The Basics of Marketing Principles

The STP process is a great place to start, even before your product or service is marketed.  STP stands for segmentation, targeting and positioning. 

Basically, segmentation is the way in which you recognize your customers.  Start by making a list of every potential customer.  Then, split that list into smaller, more detailed segments.  The best way to use segmentation is by starting out big.  For example, put individuals in a different segment than businesses.  From that point, continue dividing each segment further.  You may want to use demographics such as age, sex, location…etc.  Or, you might consider interests, hobbies or group affiliation.  The main goal is to find commonalities in buying habits between your segmented groups. 

Once you feel that everything has been segmented in just the right way, take time to evaluate each segment.  Try to calculate the size of the segment, the likeliness of obtaining them and how much they overlap from one to another. 

Targeting is the next step in the process.  Here you will make decisions about which segments to pursue.  First, you will need to determine the size of your market.  Will you target a mass market?  Will you target a niche market?  Basically, how large or small will your segment be defined?  Niche markets are the smallest way to go, which means for less competition.

The two main considerations for choosing between market segments are:  recognizing the competition level and knowing the prospective value of the segment.  Everything that you do will be dependent on which segment is chosen.  It is wise to first evaluate where you want your business to go.

The last step in the STP process is positioning.  This will help you to define which method you’ll use to position your product or service.  There is another method to help develop this element:  the 4P’s – Product, Price, Promotion and Place.

It is vital that the focus of your product follows the direction of your selected target.  Find out the needs and wants of the people in your segment.  If you are marketing a product that isn’t new, be confident that it fits well within your target market.

The price you choose for your product or service is a very important element.  There are many factors that must be considered.  You’ll want to think about the meaning behind a price.  If it is too little, some might think that your product is cheap.  Another factor is competition.  It would be foolish to market a similar product at the same price as your competitors, while directed towards the same market.  If you want a little assistance in this area, there are entire books written on the subject.  Also, avoid the cost plus profit margin mentality.  The best way is to evaluate the price independently, while considering competition and value. 

Simply put, promotion is the method in which you will deliver your message about your product or service.  There are many methods to choose from:  Internet, commercials, radio, mass mailings or magazine advertisements.  

The last piece of the 4P method is place, which can also be referred to as marketing channels.  Place is the technique used to bring your product to market.  For example, who will sell your product and where will you sell your product?  Will your method be strictly to the customer, or will you use distributors or retailers?  Will you use the Internet alone to market your product or will there be traditional methods?     

This is a tried and true process that will allow you to organize the plan in your head.  Invest time in identifying your strategies and goals on paper and it may help you to explore other opportunities.