Segmentation, Targeting and Positioning Model (STP Model)

The concept of Segmentation, Targeting and Positioning Model (STP) has been one of the most frequently cited topics in the marketing literature and widely applied tools in the marketing practice for the last years. Considering that it is impossible to appeal to all buyers in the marketplace in the same manner, firms nowadays develop customer driven marketing strategies by segmenting and targeting the marketplace according to the miscellaneous customer profiles and buying behavior.

The STP Model is a three stage process and is explained below:

Segmentation

Market segmentation involves the identification of consumer needs and characteristics based on several segmentation variables, ranging from objective qualities such as age and gender to more intangible values such as lifestyle, personality or even past behavior. The main segmentation variables are categorized into geographic, demographic, psychographic and behavioral variables.

  • Demographic variables are the most frequently used variables and they segment the market according to demographic characteristics such as age, gender, income and ethnicity.
  • Geographic variables segment the market into geographical units so that offerings are adapted to the local standards.
  • Psychographic variables take into account social class, lifestyle and personality characteristics.
  • Behavioral variables segment the market based on occasion, benefits sought, user status, usage rate and loyalty status.

Often marketers combine the above variables in order to achieve better comprehension and accurate segmentation of the market.

Targeting

The second stage of the STP model is targeting, at which point firms target the segments with an appropriate marketing strategy. At this stage, businesses should evaluate each segment’s attractiveness and select one or more to enter. Some of the factors that have to be considered are the market size, measurable differences between the segments, anticipated profits and accessibility. This decision also relies upon the company resources, the product variability, the product lifecycle stage, the market variability and the competitors’ marketing strategies.

Positioning

The final element of the STP model is positioning and at this phase the firm aims to create a valued perception for its products and services to the mind of the consumer. Brands must position their offering in a way that will give them the best chance to succeed in a selected target group and thus design appropriate marketing mixes to effectively communicate and deliver this position to the marketplace. On that account, firms may choose to position themselves on a cost leadership strategy in which they gain competitive advantage through a low cost price; while others may choose to pursue a differentiation strategy in which firms offer a higher quality that justifies a premium price.


The STP model is a strategic approach that aims to guide firms to plan and implement a marketing mix that is appropriate for the segments identified within the market.  The various and diverse preferences and buying patterns of consumers nowadays propound the STP model on of the most important processes within Strategic Marketing. In order for a fluid plan to be developed, all three stages should be assessed and be aligned with one another.

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