What is STP process? (STP - segmentation, Targeting, Positioning)

STP Process (STP - segmentation, Targeting, Positioning)

The growing use of the STP process has occurred as a direct result of the prevalence of mature markets, the greater diversity in customer needs, and the ability to reach specialized or niche segments. As such marketers are increasingly segmenting markets and identifying attractive segments (i.e. who to focus on and why?), in order to identify new product opportunities, develop suitable positioning and communications strategies (i.e. what message to communicate), and effectively allocate resources to key marketing activities (i.e. how much should we spend and where?). Organizations will often commission segmentation research when they want to re-scope their marketing strategy, investigate a declining brand, launch a new product, or restructure their pricing policy. Organizations operating in highly dynamic environments seek to conduct segmentation research at regular intervals, to keep in touch with changes in the marketplace.

To succeed in today's competitive marketplace, companies must
be customer centered, winning customers from competitors, then keeping and growing them by delivering greater value. But before it can satisfy consumers, a company must first understand their needs and wants. Thus, sound marketing requires a careful analysis of consumers. Companies know that they cannot connect profitably all consumers in a given market—at least not all consumers in the same way. There are too many different kinds of consumers with too many different kinds of needs. And some companies are in a better position to serve certain segments of the market. Thus, each company must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments better than its competitors do.

This STP process refers to the three Marketing activities
segmentation, targeting, and positioning.

Segmentation - is the process of classifying customers into groups which share some common characteristics.
Targeting - involves the process of evaluating each segments attractiveness and selecting one or more segments to enter.
Positioning -  is arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the mind of the consumer.


Key benefits of the STP process include:

- Enhancing a company’s competitive position by providing direction and focus for marketing strategies such as targeted advertising, new product development, and brand differentiation. For example, Coca-Cola identified through market research that its Diet Coke brand (also marketed as Coca-Cola Lite) was regarded as ‘girly’ and ‘feminine’ by male consumers. As a direct result the company developed a new product, branded Coke Zero, which is targeted at the health-conscious male segment of the soft drinks market.

- Examining and identifying growth opportunities in the market through the identification of new customers, growth segments, or new product uses. For example Arm & Hammer was able to attract new customers when existing consumers identified new uses for their baking soda. Lucozade also changed the positioning and targeting from its original marketing strategy positioned for sick children and rebranded to target athletes as an energy drink.

- More effective and efficient matching of company resources to targeted market segments promises the greatest return on marketing investment (ROMI). For example, financial institutions like HSBC and Barclays and large retailing multinationals such as Tesco and ASDA, Wal-Mart are utilizing data-informed segmentation strategies to effectively target direct marketing messages and rewards to customers they have classified as offering long-term value to the company, i.e. they are profitable customers.

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