stp marketing case study examples

The Complete Guide to STP Marketing: Segmentation, Targeting & Positioning

Published: Sep 30, 2020

Updated: 28/09/2022

What is STP marketing and what role does it play in boosting conversions and revenue? We look at the Segmentation, Targeting, Positioning framework illustrated by real-life examples.

Segmentation targeting positioning marketing is a core concept in modern-day marketing. Without it, marketing campaigns would be generic, have little to no personalization, and overall would not be able to convert at a level most businesses would deem effective.

Let’s delve into the intricacies of the STP Model and see how implementing this framework into your eCommerce business can yield amazing results.

Table of Contents: 1. What is STP marketing 2. The STEP formula 3. Benefits of STP marketing 4. STP marketing example: The Cola Wars 5. How to build an STP marketing strategy

What is STP marketing?

STP marketing  is an acronym for  Segmentation ,  Targeting , and  Positioning  – a three-step model that examines your products or services as well as the way you communicate their benefits to specific customer segments.

In a nutshell, the STP marketing model means you  segment your market , target select customer segments with marketing campaigns tailored to their preferences, and adjust your positioning according to their desires and expectations.

STP marketing is effective because it focuses on breaking your customer base into smaller groups, allowing you to develop very specific marketing strategies to  reach and engage each target audience . 

In fact,  59% of customers say  that  personalization influences their shopping decision  and another 44% said that a personalized shopping experience would influence them to become repeat customers of a brand.

STP marketing represents a shift from product-focused marketing to  customer-focused marketing . This shift gives businesses a chance to gain a better understanding of  who  their ideal customers are and  how  to reach them. In short, the more personalized and targeted your marketing efforts, the more successful you will be.

The STEP Formula

If you are looking for a simple way to remember and summarize the STP marketing concept, the acronym STEP is extremely useful:

Segmentation + Targeting Equals Positioning

This formula clearly illustrates that each segment requires tailored positioning and marketing mix to ensure its success. Let’s take a closer look at each of the three steps in the STP marketing model.

Segmentation

The first step of the STP marketing model is the segmentation stage. The main goal here is to  create various customer segments based on specific criteria  and traits that you choose. The four main types of  audience segmentation  include:

• Geographic segmentation : Diving your audience based on country, region, state, province, etc.
• Demographic segmentation : Dividing your audience based on age, gender, education level, occupation, gender, etc.
• Behavioral segmentation : Dividing your audience based on how they interact with your business: What they buy, how often they buy, what they browse, etc.
• Psychographic segmentation : Dividing your audience based on “who” your potential customer is: Lifestyle, hobbies, activities, opinions, etc.

Step two of the STP marketing model is targeting. Your main goal here is to look at the segments you have created before and  determine which of those segments are most likely to generate desired conversions  (depending on your marketing campaign, those can range from product sales to  micro conversions  like email signups).

Your ideal segment is one that is actively growing, has high profitability, and has a low cost of acquisition:

• Size : Consider how large your segment is as well as its future growth potential.
• Profitability : Consider which of your segments are willing to spend the most money on your product or service. Determine the lifetime value of customers in each segment and compare.
• Reachability : Consider how easy or difficult it will be for you to reach each segment with your marketing efforts. Consider customer acquisition costs (CACs) for each segment. Higher CAC means lower profitability. 

There are limitless factors to consider when selecting an audience to target – we’ll get into a few more later on – so be sure that everything you consider fits with your target customer and their needs.

Positioning

The final step in this framework is positioning, which allows you to  set your product or services apart from the competition  in the minds of your target audience. There are a lot of businesses that do something similar to you, so you need to find what it is that makes you stand out. 

All the different factors that you considered in the first two steps should have made it easy for you to identify your niche. There are three positioning factors that can help you gain a competitive edge:

• Symbolic positioning : Enhance the self-image, belongingness, or even ego of your customers. The luxury car industry is a great example of this – they serve the same purpose as any other car but they also boost their customer’s self-esteem and image.
• Functional positioning : Solve your customer’s problem and provide them with genuine benefits.
• Experiential positioning : Focus on the emotional connection that your customers have with your product, service, or brand.  

The most successful product positioning is a combination of all three factors. One way to visualize this is by creating a perceptual map for your industry . Focus on what is important for your customers and see where you and your competitors land on the map.

