Optimize Your Marketing Strategy with Lead Segmentation for Marketing

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hello and welcome to today's lesson where we're looking at the STP marketing model now a mistake many companies make is to think that anyone can be their customer taking this approach can make it difficult to sell your product or service because none of your prospective customers will feel that your solution is tailored to them and their specific needs in fact there isn't really a product in existence that should target everybody as its customer even a company like coca-cola that operates in over 200 countries and sells well over a billion products a day offers different products to suit different types of people now STP stands for segmenting targeting and positioning and it's a simple framework that can help improve your marketing and what the model says is that to achieve easier sales you should divide your market into groups of customers called segments select the most attractive segment or most attractive segments and then position your product in the marketplace to be the most appealing to that segment let's take a closer look so the first step of the STP process is to segment your market and here you divide your market into groups based on some criteria and there's a number of criteria you can use so first we have a demographic segmentation and that's where you divide your market based on a combination maybe age gender income level education level marital status etc you can divide your market based on geography so sorting your market by country region state or province or even urban or city area you can segment your market in a psychographic way so segmenting people by lifestyle hobbies activities opinions political affiliation entertainment choices or maybe personality traits or attitudes now while demographic information explains who your potential customer is psychographic information tends to explain why they choose to buy another way to segmented people is behaviorally and this breaks down your market by how they use the product so including how the purchase was financed brand loyalty their usage levels key benefits sort or key features used etc now when you divide your market into segments and then focus your marketing on a specific segment driven by the information you've collected you're much more likely to be successful than if you simply created a one-size-fits-all generic marketing campaign so the second step is targeting and this involves deciding which of the segment's you've identified are the most attractive so essentially you're trying to determine the commercial attractiveness of each segment and there's a number of factors you can consider to do this so for example size of the segment and its potential to grow in size in the future profitability of the segment what segments are prepared to pay the most for your product or service or what's going to be the lifetime value of a customer in this segment and finally we have ease of reach you know how difficult is it for you to reach the market with your marketing can your distribution networks easily reach this segment is it going to be really expensive to try and acquire a customer so ultimately it isn't just the size of the segment you should be looking at but it's the overall profitability of each segment so the final step is positioning and here you map out the different variables considered in the previous two steps and position your product differently to your competitors in the minds of your customers you want your product or service to take a unique position in the market and in marketing terms this is called your value proposition now there are three standard ways you can position your product to achieve a competitive advantage so first you have functional positioning and this refers to solving a problem or providing a benefit to your customer second you have a symbolic positioning and this refers to enhancing the self-image ego or belongingness needs of your customer so think about luxury cars they market themselves using symbolic positioning so if luxury car will get you from A to B just like any other car but unlike other cars they fulfill their customers self-esteem and ego needs and the third way of positioning is experiential positioning and this riff to focusing on those elements of your product or brand that connect emotionally with your customers now ideally you want your product or brands to combine all three positioning factors to put it as a competitive advantage to your competitors now one way of drawing your position in the market showing what's important in the mind of your customer is to put together a market map or a market positioning map such as the one you can see here for the car market now this diagram is obviously just a simple example it doesn't show all car manufacturers but what it does allow us to see is that there is perhaps a gap in the market for an economic performance car as there's no other company competing in this space right now so let's look at a little example both of the books you see here are essentially about outsourcing however the book on the right sold more copies than all other outsourcing books combined why do you think that is well to understand the real power of the STP model we can use it to see why the 4-hour workweek was so successful firstly let's look at segmenting targeting and positioning for the book on the left now this book is aimed at everyone it hasn't segmented the market and then targeted a specific segment and because it isn't targeting a segment then it can't be uniquely positioned it's trying to be all things to all people interested in outsourcing now conversely before our workweek has clearly segmented the market and decided to target small business owners and people wanting to start a business it then appealed directly to that market using all three positioning factors and you can see all of these on the cover functional the book gives us a process we can use to escape the nine-to-five symbolic it's fulfilling our ego needs by telling us we can join the new rich and experiential the picture of a business owner in a hammock is deliberate and it connects with us emotionally what busines business owner doesn't want more free time so this example shows you the real power of the STP model enabling you to create a unique product in the minds of your customers so that you can dominate your chosen segment before our work week is essentially a book about outsourcing but positioned in a very unique way so I really hope this example shows you the real power of the model now there are a number of advantages and disadvantages associated with the model so firstly in terms of advantages it allows you to increase sales by defining a precise target market and then positioning products directly at that market it helps you avoid wasting money by advertising to the whole market and it helps you identify gaps in the market now there are also a few disadvantages associated with the model so costs can increase if you have to produce multiple versions of your product or service you will need to create different marketing campaigns and collateral for each segment you target and again that can increase your costs and finally you may need to use different distribution channels to reach different customer segments so in summary the SCP marketing model is a three-step process designed to help you identify your most profitable customers and then tailor your marketing and products to the needs of those customers and the three steps of the model are segments so divide your market into segments target identify the most attractive segments to your organization and finally position or positioning position your product or service to appeal directly to the audience you want to target so that's it from for this lesson I really hope you enjoyed it and I look forward to speaking to you again soon