What is STP analysis?

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Easy-to-understand explanation of the purpose, method of analysis, notes and examples of STP analysis!

STP analysis is one of the indispensable marketing methods when building a marketing strategy. Introduction to the basics of STP analysis, analytical methods, points to be kept in mind, and successful models in STP analysis.

  • What is STP analysis?
SegmentationSegmentation: Divide the market into groups with similar needs
TargetingObjective: Decide target customers from classified groups
PositionLocation: Clarify your position in the market by differentiating yourself from your competitors

STP analysis is the primary marketing process in. This analytical method is advocated by Philip Kotler, an American business scholar who has a reputation for marketing theory, and has been adopted by many companies. It is named STP Analysis from the acronyms of three words analytical procedure.

Why is STP analysis necessary and what is the purpose of STP analysis?

STP analysis is done with the aim of effectively increasing sales. A product, no matter how good, wont sell unless its recognized by its target audience. Moreover, if the goal is set too broad, the product will not be appreciated.

For example, consumers also choose products with features that stick to their goals, such as rice sourced from … and rice that tastes good even when cold, ideal for lunch boxes , instead of average smooth and tasty rice. STP analysis is an indispensable method to effectively increase sales by targeting and positioning in the market when selling products.

The concept of STP analysis: Segmentation

I will explain the concept of STP analysis in order. The first is Segmentation - segmentation. The point is to capture the needs and attributes of the customer. We will break down based on four metrics.

concept of segmentation stp segmentation analysis
concept of segmentation stp segmentation analysis

Important variables

1. Demographics

The key variables break down markets and customers and analyze what attributes people are using products and services with. The main items are as follows.

  • Age
  • Sex
  • Job
  • Income
  • Family structure
  • Educational level

2. Geography

Geographic variables analyze different needs depending on where the customer lives. For example, the airtightness and insulation required for housing also vary between warm and cold regions. Even when targeting foreign countries, the products and services to be offered will vary from region to region such as Asia, Africa and Europe. Geographic variables include the following:

  • Regions of the world
  • nation
  • climate
  • cultural
  • Religion
  • Level of development
  • Domestic area
  • Conscious
  • Cities
  • Population density

3. Psychology

Psychological variables are items for analysis that focus on human psychology. For example, a working mother who wants to cook in a short time and a housewife who prefers the polite life will be very different in terms of how to buy ingredients. By developing marketing that captures target characteristics and psychology, a more effective approach becomes possible. The main psychological variables are as follows.

  • Lifestyle
  • value
  • Buying Motivation
  • Social class

4. Behavior

By focusing on target behavior and analyzing when, where and when products are sold, you will be able to implement effective marketing measures. For example, high-end shoppers from online ordering will pre-order early in order to get an early discount, but casual buyers will buy at supermarkets just before closing. By having such information, you will be able to drive sales at the optimal time for each product. The main items of behavior variables are as follows.

  • User experience
  • Usage level
  • Purchase Quantity
  • Buying process
  • Benefits at the time of purchase
  • Copyright status

The concept of STP analysis: Targeting

the concept of analytics stp targeting targeting
the concept of analytics stp targeting targeting

Next, establish an actual customer set with Targeting. First, narrow the target from the 3C analysis (customer, competitor, company).

CustomerCustomers: Market size, growth potential and profitability of fragmented customer groups
CompetitorCompetitors: What is the size and number of competitors and their advantages?
CompanyCompany: Does it align with your companys strategy and brand?
3C analysis
3C analysis

The 5R perspective is also important for detailed evaluation of the goal.

Realistic ScaleActual Scale: Is it a Profitable Market?
Rate of GrowthSales Growth Rate: Will it continue to grow in the future?
Rank & Ripple EffectRipple Rating & Effect: Check the priority and see if you can expect sales in neighboring markets?
ReachTouch: Is there a response to the marketing measures?
RivalCompetitors: Number of opponents, do you have an advantage over your opponent?

As a result of the analysis from the point of view of 3C/5R, if you find that the target is not expected to generate a lot of sales, immediately change your goal to another one.

See also:  5 ways to set goals !

The concept of STP analysis: Positioning

concept of stp positioning analysis Positioning
concept of stp positioning analysis Positioning

The last is Positioning - Positioning. Differentiate yourself from your competitors and establish a clear standing, a dominant position.

  • Is it an attractive product?
  • Is it the product that has an edge over the competition?

In this way, it is important to clarify the why of choice.

Notes on performing STP . analysis

What is the STP analysis process? I will explain four points to keep in mind.

1. Understand your competitor’s business model

First, analyze your competitors business model. Competitive analysis is also important to determine which segments are promising in the market and how your product differentiates from the competition.

2. Think from the customer’s point of view

No matter how great a product is, it wont sell unless it meets the needs of the customer. For example, for household use, there are many people who want a cordless vacuum cleaner that is lighter than a large, multi-function vacuum cleaner. With the rise of IT and digital technology, it has become easier to understand behavioral variables such as purchase history and customer response to web advertisements. Leverage your data to understand customer needs.

3. Think of each item separately

Its important to treat elements like segments, goals, and positioning as linked items. For example, for food exports targeted to Southeast Asia, it is advantageous to locate certification. We need to consider the Muslim segment, which accounts for more than half of the population in Malaysia and Indonesia.

4. Remember to review the results of the STP analysis

STP analysis is not this is the correct answer. This is because it is only an analysis and the actual data is available after the marketing measures are taken. If a situation arises where the measures do not work as expected or the customer response is poor, the results of the STP analysis should be reviewed immediately using the research and the data obtained. Regardless of the initial analysis results, perform the STP analysis again and make corrections such as resetting target and target market characteristics.

Two successful companies in STP . analysis

From what perspective have successful companies in STP analysis performed their analysis? Here are two famous cases.

1. Uniqlo

UNIQLO has succeeded in a unique positioning strategy that sets itself apart from other garment manufacturers. In general, clothing does not have age and gender restrictions, but a strategy of selling to a specific person by narrowing the audience such as married / unmarried, with children, work / casual …

However, UNIQLO has implemented a strategy of controlling the production of products according to consumer needs. Take advantage of the SPA business model (*) with consistent execution from product planning to production and sales. Instead of narrowing the target audience, we narrow the products. It was the SPAs unique responsiveness that created the boom. As a result, they have succeeded in gaining a foothold in the market with a wide range of products that specialize in both normal and fundamental trends.
* SPA: Short for a store specializing in retailing private label clothing. A business model for the apparel industry that consistently handles planning, manufacturing, and retailing.

2. Starbucks

Starbucks was the first to capture the need for a third location that was neither home nor work. Starbucks has performed a thorough STP analysis to secure its unique position among many coffee shops and coffee chains.

The market is broken down by segment and the objective analysis establishes a character known as office workers who can afford to work in urban areas and provides high quality and delicious coffee in an urban fashion store. Contrary to the UNIQLO example, Starbucks has succeeded in narrowing its target audience.

See also:  5 steps to form an effective marketing strategy

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