🎯 STP Framework — Segmentation, Targeting, Positioning
Definition: STP is the foundational marketing strategy process: divide the market into segments, choose which to serve, and create a compelling position in the minds of your chosen customers.
Developed from: Philip Kotler’s Marketing Management Key courses: Kellogg MKTG 430, HBS Marketing, Wharton MKTG 611
📐 The Three Steps
Step 1: SEGMENTATION
Divide the total market into distinct groups with similar needs.
Segmentation Variables:
| Category | Variables |
|---|---|
| Geographic | Region, city size, climate, density |
| Demographic | Age, income, gender, education, occupation |
| Psychographic | Lifestyle, values, personality, AIO (activities, interests, opinions) |
| Behavioral | Usage rate, loyalty, purchase occasion, benefits sought |
| Firmographic (B2B) | Industry, company size, revenue, geography |
Requirements for effective segmentation (MADS):
- Measurable — segment size and purchasing power quantifiable
- Accessible — reachable through marketing channels
- Differentiable — distinct needs that respond differently to marketing mix
- Substantial — large/profitable enough to be worth targeting
Step 2: TARGETING
Evaluate segments and select which to pursue.
Targeting Strategies:
| Strategy | Description | Example |
|---|---|---|
| Undifferentiated | One offer to whole market | Commodity goods, utilities |
| Differentiated | Different offer per segment | P&G (Tide, Charmin, Gillette) |
| Concentrated (Niche) | Dominate one segment | Rolex (ultra-premium watches) |
| Micromarketing | Hyper-local or 1:1 | Amazon recommendations |
Segment Attractiveness — evaluate with:
- Segment size and growth
- Structural attractiveness (Porter’s Five Forces applied to segment)
- Company objectives and resources
Step 3: POSITIONING
Occupy a distinct, valued place in the target customer’s mind.
Positioning Statement Formula:
“For [TARGET SEGMENT], [BRAND] is the [FRAME OF REFERENCE] that [POINT OF DIFFERENCE] because [REASON TO BELIEVE].”
Example — Volvo:
“For safety-conscious families, Volvo is the premium car brand that provides the greatest protection because of our engineering heritage and crash test performance.”
Perceptual Mapping: Plot your brand versus competitors on two axes that matter to your customer (e.g., Price vs. Quality, Modern vs. Traditional).
📊 Real Example: Nike’s STP
| Step | Nike’s Approach |
|---|---|
| Segmentation | Athletes (serious + aspirational), by sport, by age |
| Targeting | Performance athletes (primary) + aspirational consumers (mass) |
| Positioning | ”If you have a body, you are an athlete” — inclusive peak performance |
| POD | Innovation, athlete endorsements, cultural cachet |
⚠️ Common Mistakes
- Too many segments — leads to unfocused execution
- Targeting too broadly — “everyone” is not a target
- Positioning on what you make, not what customer values — features ≠ benefits
- Not updating segments — markets evolve; positioning must too
- Ignoring competitive response — your target segment attracts competitors too
🎯 When Would I Use This?
- Go-To-Market Plan for a New App: “We cannot target ‘everyone’. We must Segment the market by income, Target college students, and Position ourselves as the affordable luxury alternative.”
- Brand Repositioning: “Our legacy brand is viewed as outdated. We need to shift our Positioning statement to target a younger, hyper-online demographic.”
- Product Line Expansion: “If we launch a premium version of our tool, how do we Segment the user base so it doesn’t cannibalize our cheap tier?”
🔗 Connected Concepts
- 4Ps of Marketing — Positioning informs all four Ps
- Customer Lifetime Value — Key metric in targeting decision
- Brand Equity — Positioning builds brand equity over time
- Jobs to Be Done — Alternative way to define segments
- Porter’s Five Forces — Assess segment attractiveness
← 📣 Marketing MOC | Related: 4Ps of Marketing · Brand Equity · Customer Lifetime Value