The First Step in Segmentation, Targeting, and Positioning (STP)
The Power of Research
When embarking on the marketing journey of segmentation, targeting, and positioning (STP), the first step is pretty much universally agreed upon: research. It’s a foundational phase that sets the stage for everything to come, yet it’s often overlooked in favour of jumping straight into the more dynamic parts of the STP process.
Let’s dive deeper into why research is indispensable and how it shapes the path for effective marketing strategies.
The Marketing Made Clear Podcast
This article features content from the Marketing Made Clear podcast. You can listen along to this episode on Spotify:
Understanding the Model
The generic model of segmentation, targeting, and positioning (STP) is widely adopted in marketing. As discussed in Episode 7 of the Marketing Made Clear podcast, most professionals agree on the core of the STP model; segment the audience, target them, and then position your product or service to meet their needs. But, as highlighted in the podcast, “where things vary is the steps before and after segmenting, targeting, and positioning.”
And that’s where research comes into play.
Before diving headfirst into segmentation, marketers need to contextualise their strategy. It’s all about starting on solid ground; understanding the market, the competition, and even your own business capabilities.
The Role of Research in STP
Research, or as it’s sometimes called, “situation analysis,” is the gateway to successful segmentation. Without it, you’re essentially navigating the market blind. As Philip Kotler, the marketing guru, puts it:
“Research is the starting point for marketing. Without research, a company enters a market like a blind man.”
The story Kotler tells about a Hong Kong shoe manufacturer beautifully illustrates this point:
- The manufacturer sends an order taker to a remote South Pacific island to explore the market for shoes. The order taker reports back: “The people here don’t wear shoes. There’s no market.”
- Unsatisfied, the manufacturer sends a salesman, who responds: “The people here don’t wear shoes. There’s a tremendous market.”
- Finally, a marketer is sent to the island. This professional conducts thorough research, interviews the tribal chief and locals, and reports back with detailed insights, including potential sales volumes, financial forecasts, and ROI projections. The marketer concludes: “This is a viable market with a clear path to profitability.”
This example underscores how research goes beyond surface-level observations. It identifies opportunities, validates assumptions, and aligns marketing efforts with financial and strategic objectives.
What Does Research Achieve?
Research isn’t just about gathering data; it’s about understanding the nuances of your market and audience. Buyers in any market differ in their:
- Needs: What problems are they trying to solve?
- Perceptions: How do they view your product or service?
- Preferences: What features or benefits matter most to them?
For example, when it comes to shoes, consumer requirements range from practicality and comfort to style and affordability. Without understanding these factors, how can you effectively segment your audience or position your product?
Kotler vs Gilligan and Wilson: Two Research Perspectives
In the research phase, perspectives can differ. Kotler’s approach focuses outward, prioritising consumer research to understand the market landscape. In contrast, Gilligan and Wilson advocate for an inward focus, examining the organisation’s current position, capabilities, objectives, and constraints. They describe this phase as a “situation analysis.”
As marketers, it’s not about choosing one approach over the other but rather combining both. A robust research phase should:
- Examine external factors like market trends and consumer behaviours.
- Assess internal factors like your company’s strengths, weaknesses, and strategic goals.
Tools and Techniques for Research
To carry out effective research, marketers can use several tried-and-true models:
- SWOT Analysis: Understand your strengths, weaknesses, opportunities, and threats.
- PESTEL Analysis: Analyse external factors like political, economic, social, technological, environmental, and legal influences.
- Boston Growth-Share Matrix: Evaluate your product portfolio.
- Porter’s Generic Strategies: Assess your competitive position.
- Ansoff’s Matrix: Explore growth opportunities.
- Stakeholder Analysis: Identify and prioritise key stakeholders.
- Kotler’s Pricing Model: Align pricing with market demand and business goals.
By leveraging these tools, marketers can gain a comprehensive understanding of both their market and their organisation, setting the stage for effective segmentation.
Why Research Matters in STP
The research phase of the STP process isn’t just a box-ticking exercise, it’s the foundation upon which successful marketing strategies are built. It helps you:
- Recognise opportunities in the market.
- Avoid costly mistakes by validating assumptions.
- Align marketing efforts with business objectives.
As mentioned in the podcast:
“it’s very well accepted that before you do any form of segmentation, you need some form of research to contextualise the next part of the process.”
After all, how can you segment a market you don’t understand?
Conclusion
The first step of the STP process; research, is where marketing strategies come to life. Whether you call it market research, situation analysis, or simply “the starting point,” it’s a phase that no marketer can afford to skip.
By combining outward-focused consumer research with inward-focused organisational analysis, you can lay the groundwork for effective segmentation, targeting, and positioning. And as Kotler’s shoe example reminds us, careful research isn’t just about gathering data, it’s about uncovering insights that drive strategic decision-making and, ultimately, business success.
Ready to dive into the next step of the STP process?
Make sure your research is rock-solid first. As they say, fail to prepare, prepare to fail.
