantage to the competitors in that segment. The only disadvantages a STP Marketing Model comes with are Production of multiple products using STP framework can increase costs, Separate marketing campaigns need to be created along with separate collaterals for individual target segments which further increases the overall expenditure and Different distribution channels need to be used to reach different customer segments. To know further about STP Marketing Model students can now avail Marketing Assignment help from SourceEssay experts.