Benefits of STP marketing

If you aren’t already convinced that STP marketing is going to revolutionize your business, we’re breaking down the key benefits that STP marketing has over a traditional marketing approach.

Because STP focuses on creating a precise target audience and positioning your products/services in a way that is most likely to appeal to that audience, your  marketing becomes hyper-personalized . With  personalization :

• Your brand messaging becomes more personal and empathetic because you have your customer personas and know exactly whom you’re talking to;
• Your marketing mix becomes more crystalized and yields higher return on investment because you’re no longer wasting budget on channels that your audience simply ignores;
• Your market research and product innovation become more effective because you know exactly whom to ask for advice and feedback in the development phase.

Yieldify’s recent research shows that eCommerce leaders are adopting personalization at an unprecedented rate – 74% of eCommerce sites now claim to have now adopted some level of personalization strategy . Their reasons?

Fifty-eight percent found that personalization helps increase customer retention, 55% cited conversion and 45% found that personalization actually helped minimize the cost of new customer acquisition . 

Finally, STP marketing levels the playing field. The framework allows small businesses and startups to find success in their niche markets when they normally wouldn’t have the reach to compete with the larger whole-market businesses in their industry.

STP marketing examples: The Cola Wars

STP marketing has been around for a long time – and it has been effective for just as long. We’re going to take a look at a real-world example of STP marketing so you can see how it has worked historically in increasing conversions and revenue.

Back in the 1980s, when Pepsi-Cola was trying to claim some of the market share from Coca-Cola, Pepsi used segmentation to target certain key audiences. They focused on an attitude and loyalty segmentation approach and divided the market into three consumer segments:

• Consumers with a positive attitude to the Coke brand who were 100% loyal to Coke.
• Consumers with a positive attitude to the Pepsi brand who were 100% loyal to Coke.
• Consumers with a positive attitude to both brands, with loyalty to both, who switched their purchases between both brands.

Pepsi had always focused their marketing efforts on the third segment , as it was the most attractive and had the highest return on investment. Focusing on customers loyal to Coke was considered a waste of time and money, as they were unlikely to change their purchasing habits.

However, that all changed with the launch of New Coke in 1985…

The new iteration of Americas’ favorite beverage missed the spot with a lot of loyal consumers, so Pepsi swopped in. In fact, as Mental Floss points out , “Coke’s headquarters received upwards of 1,500 calls a day, up from the usual 400, with virtually all of them complaining about the change.”

Sensing the change in consumer sentiment, Pepsi began targeting loyal Coke drinkers. The rival brand also refocused its positioning – Pepsi started drumming up the fact that Coca-Cola, supposedly, changed its classic Coke with New Coke to resemble more the taste of Pepsi. Their marketing campaigns were brutal (well, in today’s terms at least):

That same year, Pepsi announced  a 14% spike in overall product sales . Pepsi was able to use STP marketing strategies to increase their market share and convert Cola-loyal customers to Pepsi-lovers.

How to create an STP marketing strategy: The full STP model

We covered the three stages of the STP marketing model, looked at the benefits and examples of this approach. While this provides you with an excellent overview of the concept, we want to get into the detail of creating an STP marketing strategy that serves your business.

Below you will find 7 steps to creating a solid marketing strategy using the full STP model.

1. Define the market

The global market is far too big and far too vast for anyone – even the biggest corporation with the most resources – to address. That’s why it’s important to break it down into smaller chunks and clearly define the part you are going after.

Typically, to evaluate your business opportunity, you will need to define your TAM, SAM, and SOM: Total Available Market , Serviceable Available Market , and Serviceable Obtainable Market .

Think of it as an iceberg. The very top peeking from under the water is your SOM – that’s the portion of the market that you can effectively reach.

SAM is is the portion of the total available market that fits your product or service offering. Whereas TAM is the total available market , in other words, “the overall revenue opportunity that is available to a product or service if 100% market share was achieved.”

For example, back when Airbnb was starting to pitch investors, they used the TAM, SAM, SOM model to explain their business potential. Their total available market (TAM) then was valued at $1.9 billion dollars and included any type of accommodation that travelers were booking worldwide.

Because their service offering was targeted more at the budget travelers who were using online booking engines to find their stay. In this case, the SAM was valued at $532 million dollars. Lastly, their SOM came in at $10.6 million dollars and signified the revenue obtainable for Airbnb.

