SEGMENTATION, TARGETING AND
POSITIONING
To grow
your business, you don’t have to sell to everyone. There are not a lot of
products in the online world that appeal to every single person on Earth.
So,
instead of convincing yourself that everyone can be your customer, you need to
direct your focus towards finding your target market and selling your
products/services there. If you discover the people that are most likely to buy
from you and target the marketing efforts towards them, the sales process will
be a breeze.
Discovering
your customers and targeting them is the concept that stands behind the STP
model of marketing. The acronym stands for the following key parts of the
concept:
Your marketing tactics will be much more
fruitful and efficient if you follow the STP model. By segmenting your target
market, targeting the right customers and properly positioning your
products/services in the marketplace, you can grow your business at a faster
rate.
Of course, there will be other factors that
will influence the success and growth of your company. But the three concepts
above are critical if you want your marketing efforts to be effective within
the marketplace. To help you further comprehend them, let’s have a look at each
of them separately.
Segmentation
As stated at the beginning of this article,
it is a massive mistake if you try to market to every consumer on Earth. What
can benefit your company more is marketing
to individual segments of the marketplace and develop product/services
that would suit those segments.
You need to select the segment in which your
venture will fit in perfectly. The application of segmentation will help you
further develop your competitive knowledge which will have a strong effect on
your newly formed competitive advantage.
There are different ways to segment your
target market.
For example:
·
Demographic – You segment
consumers by personal characteristics such as age, gender, marital status,
ethnicity, education, occupation, etc.
·
Geographic – By country,
region, city, county, etc.
·
Psychographic – Their
personality, values, lifestyle, attitudes, interests, and opinions. Among the
strongest sources that form these factors are families, region, schooling, and
society.
·
Behavioral – How they use
the products? Are they loyal to any product? What benefits are people looking
for from these products?
For example, you have a company that sells
used cars. If you split your customers into more segments, you can also differ
the types of vehicles that you’ll sell to different customers. One segment can
be married couples looking for a family minivan. The other segment can be young
men who want a sports car. Then you have business people with bigger pockets
who want a fully-equipped luxury sedan.
These segments, although similar in scope,
differ in their constructive elements and have a different level of
attractiveness for each target.
When you rationally segment your target
customers you’ll discover more and better sales opportunities. The best market segments satisfy
the following criteria:
·
Group Identity – The best
target groups are similar inside segments and diverse across groups.
·
Methodical Behavior – Segments must
react similarly to a given marketing tactic.
·
Efficiency Potential – Feasibility
and cost of reaching a segment as well as its stability over time depending on
marketplace conditions.
Targeting
After you’re clear about your segments, your
next step should be to aim at each segment that you think will be profitable
for your venture. Targeting is crucial at this point in your STP marketing
process.
What are the market segments that you
consider as your best ROI (Return on Investment? It’s not just a question of
size/quantity, but like we said, it’s all about the profitability, are those
people prepared to pay what you want for your product?
That’s why you need to analyze the size and
the potential growth for each of your segment groups and do a comparison
between each of them. Think thoroughly about how you can serve that section of
the marketplace. Also, you need to look into all the legal, technological and
social hurdles that may stop you from addressing the segment.
For the purpose, it is best to opt for PEST (Political,
Economic, Socio-Cultural, and Technological) Analysis. This type of analysis
will help you rid yourself of every assumption about your target segment and
develop better goals for that section of the market.
For example, you analyze the sales and
profits from your used car company. You determine that from the first segment
you have $1,000,000 in profits. From the second segment, you have $3,000,000 in
profits. And from the third segment, you have $5,000,000 in profits. If you
know that the third segment is big enough and brings you the best ROI, you’ll
focus only on serving that part of the marketplace.
Positioning
The final stage of the STP marketing process
is Positioning.
Here, you need to figure out how you’re going to place your product/service in
front of the target segment that you chose in the previous two phases. You need
to focus on your marketing channels, as well as on the product presentation.
The most important question that you need to
have an answer to is “Why should the consumers buy from me instead of my
competitors?”
To answer that, you need to have your
own unique selling
proposition (USP) – a uniquely positive and extremely
useful trait that your competitors can’t or don’t offer. That should be your
“edge” and the sole reason why the customers will come knocking on your door.
However, finding your competitive edge is not
easy. And when you find it, it’s really difficult to keep it hidden from your
competitors because they will want to emulate and improve it. To find and keep
your USP, you need to follow 3 major principles:
·
Understand What Your Customers Appreciate – Brainstorm
what your customers love about your products or services. Then do the same for
your competitors. Look at every trait that makes people decide which company
they’ll choose. Talk to your sales team and to your customer service team, and most
importantly, talk to your customers so you can figure it out.
·
Rank Every Competitor – After you
learn about what your customers appreciate and value, rank yourself and your
competitors according to that. Base your ranking on data and statistics, don’t
assume anything. Think about the customers’ POV and how they perceive every
product in the segment.
·
Defend Your USP – As a business
owner, you should always be prepared for competitive attacks. Your competitors
will try to neutralize, diminish and emulate what you offer with your USP.
Invest in PR, patents and legislative help to defend your USP once you start to
use it on your customers and establish it.
Think about it, what is it about your
product/service that helps you stand out in the marketplace? Are you more
affordable than your competition? Are you more inclined towards custom
packaging and bargaining? Or do you offer much higher quality than the rest out
there?
Whatever it is, it will decide whether you
win the segment over or not. You need to establish the value that you provide
to your target consumers, and define your:
·
PODs (Points of Reference) – The
characteristics of your product that can’t be found anywhere else.
·
POPs (Points of Parity) – The
attributes that you also share with other brands in the marketplace.
Again, if we take the used car company as an
example, the cars that you sold to the business segment will most likely be
marketed in places where these people hang out online and offline. After you
pick the right places and the right marketing channels, you want your cars to
be marketed as premium vehicles that are sold in mint condition and fully
equipped.
When you’ve positioned yourself properly and
you’ve convinced your target market segment why they should buy from you,
that’s when the STP marketing model has done its job successfully.
Wrapping up
Utilizing the STP marketing model is one of
the most crucial processes that you can undertake to grow your business. With
the STP model, you and your team will be put on a test where you’ll learn
whether you’re capable or not to take your business to the next level. It will
test your ability to research and think creatively about your target market and
marketing approaches.
Working together with your sales and customer
service team to implement the STP marketing system will result in greater
process effectiveness and better product positioning that you can utilize to
win over your marketplace.
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