Published April 2002

Add ‘STP’ to advertising
to improve performance

The most common question I get from those with depressed sales is “How can I ‘magically’ improve my advertising?” The answer has less to do with advertising and more to do with positioning.

STP stands for segmenting, targeting and positioning — a niche strategy that often gets overlooked. Advertising without STP is like throwing a dart without a tip — even if you hit the target it won’t stick.

The purpose of STP is to focus your resources by targeting market segments that demonstrate the greatest response sensitivity to your unique selling proposition. It’s a three-step process.

First, segmenting is the function of subdividing the “market pie” into “segment pieces.” The market includes all who consume within the product or service category. Segments are consumer groups that have common characteristics or circumstance.

Apply the 80/20 rule, which suggests a small group of customers generate a large proportion of sales. Query your database to define who your best customers are and what they have in common. A survey can give you even better data.

Profiling your best customers enables you to better identify your best prospects. The prevailing segmentation criteria are demographics (age, gender, ethnicity, education, occupation, income, family unit and residence).

Most companies intuitively do what I call “surface segmenting.” For example, they may classify Snohomish County residents, 25 to 54 with income over $50K as their target. Good start but still a “mass market.” You’ll need to dig deeper to uncover the most profitable “niche market.”

More predictive criterion is behavior, such as user status (frequency of and reason for buying), benefit sought, underlying motive, personality and lifestyle. The Gap targets younger consumers — not by age, by user status — because they buy clothing with the greatest frequency.

The second step is targeting — the process of honing in on the best market segment. After you’ve divided up the pie, rank the pieces based on response sensitivity and profit potential.

Be sure to target expanding (or at least stable) segments. At the same time the market was exploding for PCs, it was evaporating for typewriters. Remain mindful of how innovation and technology change your market.

The third step is positioning. After you’ve determined which segment to target, position yourself (in the mind of those consumers) as the best provider. To do this, develop a unique selling proposition (USP) based on your competencies.

Your USP must have two attributes to communicate an attractive position. It must differentiate your brand from the competition, and the difference (or competency) must be perceived as beneficial by the targeted segment. Ask yourself, what is it I do best that my customers value most.

Visa has the distinction of being accepted in more places than any other credit card. Their slogan, “It’s everywhere you want to be,” effectively communicates that position.

Study your key competitors to determine their vulnerabilities, then survey your best customers to learn about their preferences and perceptions.

The most critical success factor is to incorporate your USP in all of your marketing communications — long term. There’s no magic marketing pill you can take, but I assure you, STP will lead to more profit than Prozac.

Andrew Ballard, President of Marketing Solutions Inc. in Edmonds, develops brand leadership strategies for businesses and teaches strategic marketing through Edmonds Community College. He can be reached at 425-672-7218 or by e-mail to andrew@mktg-solutions.net.

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