Similarly with a consumer product, we can look at Diet Coke and say that its TAM would include the total beverage market. Its SAM would narrow it down to soft drinks, and SOM would zero in on the carbonated sugar-free drinkers out there.

There are several routes you can choose when defining a market. You can do so by:

• Industry classification (agriculture, retail, transportation, etc.
• Product category ( apparel , health and beauty , food and beverage, etc.)
• Country (United States, United Kingdom, etc.)

2. Create audience segments

Now that you’ve adequately defined your target market, it’s time to segment it using geographical, demographic, behavioral, and psychographic variables. 

Each segmentation variable helps you tap into a different aspect of your audience and when you use them in unison you can create niche segments that really make an impact on your overall marketing effort.

For example, if you split your serviceable obtainable market into men vs women (demographic variables) you are still left with a pretty broad audience segment. However, if you start layering other segmentation variables on top, you can create a precise audience that you can make the biggest impact on.

Perhaps you go after women (demographics) in the United States (geographics) who prefer to spend money on luxury products (psychographics) who follow you on social media or have visited your website in the past (behavior).

As you can see, this layering method creates a hyper-focused audience segment that allows you to create an extremely personalized experience. And as we mentioned before, personalization has a huge impact on the success of your marketing efforts.

3. Construct segment profiles

When you’ve landed on your viable market segments, it’s time to develop segment profiles. Segment profiles are very similar to your ideal customer personas but they act as subsets of your main persona – they are detailed descriptions of the people in each segment . 

Describe their needs, behaviors, demographics, brand preferences, shopping traits, marital status, and any other characteristics. Each profile should be as detailed as possible to give you and your business a good understanding of the potential customers within each segment. This will allow you to compare segments for strategy purposes.

4. Evaluate the commercial attractiveness of each segment

Cross-referencing your findings with available market data and consumer research will help you assess which of your constructed segments can bring in the biggest return on your investment. Consider factors like segment size, growth rates, price sensitivity, and brand loyalty. 

With this information, you will be able to evaluate the overall attractiveness of each segment in terms of dollar value.

5. Select target audience/s

Now that you have detailed information on all of your segments, you need to spend some time deciding which ones are the most viable to use as your target audiences. You’ll need to take into account your overall business strategy, the attractiveness of the segment, and the competition that exists in that segment.

The best way to determine the most viable segment is by performing cluster analysis . Quite a complex and technical topic on its own ( check out this guide to get more insights), clustering in the context of eCommerce segmentation means using mathematical models to identify groups of customers that are more similar to one another than those in other groups.

Your ideal audience segment is one that is both large and still growing, and you are able to reach with your marketing efforts. You’ll also want a segment that aligns with your business strategy – it makes no sense to focus your efforts on a segment of men in Australia if you are phasing out your menswear and don’t offer free shipping to Australia. 

6. Develop a positioning strategy

Next, you need to develop a positioning strategy that will give you the best edge to compete in the selected target audience. Determine how to effectively position your product, taking into account other competitors – focus on how your positioning can win the largest amount of the market share.

There are several positioning strategy paths you can follow:

• Category-based positioning – This calls for determining how are your products or services better than the existing solutions on the market.
• Consumer-based positioning – This calls for aligning your product/service offering with the target audience’s behavioral parameters.
• Competitor-based positioning – This is a pretty straightforward approach that calls to prove you are better than competitor X.
• Benefit-based positioning – This calls for proving the benefits that customers will get from purchasing your product or service.
• Price-based positioning – This calls for distinguishing based on the value for the money people get when purchasing your product/service.
• Attribute-based positioning – Competitors, price, and benefits aside, this calls for zeroing in on a unique selling proposition that makes your product or service stands out from the rest.
• Prestige-based positioning – This calls for proving that your products supply a certain boost in status to those who purchase.
• Product Positioning Map – The product positioning map is a technique where the business uses visual display to show their products against competitors. This allows for an easy way of navigating and understanding which products are being represented in comparison with others, ultimately helping them make decisions about what should be prioritized or modified based on company needs.

Chose what positioning model makes the most sense based on your previous research, and which would allow you to reach your specific segment.

