A guide to the STP marketing model
In today’s fast-paced and competitive digital environment, businesses need to know how to create more effective marketing strategies and campaigns that convert at higher rates.
Enter the segmentation, targeting, and positioning (STP) marketing model. The STP marketing model can help businesses segment their audience, target their market, and position their product or service in ways that boost conversion. Without it, marketing campaigns would be generic and struggle to convert at a level most companies consider adequate.
In this article, you’ll learn about the STP marketing model, why it’s important, and the steps you can take to use it. You’ll also find some examples, discover best practices, and see how to craft your own STP marketing campaign with confidence.
This post will explain:
- What STP is in marketing
- The importance, purpose, and benefits of STP marketing
- How to use the STP marketing model
- The STEP formula
- Ways to segment your audience
- Ways to target your market
- Ways to position your product
- Examples of STP marketing
- Best practices to create an effective STP marketing strategy
What is STP in marketing?
In marketing, STP is an acronym for segmentation, targeting, and positioning. It’s a three-step formula to help businesses segment their audience, target the right buyers, and position their products to make the biggest impact.
Before the STP model, marketers primarily focused on pushing products without understanding their market or audience. But this approach yielded subpar results for businesses. In search of a better technique, Philip Kotler invented the STP model in 1969, believing this would “be the essence of strategic marketing.”
Today, many marketers follow the STP marketing model to focus less on their products and more on customer needs. This way, marketers can have more empathy for the customer experience and pain points, which often leads to higher conversions.
The importance, purpose, and benefits of STP marketing
The purpose of STP marketing is to put the customer front and center in a company’s marketing strategy. Without segmentation, targeting, and positioning, marketing campaigns would be too generic and uninteresting to consumers. Fortunately, STP provides a solid formula for understanding customers’ pain points and delivering on their expectations.
Brands that follow the STP marketing model realize a range of benefits.
- Hyper-personalized marketing. Brands can’t afford to target every person on the planet. With the STP model, you narrow down who you’re speaking to. The segmentation step ensures businesses separate the different groups in their audience and customize messaging to each group’s needs. That gives you the freedom to write hyper-specific messaging that wouldn’t be possible with a huge, general audience.
- Streamlined marketing mix. Segmenting your audience allows you to focus only on the channels that your audience uses. Instead of spending time and money on channels that don’t convert, the STP model helps businesses streamline their efforts by focusing on the channels that are most likely to generate a return on investment.
- More effective market research and product innovation. When you know your audience, you can create products designed for their problems specifically. The STP model can help you identify the right customers for focus groups and other forms of market research, which can lead to better products that sell.
- Most valuable customers identified. Not everyone will be an ideal customer. If your sales team is tired of chasing down lukewarm leads that don’t convert — or that don’t spend very much — the STP model can improve both the lead quality and customer lifetime value from marketing-generated leads.
- Reduced marketing costs. Targeting a general audience is expensive and time-consuming — and it usually doesn’t lead to many conversions. But with the STP model, businesses can focus on the channels, products, and messaging that work best for their audience. This focus preserves your time and budget while maximizing results.
- Improved marketing data accuracy. Audience segmentation equips you with clean, relevant data about your ideal customers. With quality information on your side, you can make data-driven decisions that move the needle.
- Increased market share. Customers respond positively to hyper-personalized, targeted messaging. Over time, that can help your company carve out a bigger slice of the market and ultimately become a key player in your industry.
How to use the STP marketing model
Brands use the STP marketing model to focus less on their product and more on their audience. While you can use the STP model alongside any marketing strategy, it’s especially helpful for digital marketing.
Audience segmentation, targeting, and positioning are easier in a digital environment, so it’s no wonder many businesses blend the STP marketing model with digital strategies.
You can use the STP marketing model with digital marketing by:
- Split testing your landing pages to see which elements perform better for your target audience
- Using marketing technology to create more granular segments so that you can gather better customer data
- Segmenting your email list into multiple audiences
- Creating hyper-targeted pay-per-click (PPC) ads on social media
- Posting content on the social networks that your audience frequents the most
- Choosing SEO keywords that match your customers’ biggest pain points
- Creating blogs, podcasts, and YouTube videos tailored to your unique audience
The STP marketing model makes digital marketing more effective and data-driven. It allows businesses to leverage the convenience and agility of digital marketing but with the customer-centric approach of the STP model to come out ahead.
