With the STP process create a market segmentation for your new product or service. The STP process has 3 elements to realize the segmentation. This consists of segmentation, target market determination and positioning. This market segmentation model is part of the external analysis and not the internal analysis, because you will analyze the market of your product and make a selection of your target group for a marketingmix.
Do I need the model?
You use this STP process when you want to change the marketing strategy of your company. You choose a different target group and a different target market with an appropriate positioning to tap into the market and target group.
Which variables do I need?
The segmentation can be used specifically. These features can be chosen in different ways (this covers the ‘ S ‘ of the STP process):
- Geographic segmentation: You segment by country, region, city or district.
- Demographic segmentation: You segment based on age, stage of life, gender or religion.
- Socio-economic segmentation: You segment based on income, profession or education.
- Psychographic segmentation: Another segmentation criteria is also based on personal characteristics and lifestyle.
- Behavioral segmentation : You can also segment based on the knowledge of a product, the frequency of use, the willingness to buy, the purpose of use or the degree of use and the time of use.
When you have applied one of the segmentation features, a customer profile can be created. This gives you different groups that show the same behavior or are in the same segment.For example, the STP process can be segmented by country, by province or by place name. The target market definition consists of sectors from which you can select. In addition, there are different types of positioning that you can apply to your product.
How can I apply the STP process?
The STP process has different types of positioning: informational positioning, transformational positioning, two-sided positioning and execution positioning. Positioning is an important tool to place your product or service in the head of the customer.
This is a perception of the competitor. This technique tries to create an image or identity in the perception of the target group. The type of positioning of the STP process that is suitable for the brand depends on the target group and the phase in the product lifecycle in which the product or service finds itself.
There are several characteristics on which the target group is segmented. You can also go a step further with positioning in combination with the STP process. The examples below show how you can further zoom in on personal characteristics and lifestyle. This deals with the ‘ D ‘ of the STP process.
The advantages of a product are emphasized more when it comes to an informational positioning. This is applied to new products with a problem-solving character. These products are often located in a niche market. You distinguish yourself on the basis of functional properties.
In a transformational positioning, the values or lifestyle of the consumer is linked to the benefits of the product. This positioning is often applied to products from a market leader.
With a two-sided positioning, both the functional product properties and the values or lifestyle are combined as position.
In a performance positioning you distinguish yourself from the competition on the basis of a striking communication message. You link the striking message with a symbol or element.
With a positioning strategy you create a distinguishing ability from the competition. The STP process focuses on your target group which you have previously segmented, in order to further develop it. This way you have less unnecessary costs for your marketing and your product meets the target group. This is a win-win situation for both parties. However, you still have to keep a close eye on the competition. You cannot expect the competition to maintain the same positioning.
Different types of positioning
For example, there are three different marketing communication strategies (This covers the ‘ P’ of the STP process)
- Undifferentiated marketing: 1 entire market with 1 marketing.
- Differentiated Marketing: Editing multiple segments with multiple marketing mixes
- Concentrated marketing: edit a number of segments with 1 marketing mix. Focus or niche strategy
What can I get out of it?
To make it even clearer for you, I will use this example to describe how the STP process of a company is developed with a new strategy.
In this example the ‘ S ‘ of the STP process is entered. The segmentation is deployed geographically . Company X focuses on the Dutch market. The selected provinces in this market are: South Holland and North Brabant. The selected sectors for company X are: home furnishing shops and garden centers.
Target group example
In this example the ‘ T ‘ of the STP process is used. The target group is approached with a transformational positioning, because the value of the consumer is linked to the benefits of the product.
Furniture stores : Company X sells accessories that can be sold well in a furniture store, so the furniture stores keep a stock to make no-sales.
Garden centers: Company X sells accessories that can be sold well in garden centers, mainly garden accessories that are sold. A garden center has a wide range and the products of company X would fit in well
In this example the ‘ P ‘ of the STP process is applied. This target group is chosen with differentiated marketing . There are x number of garden centers in North Brabant and South Holland. In the same provinces, there are x number of housing businesses. These are in total x number of potential customers. These are stores such as; home decoration, home furnishings (mixed) and stores.
Company X wants to place sustainable products on the market. Company X’s products are transformational products. The products of company X must stand for the customer for: atmosphere, unique, cosiness, quality and sustainability.
With the STP process you can ask yourself whether your product should stick to its current strategy and positioning or perhaps change. After all, the competition doesn’t stop, does it?