7. Choose your marketing mix

The last and final step in this long and winding process is to actually implement your strategy. For that, you will need to determine a marketing mix that will support your positioning and help you reach the target audience(s) that you’ve chosen.

A marketing mix consists of the so-called 4 Ps: Product, Price, Place, and Promotion . The 4Ps are one of the essential marketing models.

Lets breakdown what the 4Ps include:

• Product takes into consideration factors like variety, quality, design, branding, features, packaging, services, availability, and convenience.
• Price takes into consideration factors like pricing strategy, list price, penetration price, premium, discounting, payment methods, credit terms, and payment period. Are your target audience segments price sensitive?
• Place takes into consideration factors like channels, coverage, location, inventory, logistics, and trade channels.
• Promotion takes into consideration factors like digital marketing, public relations, social media, sponsorship, influencer marketing , content marketing , product placement, sales promotion and marketing communications. How will you communicate your value proposition to your target audience segments?

A carefully-curated marketing mix will ensure business success. However, if you do leave gaps in it, all the precious work you did at the previous stages might go to waste.

Here’s an example to illustrate a poor mix: Let’s say you want to sell a luxury skincare product to women in their 40s.

Your goal is to position it as a high-end addition to their skincare routine that targets concerns related to mature and aging skin. So you invest in print marketing and get your product featured in a couple of popular women’s magazines that skew towards the 30+ audience. You also make sure to price the product accordingly so it indicates the luxury category.

However, your packaging is cheap and poorly designed, while the product itself is sold in drugstores.

This inconsistency, which isn’t aligned with the overall positioning strategy, will prevent you from reaching your target audience in the first place; those who get reached will experience dissatisfaction resulting in negative word-of-mouth , which will eventually make your sales slumber.

Conclusion 

Using the (segmentation targeting and positioning) STP model, businesses can identify their most valuable customer segments and create products and marketing communications that target those customers. This helps you create engaging, personalized marketing campaigns that convert visitors to customers at a high rate. 

If you want to use clever segmentation and behavioral targeting methods in your eCommerce marketing strategy, get in touch with Yieldify and we’ll be happy to help!

STP marketing FAQ

STP marketing (Segmentation Targeting, and Positioning) is a three-step marketing framework. With the STP process, you segment your market, target your customers, and position your offering to each segment.

The most classic example of STP marketing is the Cola Wars of the 1980s. Both Pepsi and Coca-Cola used STP marketing to increase their market shares after the introduction of New Coke.

The three main steps within STP are: Segmenting your market (segmentation), identifying your target market (Targeting) and deciding on how you will position your brand (positioning)

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STP Marketing Analysis: Segmentation, Targeting, Positioning

Oct 9, 2022 - By Camilla Mackeviciute

STP marketing is the cornerstone of modern digital advertising.

Many marketers, however, do it somewhat intuitively or by acquiring the skills through practice. Yet, to use STP full form in marketing and to take advantage of the approach completely, the theory needs to be understood.

In this article, we’ll go through what STP stands for, how it’s used in the real world by well-known brands, and the theoretical strategy of the approach. By the end of the article, you’ll know everything that you need in order to make STP marketing effective.

What is STP Marketing?

STP marketing is actually really easy to define and explain – STP stands for “segmentation, targeting, and positioning” . In simpler terms, the STP process combines three separate marketing approaches into one model. In practical application, STP marketing means creating market segmentation, targeting the selected segments, and adjusting product or service positions accordingly.

The importance of STP marketing cannot be overstated. It brings with it numerous advantages. For example, 91% of consumers are likelier to buy from brands that provide personalized and relevant offers. Additionally, 80% of frequent shoppers only buy from brands that personalize the experience.

In a nutshell, STP marketing is the way to make the above preferences of consumers work in your favor instead of against them.

Segmentation Targeting and Positioning Strategy

Segmentation.

We have gone through segmentation in previous blog posts quite extensively. We will, however, give you a quick rundown on segmentation as it’s the first step in STP marketing.

Segmentation is the assignment of characteristics to your entire customer base and separating them into several different audiences based on data acquired. There are four types of customer segmentation that are used frequently:

• Geographic segmentation : Based on location, country, state, region, etc.
• Demographic segmentation : Based on age, gender, occupation, etc.
• Behavioral segmentation : Based on why, how, and how frequently users interact with your website, apps, or store.
• Psychographic segmentation : Based on factors such as lifestyle, habits, hobbies, activities, etc.

