What Is STP Marketing? Real-World Example of STP Marketing

“If you try to please everyone, you don’t really have any differentiation,” says Trinity Mouzon Wofford, CEO and cofounder of superfood company Golde. “You don’t have a point of view, and it’s just not going to capture the attention of a potential customer.”

Trinity knows her matcha and turmeric products aren’t for everyone—and that’s OK. An STP marketing strategy allowed Golde to identify its audience and speak directly to the people most likely to buy its products.

Follow this guide to learn how you can do the same with your business.

What is STP marketing?

Segmenting, targeting, and positioning (STP) is a marketing strategy that helps businesses position products or services to meet the needs of a specific consumer group (or groups). The STP marketing model can help companies increase brand loyalty and boost sales by delivering more personalized and effective marketing messages.

STP elements

The STP model has three steps:

1. Segmentation: Dividing your market into smaller groups of consumers.
2. Targeting: Identifying the most valuable customer segments.
3. Positioning: Repositioning your products or services based on what you learn.

Here’s an overview of each phase of an STP marketing strategy:

1. Segmentation

Customer segmentation is the process of dividing your general audience into smaller consumer groups, or segments. Businesses can choose from multiple segmentation criteria.

A company that sells organic pet food, for example, might segment customers by the type of pet they have, geographic location, income bracket, or a combination of these factors. These segments can help you better understand the actions behind different sets of customers.

Here’s common criteria businesses use to segment target audiences:

• Demographics: Many businesses group customers according to demographic factors like age, gender, or income.
• Geography: Geographic segmentation groups customers by country, state, region, or metropolitan area.
• Psychographics: Psychographic segmentation focuses on personality traits linked to buying decisions, such as risk aversion or a desire to seek out new experiences.
• Behaviors: Behavioral segmentation groups customers based on engagement patterns such as purchase frequency or preferred shopping channels.
• Values: You can also segment an audience based on specific values or beliefs, like political affiliation or commitment to a specific social cause.

Shopify’s built-in segmentation tools let you build segments based on different parameters (for example, locations and customer behavior, like whether they opened an email). It will also automatically segment new customers as they place their orders.

For example, Magnolia Bakery uses Shopify’s segmentation tools to automatically tag customers who order a pie for Thanksgiving. That way, the following Thanksgiving, Magnolia Bakery can use that information to send targeted messages to the customers who previously bought pies.

2. Targeting

Now it’s time to identify the segments worth targeting. This ensures you are directing your marketing efforts where you’re more likely to make a sale. Here’s an overview of the criteria businesses use in the decision-making process:

Size

Attractive segments are large enough to generate meaningful sales figures, though size thresholds vary by business type. A global fashion retailer will target a larger pool of potential customers than a handcrafted silk scarf business, for example.

Eliminate any segments too small to make a meaningful impact on your business.

Profitability

Profitable segments have low customer acquisition costs (CAC) relative to the average customer lifetime value (CLV). In other words, a segment is likely to be profitable if you can afford to reach its members and they’re willing to spend money on your products. Cut any unprofitable segments.

Benefits

STP marketing involves crafting unique messaging for each of your target segments based on the specific benefits your product or service offers each group. If you would target two or more segments with the same benefits, consider merging them.

Accessibility

You should also consider whether you’ll be able to reach these segments. Ensure there are no legal or technical issues that can affect whether you can communicate with these groups.

3. Positioning

The last step in STP marketing is to use information about your chosen segments to develop a product positioning strategy that resonates with your target audiences. This is the stage where you’ll develop messaging for each group.

As Giovanna Alfieri, VP of marketing at feminine care brand The Honey Pot, explains, the data is just a starting point. “It’s about, ‘OK, great, I have this segmentation study. I understand that my customer set is sort of divided against numerous iterations of this segmentation,’” she says on an episode of the Shopify Masters podcast. “But then, start asking questions: Why does this human identify with X buying pattern?”

These are the main positioning models:

• Symbolic positioning: Symbolic positioning supports a customer’s self-image or ego. Luxury brands like Mercedes and Rolex use symbolic positioning to associate their products with high social status.
• Experiential positioning: Experiential positioning focuses on a customer’s interaction with your products, often emphasizing fun or cognitive stimulation. Travel and hospitality companies like Airbnb and Delta Airlines use experiential positioning to encourage an emotional connection with their brands.
• Functional positioning: Functional positioning addresses how a product solves a customer’s problems. Many SaaS (software-as-a-service) companies use this strategy; the task management platform Asana, for example, positions its product as a solution to workflow and process organization challenges.

Benefits of STP marketing

STP marketing gives you more insights into your audience. Here’s how those insights can benefit your business:

Better resource management

Marketing takes many resources. However, when you have a better idea of who your audience is and how they behave, you’ll know what is a better use of your resources, saving you time and money. For example, you’ll be able to spend more time creating campaigns for high-value customers, rather than campaigns for those who don’t read any of your emails.

More aligned products

STP marketing can also help you outside of creating engaging campaigns. What you learn from segmenting your audience and how to position your brand is useful for teams like product development. Knowing your customers’ likes and pain points can help your team create products that suit their needs or better solve their problems.

