Author: Assistant Professor Dr. Wuthapong Labjaroen

Chair of the Master of Science Program in Innovative Real Estate Development

Faculty of Architecture and Planning, Thammasat University

Before diving into the details, let's first understand the meaning of each term. In fact, STP is an acronym for three words (in this article, I will discuss only the S, while T and P will be covered in the next article). STP stands for:

S stands for Segmentation or Market Segmentation, which refers to the process of dividing the market (or consumers) into segments. It's important to distinguish this from the term “Market Share”, as these two terms are often confused; they merely switch the order of words but have entirely different meanings. Market segmentation means dividing consumers with similar needs into the same group (Segment), while those with different needs belong to different market segments. In summary, the reason for market segmentation is that consumer needs vary. Therefore, marketers must segment the market, ensuring that consumers within the same segment have similar needs, while those in different segments have different needs.

Figure 1 illustrates an example of market segmentation using demographic criteria and gender as the basis for segmentation, which can be divided into three segments as follows:

Segment 1: Male market

Segment 2: Female market

Segment 3: Third gender market

In this case, marketers view that Segment 1, or the male market, has similar needs. However, if they belong to different market segments, their needs will differ. Consequently, marketing strategies will also vary, as shown in Table 1.

The next point is, once marketers have segmented the market, what do they do next? The answer is to help the business choose which market segment will be its target market or customer group, or “Targeting,” which corresponds to the “T” in STP. Therefore, when a business defines its target customer group, it must first segment the market and then consider its capabilities, expertise, and strengths to determine which market segment it is best suited for. A business can choose as many market segments as it wants as target customers. If it has expertise across all segments, it can target all three segments. However, marketing strategies must differ according to each target customer group. From the examples mentioned, it implies that a business must have a marketing strategy, or what is known as the marketing mix (Marketing Mix) or 4Ps, at least three sets.

At this point, it should be clear why market segmentation is necessary and what it aims to achieve. After defining the target customer group, the business must establish a unique selling proposition (USP) for its products. This is crucial and must differentiate from competitors. For instance, Land and Houses has a USP of selling completed homes before they are sold, with the slogan “If you can’t see it, don’t buy it”. This is because real estate developers often build and sell simultaneously, leaving consumers uncertain about the completed home they are purchasing. They also need to pay (reservation and deposit) to the developer. There is often uncertainty about whether everything discussed and agreed upon is understood or if the finished product will match what was agreed upon. The painful point for home buyers is whether the house will be completed or not. Thus, the company has chosen to sell completed homes, which sets Land and Houses apart from other competitors. This marketing approach is known as product positioning or “Product Positioning,” which corresponds to the “P” in STP. However, many people mistakenly believe that product positioning in real estate refers to the project's location, which is incorrect. The project's location is referred to as Location, not Product Positioning. (This misunderstanding is similar to P: Place, which is part of the marketing mix or 4Ps, where many people often think that P: Place refers to the project's location because they translate the word “Place” as location. The correct meaning of P: Place according to the 4Ps principle refers to the distribution channel or how to get the product to consumers. However, the distribution channels for real estate differ from those of regular products. Real estate is property, so we do not see homes for sale in convenience stores (CVS), department stores, or general retail outlets. Moreover, product positioning must align with the target customer group. For example, if the residential project targets high-end consumers, the product positioning should not focus on cost-effectiveness as a selling point, as high-end customers are more interested in project quality, amenities, community, and environment.

From all that has been discussed, it is evident that STP Marketing must be sequenced, with market segmentation or S coming first, followed by target customer group definition or T, and finally product positioning or P. By this point, readers should have a better understanding of STP Marketing. Once STP Marketing is established, the business can then define its marketing strategies (STP Marketing is not yet a marketing strategy).

Next, I will discuss the levels of market segmentation. Initially, the market was a mass market, meaning producing a single product for all consumers (One Product for All). However, there is no mass market for residential real estate; no real estate developer creates a single type of residential project to sell to everyone or builds a condominium with only one unit type, meaning the same area, the same usable space, and the same room layout for all customers. Such residential projects do not exist in the market. At the same time, customers would likely feel uncomfortable if high-end customers had to reside in the same housing as low-end customers.

After the mass market, we move to micromarketing with four levels:

1. Segmentation involves the business dividing target customer groups and selecting which market segment will be the target group for the project. For example, a developer targeting middle-income customers will use standard materials and decorations in the project.

2. Niche Market is a smaller market segment, making it challenging to sell for volume. This market is often overlooked by larger competitors but holds potential as customers are willing to pay a premium for housing in the same community, such as the LGBTQ group. An example of a residential project targeting the LGBTQ community is the Flower City project, which began in 1994 in Nakhon Ratchasima but was moved to Kanchanaburi due to community opposition. The amenities were specifically designed for the gay community, such as entertainment venues and male massage services. (MGR Online, 2011) The author believes that the Flower City project effectively meets the needs of the gay community but arrived too early, resulting in limited success.

3. Local Marketing is marketing tailored to the local context. For instance, if the project is located in a Central Business District (CBD), residential developments are typically high-rise or condominium projects.

4. One-to-One Marketing, also known as Individual Marketing, Segment of One, or Customization, is a marketing approach that aligns with the individual needs of each customer. Customers in this segment often have to wait for products as they are produced based on their orders. An example of this type of residential marketing includes selling undeveloped land, where customers buy land and build their own homes, or bare shell condominiums that come without any amenities. Buyers of such units must design and decorate everything themselves, but they will have a unit that best meets their needs. However, this comes with a higher price tag because the product is not mass-produced, but owners take pride in the unique luxury of their homes.

This article will conclude here. Future articles will cover the criteria for market segmentation, target customer group definition, and product positioning.

For readers interested in pursuing a master's degree in real estate, the Faculty of Architecture and Planning offers a Master of Science program in Innovative Real Estate Development (MIRED) with 36 credits, taught by qualified faculty members with doctoral degrees and experience in real estate. Classes are held only on Saturdays at the Rangsit campus. For more details, please contact the MIRED Hotline at 08-1549-3333, available 24 hours a day.