Of course, more than four segments can be created, but the ones outlined above are the most frequent ones. They are then used to decide what type of advertising and what kind of products or STP customer service would be most enticing to those segments.

One of the best ways to segment and target your audience is to use email marketing. It’s fast, easy and affordable.

Also read: Email List Building: 13 Email List Building Strategies

When you have created four or more segments, it’s time to find the most valuable ones. Usually, if you’ve been in the business for some time, finding the most profitable ones will be intuitive.

You can, however, take a different approach and use data to support targeting. Certain data points can help you find the ideal segment:

• Size : Larger segments with more growth potential are always better.
• Profitability : It may be a little hard to calculate profitability, but taking customer lifetime value (CLV) into account and other data is a good way to predict segment profitability.
• Reachability : As a corollary to profitability, reachability is another important data point. Usually, customer acquisition cost (CAC) hedged against profitability metrics is a great way to conclude.

While there are more data points to consider, combining size, growth, profitability, and reachability will let you arrive at simple but powerful conclusions. Targeting can be made even more accurate, but resource cost rises in tandem. For many businesses, the three data points above will be enough.

Also read: What is Targeted Marketing? Definition, Strategies & Examples

Positioning

Once the other two steps are completed, a natural question arises – how to best position the product or service? The goal of positioning is to connect with the audience on a personal level and , possibly more importantly, set yourself apart from the competition.

Before getting onto the three important factors of positioning, it’s important to note the communication part. Every positioning is done through some content that should resonate with the audience. Using buyer persona or, at the least, analyzing the reasons and feedback provided by customers will let you craft more enticing communication.

When only positioning is taken into account, however, there are three important factors to be considered:

• Symbolic positioning : Also known as lifestyle positioning. You can figure out symbolic positioning by asking what kind of image is being projected. A great example of powerful symbolic positioning were the “Marlboro man” commercial used several decades ago.
• Functional positioning : What particular problems your products or services solve and how they make their lives easier.
• Experiential positioning : What experience and emotions your products and service provided to customers.

Again, there are more positioning factors that could be taken into account; however, in most cases, the work would be superfluous. 

One of the best ways to support your understanding of positioning is to write out your own ideas about the “why, what, how” of your products and services. Then collect all the feedback provided by customers that match at least one of the factors. Such a segmentation targeting and positioning example grants you the ability to gain a more objective outlook on how your products and services are positioned.

STP Examples and Cases Studies

The STP approach has been used by many global brands to achieve success. While each company has used the STP framework differently, all have gained some measure of benefit from it. We’ve narrowed down STP marketing examples and case studies for several famous brands so that you can better take advantage of the strategy.

Apple Market STP

Apple Inc.’s segmentation, targeting, and positioning can seem quite counterintuitive when compared to how successful the company has been.

While they target a segment that appreciates design, quality, and performance, which creates a very wide audience, they also market themselves well-off individuals.

As you may well know, Apple products are considered premium and expensive. They primarily target those who can pay extra for small optimizations in performance or minor tweaks in design choices. Additionally, they reinforce the idea of paying extra by removing certain features such as headphone jacks from new products.

However, positioning their product as a premium, high-performance, and slick product, allows them to get the attention of those with the highest amount of buying power. Essentially, Apple focuses on lifestyle segmentation the most, since their products are the epitome of “paying for the brand name”.

Within the segment, Apple seems to focus on business professionals, audiophiles, designers, and teenagers. While the last one may seem odd, they are an audience that is extremely susceptible to “premium lifestyle” marketing, making targeting naturally effective.

STP Analysis of Nike

Nike is another giant that has successfully used STP marketing to its advantage. However, their approach has been slightly different from Apple’s.

They have approached an audience that consists of teens and young adults that have a focus on athletics. Additionally, they have a more extensive psychographic variable by attempting to capture high-achievers through inspiration and motivation.

As such, you’ll often see Nike appearing in nearly all sports, numerous ads with famous athletes, and supporting products (e.g. Nike’s training club or running app). However, they attempt to position their product as something available to all by making it seem that athletics can be done by anyone.