For superfood and self-care brand Golde, its bestselling Pineapple Debloat Ade is a result of digging into its customer data. “We were seeing in our data that our customer was very concerned with gut health,” cofounder Trinity Mouzon Wofford says. “That was one of the reasons why we ended up launching Debloat, which is now one of our top sellers.”

Stronger campaigns

With more information on your audience, you can create campaigns that are more personalized and focused. For example, a candle store can segment audiences by how frequently they place an order. They can then send coupons for a new product to those who are just about to buy a new candle, addressing their needs before it’s on their radar.

How to create an effective STP marketing strategy

1. Define your market
2. Segment your market
3. Identify segments to target
4. Choose a positioning strategy
5. Develop your marketing mix

The STP process can help you better understand your customers and design more effective marketing campaigns. Here’s how to get started:

1. Define your market

Start by defining your total potential target audience, also known as your target market. One popular approach starts with the TAM model, where the total addressable market (TAM) includes every individual who could potentially become a customer.

From there, look at the service available market (SAM), which represents the total number of people within the market who are a fit for your specific product type or service region. Then you can look at the serviceable obtainable market (SOM), which represents the people you can realistically expect to capture.

You can consult industry resources and review your historical performance to calculate TAM, SAM, and SOM for your business.

2. Segment your market

Next, select audience segmentation criteria and segment your market into customer groups.

Start by considering the factors that influence who needs your products.

You can also conduct a competitive analysis to isolate market gaps, conduct interviews, or use your own customer data in your customer relationship management (CRM) platform for insights into criteria linked to purchasing decisions. Market segmentation tools like Shopify Segmentation can simplify the process.

“You can create segments based on basically any customer data you have in Shopify,” says Desirae Odjick, product marketer at Shopify. “Because you have all of that detail on Shopify already, it’s all accessible and free to use. You can get pretty granular.”

If you notice a difference in conversion rates by browsing habit, geographic region, or income level, for example, you might add these criteria to your list.

Once you’ve selected your criteria, use market research strategies like conducting focus groups or reading industry publications to create audience segments.

3. Identify segments to target

Evaluate your segments for size, profitability, reachability, and benefits, then choose one or more target audience segments. Many businesses also consider differences between segments during this phase.

If your target segments are too similar, you won’t be able to adequately differentiate your positioning and marketing communications for specific segments. Consider combining groups or applying different segmentation criteria to differentiate groups.

4. Choose a positioning strategy

Evaluate product positioning strategies and determine the best approach for your chosen market segment. One way to do this is by creating a product positioning map (or matrix) to visualize your market position relative to your major competitors.

Here’s how to create a product positioning map:

1. Determine two product attributes that your target segment values, such as price and quality.

2. Draw a two-dimensional chart and place each attribute on an axis.

3. Plot where you and your competitors’ products fall on the chart.

4. Look for empty or sparse areas, which represent attribute combinations that no one owns yet (such as high quality plus mid-range price). If you’re able to move into that space, then you can frame your messaging around that position.

Sometimes positioning can be as simple as changing the language you use to describe your product. For De La Calle, a tepache company, it meant changing the description on its cans from “fermented beverage” to “modern Mexican soda.”

“I think describing it as a Mexican soda unlocks a lot of that existing demand from those second- and third-generation Latinos, but also from other ethnic groups as well,” co-founder Alex Matthews says on an episode of Shopify Masters.

5. Develop your marketing mix

The STP marketing process redefines your target customer base and your brand positioning. You’ll have a better idea of who you’re selling to, a narrower target audience, and a new approach to differentiation within your market.

You can use this information to assemble a marketing mix, a framework that helps businesses develop targeted messaging and deploy it within a larger marketing plan. A marketing mix consists of four elements known as the Four Ps of Marketing: product, price, place, and promotion.

Once you’ve tailored your marketing mix, you’ve established the foundation of a solid marketing strategy. You’ll be ready to support message consistency and more equipped to identify the best channels for your digital marketing efforts.

STP marketing examples

Here are a few ways you can use STP marketing, according to two brands:

Golde

Brooklyn-based superfood company Golde successfully used the STP process to refine its positioning. At the beginning, the brand went for more organic marketing strategies to connect with its audience. It wasn’t considering data points or surveys.

“We were really just telling our story,” Trinity says. “As we matured, there was a sense of, OK, Who’s coming to us? Let’s measure that with interviews and data collection. We found that one of the big reasons customers use our products is that they love the ritual. It’s very experiential. There are absolutely customers that use our product because they say, ‘Well, I have this problem and I need this solved,’ but if you look at their feedback they’re also saying ‘It’s just so delicious, and I just love it, and I look forward to it’.”

This information helped the brand shift from just explaining their why to showing how it could be a part of customers’ lives, integrating messages like, “Feel-good blends for your daily ritual.”

LifeStraw

LifeStraw sells water pitchers and filtration systems. It uses elements of STP marketing to build genuine connections with its audience. Through values-based segmentation, it identifies customers who have made a donation and then tailors its marketing message to appeal to them.

“We segment our emails for customers who have contributed,” says Tara Lundy, LifeStraw’s former chief brand officer, on an episode of the Shopify Masters podcast. “We send them a specific email that says, ‘We’re not trying to sell you anything. We just want to update you on what your contribution did in the last few months.’ We found that people really want to know more.”