STP in STP marketing model stands for Segmentation, Targeting and Positioning. Analyzed individually or together, these three components are very crucial for any business. For any new business offering its products and services for the first time or any existing business introducing its new set of products or services, every business needs to clearly and consciously articulate the STP Marketing model. This model helps in assisting businesses in analyzing the product and services offering. It helps in presenting the value that the business provides by showcasing the benefits and the worth of its products to the customers.
The first component in the model is the segmentation process. This process is crucial because this step guides the other two processes. Thus, it needs to be analyzed very critically. The main goal of this step is to understand the customer segment. The customer segment is to be selected for two reasons. Either to select a customer segment and produce product or services to fulfill the need or wants of that segment. Or, find out the customer segment who would use the products or services. Generally, there are four customer segments. They are:
In this segment, businesses divide their whole audiences based on the geographical differentiation such as country, region, province, district, cities or towns etc.
In this segment, audiences are divided based on age, gender, occupation, educational level etc.
Here, audiences are segregated based on their behaviors. The usage and frequency of purchase, the loyalty of customers etc. are analyzed while selecting the customer segment.
Psychographic segmentation involves identifying the customers based on their lifestyle, perception, hobbies etc.
Let’s explore the STP model of Starbucks to understand its customers and how it has tried to position itself in their minds. The market segmentation of Starbucks looks as such based on the four aspects of segmentation.
Age: 22 to 60 years
Gender: Male and female
Occupation: Working professionals and students
Life-cycle stage: Youngsters, Singles, married couple, married couple with children
Region: Latin America, Europe, Middle East, Asia, Africa and Pacific region
Density: Urban, Highly Populated
Social Class: Middle and upper class
Lifestyles: Achiever, explorer, mainstreamer
Benefits: Work space for formal and informal meetings, go to and takeaways.
Loyalty Status: Highly Loyal
After the segmentation by the businesses, they identify their customer segment, they again dig deeper to identify whom to target among the segment. The second step in STP is targeting. From a broad perspective, now the focus is shifted towards narrow and more specific groups among the segment. This is done by identifying people with similar interests, wants and needs within the broad segments. Since we are narrowing down the segment, we also need to identify and analyze what motivates our target market to purchase our products or services.
Starbucks targets mostly middle to high income individuals who are looking for quality yet sophisticated products. And the target audiences are professionals, they offer them a wide variety of choices to choose keeping their health in concern. They highly considered their customer’s choices to sugars, nutrition’s filled and healthy options such as lactose free coffee options. In addition, to improve the customer loyalty, they customize their outlook as well as offering based on local markets.
The final step in the model is all about positioning which is equally crucial like the above two steps. It is about building a strong image of the business as a brand and communicating that positive image to the customers. It is all about positioning the brand in the minds of the customers in such a manner that it sets you apart easily from the competitors. Businesses can do this through three different approaches. They are:
Communicating the brands with a certain symbolic meaning. Cars are usually symbolized as luxury and safety. Within the car segment, BMW, Porsche symbolize themselves as sporty yet classic.
Here, brands communicate to the customers about their functional capabilities and that they can solve the customers problems. A moisturizing cream function is to moisturize and prevent from dryness, an anti-aging products function is to prevent from anti-aging.
Brands in this aspect focus on emotional connection between customers and the products and services. Dolby music lets you experience the music, a luxury resort extends the customers the luxury that it provides.
Starbucks positions itself as a customer centric brand which focuses on their unique needs. It customizes its offering based on customers needs. In addition, it offers sophisticated ambience, along with its social commitment for environment protection. Through this, it has successfully established itself as a loyalty brand of its customers. In this way, businesses through the STP model acquire those customers who perfectly fit the products or services and sustain in the long run.
Pros of STP Model for Businesses
- Helps in identifying the larger pool of customers to further identify the most profitable group of customers
- Helps in attracting the right set of customers.
- Reduces the risk associated with product or service failure.
- Increases the efficiency of the marketing campaigns as the activities are always directed and targeted towards the right set of customers.
- Ease in customer retention and helps attract new customers.
- Increase the customer loyalty for the brand.
Cons of STP Model
- Cost involved in identifying the rights set of customers may be high and increases as the process lengthens.
- A product that has different customer segments requires different marketing campaigns for each segment.
- The distribution channels under different sets of segments increases the cost of distribution.