Continuing with our endeavor to explain the concept of customer personalization based on customer segmentation in marketing, in this post, we will look at the Segmentation, Targeting, Positioning (STP) marketing framework and the role it plays in marketing to both B2C and B2B companies.
STP marketing is at the core of digital marketing. The market is no longer seen as a single entity that requires a generic marketing campaign.
Like each segment of the orange, the three-model STP in business marketing divides the market into specific customer segments to then help a business communicate the benefits of a product or service. After all, no two customers have the exact needs.
Customer preferences drive this model of marketing. By consistently delivering only the most relevant messaging to a targeted group, you can directly influence the shopping decisions of up to 60 percent of your total shoppers, according to past studies.
But using the STP business marketing model for the B2C segment involves a different approach than that for B2B. That's a given. The characteristics of a B2B market differ from those of a B2C market.
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What is STP Marketing?
Let's look at STP marketing. As the formula is so named, the very first step here is to segment or classify your prospects or customers into different categories based on specific criteria and traits. Generally, the four types that are popular with marketers are:
Geographic segmentation, where the audience is based on country, region, state, province, etc.; demographic segmentation, where they are classified as per their age, gender, education, etc.; behavioral segmentation, where the categorization is done on how they react to a situation, their emotions, their shopping style or pattern, and so on.
The T for Targeting in the STP business model stands for a business understanding of which segments are most likely to convert.
Positioning is the last step here. The first two steps should signal to your business how to set your product or service apart from the competition.
All of this should make it easy for your business to identify its niche.
How is the STP Model Different for B2C and B2B?
No doubt, marketing for both B2B and B2C stems from the same root. Then, they branch out. The eventual goal of marketing for both is to achieve targeted messaging and identify the proper communication channels for it.
Having said that, when it comes to segmentation in the B2B category, the audience's statistics are unique. And, complex. What makes it intricate? A B2B product, as compared to its B2B counterpart, is always very complicated.
Here are some other reasons:
- B2B target audiences are smaller than B2C consumers
- B2B solutions are part of a larger process
- B2B clients have specialized needs
- B2B buying cycle is comparatively longer
- B2B decision-making involves not one but many people
- B2B market relies on very different sales strategies
STP marketing model for B2B and B2C
For the reasons mentioned above, segmenting customers for B2B is different from B2C. B2B segmentation can be divided into macro and micro variables.
The former is made of common characteristics that define the entire market. Micro parameters, on the other hand, are based on differences in specific buying characteristics.
In the B2C market, on the other hand, as mentioned earlier in this post, segmentation is mainly along the lines of geography, demography, and so on.
Thus, B2B segmentation represents a far greater challenge than in B2C. Some ways you can do it are:
- Based on company size
- Identify companies that are strategic to the future of your business
- Sending them questionnaires to understand their near, medium, and long-term requirements
- Then, using factor analysis and cluster analysis, your data analysts can determine which attributes best fit each group.
- Ultimately, the idea behind the exercise is to segment customers into groups based on how much total future value they are predicted to bring to your company, to direct each group in a way most likely to maximize that lifetime value
Some of the segmentation tactics that many firms adopt for B2C include:
Customer Interests
At the time of purchase, ask the customer about their interests. This is one way of clubbing customers into one group based on their shared preferences.
If Group A is price-sensitive, send them promotions-related material.
Loyalty Dividends
Customers who often buy from you should be rewarded. The first step, however, is to identify them and then put them together in one cohort.
A starting point could be your business's customers who may have recorded a purchase. There are two categories of repeat customers: those who have bought from your site without much marketing involvement, and those who purchase with one.
So, identify repeat customers who buy from your site because they like the products, like the customer service.
Devices Used
Are your customers using mobiles or desktops to come to your site? If smartphones, then whether Android or iPhone? Put out offers accordingly to each of the groups.
E.g., those using iOS devices can be classified as high-end customers, while those using Blackberries can be segmented as "high value" lients."
Conclusion
While customer segmentation is essential for B2B and B2C marketing, the challenge in B2B is far greater. In the STP marketing framework, understanding which customer in a B2B business is likely to convert is much more difficult than in a B2C business. Segmentation here involves many complexities, but there are ways to overcome the challenge.