When expanding into foreign markets, businesses need to master the Segmentation – Targeting – Positioning (STP) model, an indispensable marketing method to build strategies methodically and professionally. Each market has unique characteristics and operates differently, requiring businesses to research carefully to apply strategies that suit their business goals. The STP Model is the “backbone” of every marketing plan, playing a key role in helping businesses dominate the market. A clear and effective STP strategy not only increases competitiveness but also opens the door to sustainable success. So What is STP and How to implement it effectively in each stage of the marketing strategy?
Segmentation – Targeting – Positioning strategy
Segmentation (Market Segmentation)
To achieve business success, businesses cannot pursue the entire market but need to segment and select groups of potential customers. This process begins by performing market research (Market Research) to understand the characteristics and needs of different groups. Then, the business conducts market segmentation according to the following criteria: geography, demographics, psychology and consumer behavior.
Market Segmentation in the STP model helps businesses optimize resources, enhance competitive advantage and avoid wasting budget by focusing on specific customer groups with suitable product needs.
For example, in the field of plant-based food business, businesses can group customers based on lifestyle (vegetarian, eat clean) or demographics (age, income).
By combining multiple factors, businesses can develop customized marketing strategies, thereby creating appropriate communication messages and maximizing business efficiency.
Targeting (Target Market)
After segmenting the market, businesses need to choose the target segment that is suitable for their products. This process requires a thorough assessment based on three key criteria: market size (Market Size), relevance (Relevance), and development potential (Potential Growth).
First, businesses must determine the market size and estimate the market share that can be achieved, ensuring the market is large enough to be profitable. Then, it is necessary to consider the degree of relevance between the product and the needs of the target customer. The product must solve well the problems of customers in that segment, thereby increasing the likelihood of success. Finally, businesses need to evaluate the long-term development potential of the market, ensuring this market can expand and bring sustainable benefits.
In addition, businesses need to consider feasibility, i.e. the ability to reach and serve the target segment, and evaluate the competition within that segment to ensure they can capture market share. This process in the STP strategy helps businesses make informed decisions about potential customer segmentation, optimizing marketing strategies and sustainable development.
Positioning (Brand Positioning)
Positioning Strategy (Positioning) is the most important stage in the STP model, determining the long-term existence of the brand in the minds of customers. The main goal of positioning is to create a clear difference for the product compared to competitors, helping the brand dominate the market. Businesses need to identify the USP (Unique Selling Point) – the unique advantage of the product, and develop a strong positioning message to leave an impression in the minds of customers.
Depending on the business environment, businesses can choose one of three main positioning directions:
- Customer-Based Positioning: Emphasis is placed on meeting customer needs and desires, creating value consistent with psychology and shopping habits.
- Resources from competitors (Competitor-Based Positioning): Position the product through comparison with competitors, focusing on strengths that competitors do not have.
Benefits of the STP model in marketing
- Understand customers better:
The STP model helps businesses accurately grasp customers’ needs, desires and consumer behavior. Through the process of market segmentation and identifying target customers, businesses can develop products or services that meet customer needs, thereby increasing customer satisfaction and loyalty.
- Optimize marketing resources and efforts:
Allows businesses to focus on market segments with the highest growth and profit potential. In this way, businesses can allocate resources effectively, save effort and time in marketing activities, and help optimize the customer outreach process.
- Make a difference and compete:
Through determining brand positioning in the STP model, businesses can build a unique brand identity and create more resonance than their competitors. This helps businesses create a strong competitive advantage and occupy a position in customers’ minds, thereby enhancing brand recognition.
- Cost savings:
The STP model helps businesses prevent wasting budget on ineffective segments. By focusing on potential segments, businesses can optimize marketing costs and improve the effectiveness of marketing activities, thereby increasing profits.
- Enhance marketing effectiveness:
Support businesses in creating marketing strategies and messages tailored to each customer segment. This not only helps increase marketing efficiency but also reduces waste, ensuring that every marketing effort achieves the best results.
- Creating value and growing profits:
The STP model helps increase customer loyalty and create value for target customers. By focusing on potential segments, businesses can achieve better business results, increase profits and strengthen relationships with customers.
Plans to improve products when entering Foreign Markets
Current product improvements: Change elements such as packaging, design, uses, ingredients, flavors, colors, volumes and ways of use to meet the needs of new markets.
Providing high-quality products: Businesses can sell their products to foreign companies and at the same time allow branding to be printed according to their requirements, helping to increase market access.
Additional products: Develop complementary products to accompany existing products to enhance customer value.
Exporting old products: Bring existing products to new markets without changing much, taking advantage of what is already available.
Product repositioning: Revisit the product positioning strategy completely to better suit the tastes and consumption habits of local consumers.
Reduced some features: Cut back on some product features to reduce costs or make the product simpler and easier to use.
Acquiring local businesses: Look for opportunities to acquire or partner with businesses in your target market to quickly build reputation and presence.
Change product name: Bringing an existing product to a new market and renaming the product to better suit the local culture and language creates a better impression on customers.
Product Life Cycle
Every product introduced to the market goes through four main stages of development: Introduction, Growth, Maturity, and Decline. Understanding each of these stages will help businesses design a reasonable and effective development strategy.
Phase 1: Product introduction (Introduction)
This phase begins when the product is officially launched. At this time, customers are often not familiar with the product, and businesses cannot assess market acceptance. Revenue during this period is often very low, which can lead to losses for the business. This is the most difficult time, because if you do not pass this stage, the product may not have a chance to develop. The key to success at this stage is the use of Segmentation in the STP model to segment the market and identify target customer groups, thereby building appropriate product positioning messages.
Stage 2: Growth
Once the product has passed the introduction stage, it enters the Growth stage. Here, when customers begin to accept and love the product, businesses will begin to record profits. Demand and product scale increase, and if the product is a pioneer in a new market, the business is likely to hold a leadership position. Using the STP model during this stage allows businesses to optimize marketing efforts, focusing on market segments with the highest potential, thereby expanding market share.
Stage 3: Maturity
The Saturation stage occurs when the product reaches its Sales Peak and growth begins to level off. This is where businesses should consider marketing strategies, including promotions and service improvements, to stay competitive with industry rivals. Choosing a strategic approach from the STP model will help businesses better understand customer needs and desires, thereby adjusting their product positioning strategy accordingly.
Stage 4: Decline
Eventually, every product can enter the Decline stage. Signs of this stage are a decrease in demand from customers, the market is increasingly narrowed, and customers gradually lose interest in the product. Businesses need to implement measures to redevelop or replace products to maintain a competitive position in the market. Deeply exploring market segments through the STP model will help businesses find new opportunities and develop new products, ensuring that they remain responsive to customer needs.
Conclusion
In short, applying the Segmentation – Targeting – Positioning (STP) model in the process of expanding into foreign markets is essential for business success. By segmenting the market, identifying target customer groups and building appropriate positioning strategies, businesses can not only increase competitiveness but also create sustainable value. An effective marketing strategy will help businesses adapt flexibly to market needs, ensuring long-term development and success.
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