The STEP formula
To implement the STP model, businesses follow the STEP formula. The acronym is a misnomer because there is no “E” in this three-step formula — it’s just an easy way to memorize the core steps.
The STEP formula is:
This formula illustrates an important point — your segmentation and targeting will affect your brand positioning. In practice, this means each segment you target will have different positioning. You can expect your messaging and marketing mix to differ based on who you’re speaking to.
Ways to segment your audience
The “S” in STP stands for segmentation. In marketing, segmentation separates a company’s general audience into categories based on shared characteristics.
Segmentation is helpful because it breaks your audience into smaller groups based on specific attributes. Since businesses can’t promote their products to everyone equally, segmentation gives you more clarity on the people who would benefit most from your solutions.
For example, if you’re running marketing at a car dealership, you would create different segments for people who drive sports cars, sedans, and SUVs. A buyer who purchases a sports car differs from a person who drives a family-friendly SUV. Segmenting these audiences allows you to promote a single brand to different types of buyers.
To get started with segmentation:
- Get to know your audience. Solutions like Adobe Audience Manager can help you gather richer customer data at scale. You can add information from your CRM, social media, and ecommerce platform to deepen your understanding of your audience.
- Build profiles. Your segmentation solution can help you look for specific behaviors, attitudes, or demographics in your existing customer data.
- Segment based on these profiles. Once you build out a few common customer profiles, your marketing solution can segment the contact list into separate profiles based on shared customer attributes.
You can segment your audience based on several factors:
- Demographics. Segment customers based on age, career, economic status, or gender.
- Geography. Group customers based on their country, state, or city. You can also segment by urban, suburban, and rural locations.
- Behavior. Use data from past purchases, website visits, reviews, and communication preferences to segment your audience.
- Psychographics. Psychographic factors are harder to quantify, but they include attitudes, lifestyles, and interests.
There are more than four ways to segment your audience — such as by life stage, technographic data, or transactional data — but the four listed here are the most common. You can always follow your own unique framework to segment your audience.
Ways to target your market
The “T” in STP stands for targeting. The goal of targeting is to research the segments you have and determine which are the most likely to convert. While targeting multiple segments at once is tempting, this will spread you too thin. It’s better to identify the best segment for your goals and stick with just one audience for this campaign.
Targeting one segment at a time might sound limiting, but it can help you measure your marketing efforts effectively. By choosing the right segment for the campaign, you’ll see more interest and conversions from your ideal customers.
Don’t worry, though — the right marketing solutions can help you target different segments more quickly, which makes it possible to scale up your digital marketing efforts.
To find the right target audience, evaluate these criteria:
- Size. The segment needs to be large enough that you can generate significant traffic. For example, if there are only 20 contacts in a segment, that’s probably too small.
- Money. You need to see a return on your investment. Double-check that the money spent on this marketing campaign will generate a positive net return.
- Accessibility. How easy is it for you to reach this audience? Ensure there aren’t any legal or technical barriers to targeting this audience.
There are other ways to find your target audience — such as through competitors in the market or the industry’s overall stability — but these are the most common. Feel free to pursue other targeting factors that make sense for your business.
Ways to position your product
The “P” in STP stands for positioning. Positioning refers to how customers view your product.
In the last step of the STP model, you’ll use the insights gained from segmentation and targeting to decide how to communicate your product to your chosen audience. For example, if you realize you’re targeting a cost-conscious audience, you can position your product as a high-value deal.
Many brands create positioning maps to help with this stage of the STP model. A positioning map compares two separate options on a spectrum.
For example, if you work for a kids’ toy company, you could compare natural kids’ toys to synthetic options on one axis and affordable pricing to luxury pricing on the other. Drop your competitors’ solutions onto the graph. Maybe a competitor offers natural kids’ toys at luxury pricing. The goal is to find a gap in positioning that represents an untapped opportunity in the market. Perhaps you’ll find that no one offers affordable, natural kids’ toys.
There are several ways to position your product, but these are the most common factors:
- Symbolic. This factor leans into the status that comes with owning a product. Luxury brands use symbolic positioning to connote feelings of power, prestige, and exclusivity.
- Functional. This type of positioning is all about solving problems. Lean into customers’ pain points and position your product to solve their biggest needs.
- Experiential. What do people feel when they use your product? Brands like Folgers and Hallmark use experiential positioning to play to customers’ emotional connections with their brands.
