STP marketing is dead. What to do instead?

Lachezar Ivanov
By Lachezar Ivanov | 8 August 2023
Lachezar Ivanov.

If you are not declaring something for dead as a marketing consultant, you are doing things wrong in marketing land. The concerned reader should stop worrying – STP (segmentation, targeting, positioning) marketing is still alive, it is taught in many schools (and in popular online courses) and is practiced by nearly every marketer out there. The problem with this model is that you can not prove (or disprove) its effectiveness without single-source data.

An imaginary non-real-world scenario

The classic STP model, taught by Philip Kotler and others, suggests that marketers should start their strategic efforts by identifying market segments. Market segments result from dividing a heterogeneous market into smaller approachable homogeneous distinct groups. Without differentiating between the goals of brand-building and sales activation (see Binet and Field's "The Long and the Short of It"), STP marketers proceed by choosing which segments to target and which not. In the next step, STP marketers develop different positioning strategies for each selected segment – they adapt the tactical mix for each segment. In the words of Kotler, marketers “develop the right product for each target market and adjust their prices, distribution channels and advertising to reach the target market efficiently”.

For example, consider a category in which you could identify two segments (and name them, which magically makes them exist if you didn’t know; e.g., self-made lifestylers, which I wish made up, but I didn’t). Your job as an STP marketer would be to develop two products, set two different prices (10$ vs. 8$), distribute the products through two different channels (small boutique stores vs. large stores), and advertise them differently (emphasizing durability vs. convenience), maybe in different media (radio ad vs. subway billboard). Now, if you were to apply scientific experimental thinking in analyzing the effects on sales, you would have to run a big experimental design study (consider the many possible combinations of the independent variables, such as price, ad copy, and bought media). Only an experiment can validate your hypotheses for the segments and their consumer behaviors and outline the two best tactical mixes that maximize sales. All other approaches represent circular logic and wishful thinking (way too pervasive nowadays) or are less accurate (I’m talking about modeling).

Attempt no STP marketing without single-source data

The complex experiment I described above would only be possible if you were to use single-source data. These are individual-level data that record over time what advertising a consumer is exposed to (copy, medium, etc.) and the product variant that the consumer buys (also at what price and where). Without such data, you can not experiment and validate your STP hypotheses for the best possible tactical mix, as suggested by Kotler. The problem in the real world is that this is either very hard (expensive) or hardly possible (even in purely digital channels, where you can have some attribution).

Some companies are working on single-source data solutions like GFK in my home market of Germany (who are not paying me to mention them, as far as I know). But the data they provide, while a step in the right direction, are likely limited in their ability to capture every moment a brand reaches a consumer and then successfully link it to buying behavior. One day when all human beings have Neuralink implants in their heads with direct access to all parts of the brain, we will be able to gather the single-source data needed to validate all possible STP hypotheses, but until then we have other options.

What to do instead?

At Firebrand Consultants (shameless plug for my consultancy), first, we acknowledge the importance of differentiating between the goals of brand-building and sales activation (the long and the short). The seminal work by the effectiveness duo Binet and Field implies that brand-building benefits from broad audience targeting. Your positioning is a part of your long-term strategy and needs to be the same for all segments – different segments should not perceive your brand positioning differently. You can position your brand relative to competitors using value-based attributes. For short-term conversions, Binet and Field suggest narrow targeting to meet the needs and preferences of distinct consumer groups with precision. Above, we established the need for single-source data for experimentation and hypotheses testing. For short-term sales activation campaigns, there are two potent avenues where you could use single-source data.

The first is in direct marketing (almost forgotten despite its proven effectiveness) – you can segment the customers in your email list. You can adjust your tactical mix for different segments in a Kotlerian fashion and directly track conversions. Just don’t use the readily available segmentation variables provided to you by the Mailchimps of this world, as these variables might prove to be poor predictors of behavior in your specific category. You should think of and collect data on segmentation variables that are meaningful to your category.

Another option for targeted short-term campaigns is social media. Again, bear in mind that many targeting options might not be great predictors of consumer behavior in your category. What might work across different categories are Facebook’s targeting options for life events (e.g., new job, new relationship) which we find particularly intriguing. Life events can unlock different motive states that can influence consumer preferences, decision-making processes, and behaviors.

In a nutshell, when you do brand-buiding your value-based positioning should be the same for all segments, and when you do sales activation with single-source data (email or social) you can experiment with different targeting options.


Dr Lachezar Ivanov | Marketing Strategy Director at Firebrand Consultants

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