STP is a 3 way framework referred to as segmentation, targeting and positioning. In the digital world, it has become an integral part of marketing.
Segmentation refers to the process of dividing the market into small groups on different basis.
Targeting refers to the process of choosing a specific group out of the pool created at the time of segmentation.
Positioning means setting a position of your brand in the eyes of targeted audience such that it sounds to be the most appealing.
Let's understand the concept with an example in the image given below:
How can we segment the market:
Geographic segmentation- You can divide the market based on the location. Eg the markets in Delhi can be divided into Khan Market, Chandni Chowk Market etc.
Demographic segmentation- Division of the market on the basis of age, class, gender or physical features is called demographic segmentation. Eg we can divide the market based on number of males and females residing or shopping there.
Behavioral segmentation- It is the process of diving the market on the basis of how they interact with the company. Eg we can divide the market based on how many customers have been in transactions with the company.
Psychographic segmentation- We can also divide the market based on the psychology, beliefs, lifestyle, attitude etc of the people.
Targeting is the mixture of 3 factors:
Size of the group
Profitability if selected a particular group
Reachability
The best targeting strategy requires the use of all the 3 factors.
Types of Positioning:
Symbolic positioning- Position your brand in such a way that the self image, ego, belongingness etc. of the targeted audience gets satisfied. Eg Rolls Royce has established it as a luxury car brand and a person owning it is considered as extremely rich by the society.
Functional positioning- It focuses on customer utility or satisfaction. Eg Sleepwell has established itself as the mattress brand that is known for its quality.
Experiential positioning- It focuses on the experience of the customer. Eg McDonalds focuses on providing the best experience to its customers at a reasonable price.
Benefits Of STP:
a) Segmentation splits buyers into groups with similar needs and wants to best utilize a firm's finite resources through buyer based marketing. b) Attract the right customer. c) Reduce risk in deciding where, when, how, and to whom a product will be marketed. d) Increase marketing efficiency by directing effort specifically toward the designated segment in a manner consistent with that segment's characteristics. e) Helps in customer retention. f) Customer delight g) Reduce the cost of the company by not marketing the product where its not required.
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