1. What is STP?
STP is a model commonly used in Target Marketing – a modern marketing strategy in which businesses focus their marketing efforts on a specific market segment, also known as a target market. The purpose of STP is to assist businesses in planning and developing an effective marketing mix strategy for a specific target audience.
STP is an acronym for 3 words - corresponding to 3 basic stages that businesses must go through when implementing a target marketing strategy:
- Segmentation – Market Segmentation
- Targeting – Selecting the target market
- Positioning – Positioning the market
Simply put, when applying the STP strategy, businesses will divide the overall market into customer segments with different properties and characteristics. After that, businesses select one or a few market segments in which they have a competitive advantage and deploy marketing strategies suitable to the target customer group to build a clear, impressive brand image and consistent across the selected market segment.
2. What role does the STP model play in the marketing strategy of the business?
It can be affirmed that every marketing plan in businesses starts with market research and setting up the STP model. STP plays a fundamental role in helping businesses develop effective marketing campaigns, and is also the core focus of modern marketing methods. The implementation of the STP model has strategic significance for marketing activities of businesses, specifically STP helps businesses:
2.1. Exploiting the market effectively and promoting competitive advantages
The overall market consists of a large number of consumers with different needs, characteristics and purchasing power, and each customer group has unique requirements for products and services. Meanwhile, each business only has strengths in certain aspects, no individual business has the ability to meet all the needs and desires of potential customers. Besides, a business will have to face a lot of competitors with different sizes, different sizes and distinct strengths.
Therefore, in order to conquer market share and create a solid competitive position in the market, enterprises must find their own way by hitting the segments they are capable of serving and satisfying. better customer needs than competitors. The STP plan is the key to help businesses identify the right and win the right set of potential customers to exploit the market and promote their strengths in the most effective way.
2.2. Improve customer loyalty
In fact, 59% of users say that personalizing the customer journey strongly impacts their shopping decisions, and another 44% say that a personalized shopping experience will influence their purchasing decisions. Become a loyal customer of a brand.
It can be seen that the increasing social life has led to changes in consumer lifestyles, needs and tastes. Customers are now less interested in mass products that are widely available in the market, instead they prioritize products and services that can satisfy their own needs and desires and appreciate those quality experience.
The STP in Marketing represents the shift from product-focused marketing to customer-focused marketing. This shift gives businesses the opportunity to better understand their target customers and develop appropriate approaches. In short, the more personalized and targeted marketing efforts are, the easier it is for businesses to conquer the market.
2.3. Marketing budget optimization
With a marketing method that covers the entire market, there will be segments that do not bring efficiency and real value to businesses because the customer file does not have high demand, does not match consumer tastes, ... waste of budget and resources.
Meanwhile, with the STP strategy, businesses only pursue segments with high potential and high ROI. Therefore, the budget and resources for Marketing activities will be optimized and bring outstanding efficiency.
3. Analyze the elements in the STP Marketing model
3.1. Segmentation – Market Segmentation
a. What is Segmentation in STP?
Segmentation – Market segmentation is the work of dividing the overall market into distinct sub-segments. Customers in the same market segment will have the same needs, wants, purchasing power, buying behavior, etc or have similar responses to the same marketing stimulus. Based on these characteristics, businesses will conduct research and develop appropriate marketing campaigns for each customer segment.
b. Market segmentation criteria
Enterprises will conduct segmentation based on specific criteria of the market. The 2 most popular target customer markets of businesses are the institutional market and the consumer market (corresponding to 2 business models B2B and B2C). With institutional customers and individual customers, it is necessary to conduct market segmentation based on different criteria.
c. Requirements of market segmentation
To ensure the efficiency and clarity of the segmentation process, each market segment needs to meet the following 5 requirements:
Measurable: Segmentation needs quantitative factors that can be measured in terms of size, purchasing power, and other characteristics that determine segment size.
Feasibility: The business must have the ability and resources to reach, attract and satisfy potential customers in the market segment.
Have a large enough scale: The capacity of the market must be large enough for the business to be profitable and generate positive cash flow (revenue > costs) when mining.
Distinguishable: The most important factor to pay attention to when segmenting a market is that the established market segments must have a distinct, easily identifiable and distinguishable point from each other in order to develop marketing strategies separately for each paragraph.
3.2. Targeting – Selecting the target market
a. What is Targeting in STP?
After market segmentation has been performed, businesses will evaluate and select one or a few most potential market segments to focus marketing efforts on to achieve business goals. This process is called Targeting.
b. Base on selecting target market
To select its target market, businesses need to evaluate the attractiveness of market segments and select the most suitable segment based on comparing the results obtained. The bases used to define the market include:
- Size and growth of the market: Shows the profitability of the market, the criteria used are: sales, profit, demand fluctuations, etc.
- The attractiveness of the market structure: The characteristics of the 5 competitive forces in the market will determine the attractiveness of the profitability of that market segment, these 5 factors include:
+ Barriers to market entry
+ Pressure from customers
+ Pressure from suppliers
+ The threat of substitutes
Competition among competitors in the industry
Objectives and capabilities of the enterprise: An attractive market segment needs to meet the exploitation needs in the long term, and at the same time be suitable with the exploitation capacity of the enterprise (human resources, technology, finance, marketing, etc…).
3.3. Positioning – Positioning the market
a. What is Positioning in STP?
Positioning – Market positioning is when businesses focus their marketing efforts to build a distinct image of their products and brands and leave a strong impression in the minds of target customers. In the positioning phase, businesses need to decide what to promote to both differentiate themselves from the competition and have a great impact on the target customers.
b. Requirements on market positioning
A good positioning strategy should meet the following criteria:
- Mark specific images of products and brands in the minds of customers
- Clearly define the position of the business in the target market (usually emphasized in pioneering, leading, unique, ...)
- Building a difference for products, brands in terms of images, services, designs, etc. In particular, the difference needs to be unique and not easily copied.
- Your products and services provide superior value compared to competitors.
c. Make a positioning map
Positioning map is a coordinate system used to describe the position of a business compared to competitors in the market. Each position on the map will represent an element of the product/brand that the business must create in the minds of customers, and also indicate which competitors the business will have to compete with to conquer customers row.
Through the article on Vietnam Manpower, I have given readers useful knowledge about what STP is as well as sharing strategies for applying STP in effective Marketing.
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