The STP Marketing Model: Complete Guide

Nowadays, the STP marketing model is one of the most commonly practiced strategies in marketing. It is best known for creating more effective, streamlined communication.

It concentrates on analysing various markets to then choose the most profitable segments for your business. Once market segments are picked, a marketing mix and positioning strategy is developed for each segment.

As markets and consumers constantly change, so do opportunities and threats for your businesses. Whether you’re new to the STP marketing model or this is old news to you, now is the time to revisit your marketing strategy to make sure you are using every single chance you get.

So, do you want to maximise your customer reach, engagement and conversion rate? If your answer is YES, read on!

The STP Marketing Model Explained

Segmenting, targeting and positioning is the key to reach your target audience effectively. It also makes sure you reach the right customers – the ones most likely interested in your business and can’t wait to become your biggest fan.

The STP marketing model is especially useful when developing marketing communications strategies. It helps create a plan of action where various relevant messages are created that ensure effective interaction with different audiences.

This model consists of a three-step funnel. So let’s see how it works, step by step.

Step 1: Segmenting

In the segmentation process you divide up your customers and sort them into groups based on similar characteristics and behaviours.

There are four main categories to divide up your customers:

• Demographics (age, gender, income, education, family status)
• Geographics (specific location, climate, type of location e.g., rural or urban)
• Psychographics (interests, beliefs, lifestyle, attitudes, values)
• Behavioural (buyer behaviour e.g., first-time buyer or habitual buyer, usage e.g., one-off or frequent, brand loyalty e.g., high loyalty or doesn’t care about brand, price sensitivity e.g., high or low)

This is an all-important step as it builds the foundation of a successful communications strategy. In the next step you will determine which segments offer most potential for your business.

Step 2: Targeting

When you choose your target audiences, you define which market segments earlier identified provide the best prospects. In order to do this you need to answer the following question:

What is the attractiveness of each market segment?

First, start off by analysing the size and growth potential of each segment. Obviously, it’s vital to reach a good amount of people or else your business won’t thrive.

Then, you also want to look at the market and consumer trends. This is crucial as your customers and business are affected by these trends. Analyse global market trends to find out what direction we are going and how it is going to influence the way you do business. You can find the 2021 global market trends here.

You also want to analyse current consumer trends to understand customers better. What’s important to them now? What will be in 5 years? Do they value what your business does? What do they really care about?

Evaluating the market as well as consumer trends will give you a better understanding of each segment. Now you can identify the most attractive segment (or segments) and pick them to be your target audience/s.

Once you’ve picked your most viable target audience/s you create a customer profile for each of the segments. This is a detailed description and visualisation of each target audience. Here’s an example:

Sarah, 31 year old mother of two. She lives in Brunswick, NSW, Australia and works part-time as a teacher. She has an active lifestyle, spending a lot of time outdoors with her family. Her family is most important to her and she wants to create a suitable environment for her children. Being a very active and social person, she has an interest in healthy eating, contributing to community activities and outdoor sports. In her free time she likes to practice yoga, go on long coastal walks with her girlfriends and try different recipes.

See where this is going?

Step 3: Positioning

The last step in the STP model examines where your product or service sits within the market and why it’s a better alternative for your target audience compared to its competitors. There are a few components to consider when defining your positioning:

• Benefits your product or service can offer (functional, emotions, self-expressive)
• Tagline (slogan that will capture your audience’s attention)
• Unique selling points (find out how to create a killer Unique Selling Proposition here)
• Perceived risk by customer (e.g., high price, complex offering, time involvement)
• Brand essence (what you want to be known for the most)

Once you have defined all of the above components you can draw a positioning map that will show you where you stand in the market. Simply choose two relevant attributes of your product or offering to compare it with its competitors.

Lastly, you want to write a positioning statement. This is a short brief describing the following:

“For (target markets) that value (needs/wants), (your product/service) provides a solution by offering (benefits).”

Applying the STP Marketing Model to the Marketing Mix

Now that you know where your product or service stands in the marketplace and what benefits it can offer, you must communicate this to your most ideal customers.

The best way to develop effective communication strategies is to find out how your target customers interact with your brand. What communication tools do they use? Where do they search for information? What do they type into the search? Do they trust their friends or social media?

Once you know what digital communication tools your customers prefer you can create relevant communication strategies in alignment with your marketing mix. Keep in mind who your customers are and what motivates them to buy your product or service.

The STP marketing model is very much an audience-based tool rather than product-based. It puts your customers at the core of your marketing strategy, which is now more relevant than ever.

Consumers want to be heard, they want to know that you care about them and they want businesses to have a more holistic approach.

The STP marketing model helps you to create powerful communication strategies, so you can better convey value to your customers. And what’s the outcome of that? More perceived value from your customers means more given value! In simple words, better returns on investment.

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