As always, you can customize your positioning with whichever factors work best for your business.
Examples of STP marketing
There are various types of STP marketing approaches, such as:
- Vertical market. Targeting multiple segments in a single vertical can help you reach smaller segments in your industry. You position a specific product or service to appeal to different segments in a single market.
- Horizontal market: Instead of narrowing in on a single vertical, horizontal marketing focuses on targeting segments across different industries that have shared characteristics. This approach is common with small businesses.
- Product line extensions. If you want to increase your company’s reach, product line extensions help you add new products as a way to find new customers. New products allow you to reach a different segment of the market with solutions tailored to their unique needs.
- Positioning. This type of STP marketing focuses on positioning a single product or service. It highlights customers’ problems and how your solution solves those pain points.
The option your business should choose depends on your goals, marketing capabilities, and competitors.
If you’re curious what STP marketing looks like in real life, these three examples show how brands can scale up with the STP model.
During its infamous tug-of-war with rival brand Coca-Cola in the 1980s, Pepsi used segmentation to go after its ideal audience. It identified three segments in the market:
- Customers who were only loyal to Coke
- Customers who liked Pepsi but still preferred Coke
- Customers who bought from both brands equally
Pepsi focused on the third segment because these consumers were more open-minded. But after Coca-Cola debuted New Coke in 1985 — to the chagrin of many Coke fans — Pepsi stepped in when Coca-Cola’s customer loyalty faltered. Targeting this segment of previously loyal Coke customers led to a 14% increase in Pepsi sales.
Apple mastered STP marketing because it didn’t target the whole world. It went after a segment of well-off people interested in design, performance, and luxury. It marketed itself as a premium brand by leveraging symbolic and experiential positioning.
Apple’s marketing team leaned into innovation and exclusivity to create a high-end technology brand. Even today, Apple users are intensely loyal to what they consider a name-brand tech company.
Unlike Apple, McDonald’s targets middle- and lower-income consumers. With slogans like “I’m Lovin’ It” and “We Love To See You Smile,” McDonald’s positions itself as an accessible, family-friendly option for people who want to pay less for fast food.
As an international brand, McDonald’s leans heavily into segmentation and targeting for product research. For example, it gets to know local cuisine and designs localized menus — featuring items like poutine in Canada — based on its target audience’s taste preferences.
Best practices to create an effective STP marketing strategy
Implementing an STP marketing strategy can help your business gain a stronger foothold in its target market. Follow these practical steps to create a solid marketing strategy using the STP model:
- Define the market. To start, find your total available market, serviceable available market, and serviceable obtainable market. These parameters will break down how many people are in the whole market, which of these people could become your customers, and how many of these people you can reasonably reach.
- Segment your audience. Follow the tips in this article to segment your audience based on location, demographics, behavior, and more. You’ll likely develop several segments at this stage.
- Develop the most attractive segment profiles. Identify which segments are the best fit for your marketing campaign. Evaluate how commercially viable each segment is and go after the most promising option.
- Evaluate the competition. Don’t overlook the threat of competition. Assess how your product or service compares to your rivals. Do research to see what they do better than you and where they fall short. Ensure your solution fills a gap in the market so your audience has a compelling reason to engage with you.
- Create a positioning strategy. Position your solution with symbolic, functional, or experiential positioning. You can also position your business based on pricing, competition, or prestige.
- Determine marketing mix. You’ll work with the 4 Ps of marketing (Product, Price, Place, and Promotion) to finalize your marketing mix. Consider your product features, pricing strategies, available channels, and promotional methods to round out your campaign.
Turn insights into action and put your customers front and center
Knowing the STP marketing model can help businesses create more effective marketing strategies and campaigns that convert at higher levels.
When you’re ready to get started, define your market and segment your audience. From there, you need to choose the best segment for the campaign, evaluate your competitors, position yourself strategically, and determine a marketing mix.
But implementation can be a significant barrier for the STP marketing model, especially for larger businesses. Solutions like Adobe Audience Manager can help.
Audience Manager is a best-in-class data management platform that lets you collect and merge information from practically any source. Build intelligent audience segments that give you a complete view of your customers and experience attribute-based audiences, lookalike modeling, and more to help you take charge of your customer experiences and extend your reach further than before.
To learn more, take the Adobe Audience Manager product tour.