Amazon uses the broadest available segmentation of target market. In fact, in many cases, there isn’t that much targeting and segmentation involved as they try to reach all demographics, geographics, and psychographics of consumers.

However, they do position themselves in a subtle manner. Their method is called anticipatory positioning as they attempt to introduce products right as demand begins to appear. A great example of such positioning has been Amazon Web Services. As said in their 2018 annual report : 

“We must invent on their behalf. We have to tap into our own inner imagination about what’s possible. AWS itself – as a whole – is an example. No one asked for AWS. No one. Turns out the world was in fact ready and hungry for an offering like AWS but didn’t know it.”

Thus, a significant part of their positioning strategy is anticipating demand before everyone else. In other cases, Amazon might start developing its own products that beat the competition (Kindle is one example).

Coca-Cola Segmentation Targeting Positioning Analysis

Coca-Cola is another company that has a sort of ubiquitous product. Of course, it can hardly be the case otherwise, as it’s the largest beverage company in the world. Again, its targeting and segmentation is so wide there’s barely anything to speak of.

Their product positioning, however, is something to talk about. Primarily, they try to position their drinks as something that brings happiness and well-being. As such, you should have noticed a wide array of advertisements involving families, friendships, and holidays.

In fact, Coca-Cola has such a strong connection to Christmas that its designers are often credited for solidifying the color of Santa Claus’ suit (original incarnations of the symbol used tan). Even if this story isn’t true, Coca-Cola has positioned its products so well that they have become intertwined with Christmas – a celebration of family and happiness.

McDonald’s STP Model

McDonalds primarily targets low to middle-income segments. It’s definitely not a premium brand, but it is accessible. As such, it can target a wide variety of low to middle-income people.

Additionally, the products are nearly always adjusted for specific geographic locations. Menus in India are very different from the ones in France. These differences are not due to logistics. Mcdonald’s investigates cultural preferences in each country before developing a menu in order to match the target audience better.

Similarly to Coca-Cola, Mcdonald’s position itself as something that brings joy to families. In fact, Ronald McDonald, the mascot, replaced their previous symbol because the clown figure was a lot more popular with children.

Start Refining STP Marketing Model Now

STP marketing has led many companies to run significantly more effective campaigns. There’s no good reason why any business, especially a digital one, would avoid using STP. With all the data available nowadays, the process is much easier than before, but nets the same great benefits.

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STP Marketing Strategy: Comprehensive Guide

Hyper-personalise marketing communications and boost audience engagement with the segmentation, targeting, and positioning (STP) model. Know all about in this STP guide.

Salesforce India

Share article, introduction to stp (segmentation, targeting, positioning).

There’s a common saying in the business world, “If you try to be everything to everyone, you’ll end up becoming nothing to anyone.” Far too often, businesses fall into the trap of positioning their product(s) as something that ‘everyone’ benefits from. Their rationale is this: if they cast their net wide enough, they’re bound to catch enough customers soon. This approach is flawed in two ways-

• The company’s resources – budget and employees – get spread too thinly in chasing far-flung customer segments.
• It leads to brand dilution, where the company’s ‘real’ target customers stop seeing value in the brand.

Think about it: you build a product or many products to solve a specific problem. Not all 7.9 billion people in the world would have that problem. Even if your product is something as essential as a toothbrush, it has to stand out from the existing toothbrushes in the market in some way to bring in sales.

Say, from the media and your conversations with friends you notice that an increasingly large number of people are moving towards sustainable living. You strike up this idea of creating toothbrushes out of bamboo shoots.

At the very outset, you plan to target all the toothbrush users by positioning your product as an environmental-friendly alternative to plastic brushes. This strategy is going to create a negligible impact, almost like a drop in the ocean.

This is because 85% of your audience doesn’t care for sustainable living. While you could still go after them by creating awareness, you need to first educate them on the adverse effects of using plastic on the environment. Tell them how your product addresses the issue, and finally, how it benefits the customer individually.

This is a long-drawn process that can strain your time and budget while giving minimal returns. You’d fare better targeting the other 15% – people who are already looking for sustainable alternatives. They’re already aware of ‘why’ they need your product, so you can go ahead and directly pitch it to them.

By skipping the motions, you save on resources and use them where they are needed the most. Also, since your target’s needs are aligned with your product offering, the customer acquisition cost is low.

The above scenario is an apt use case for the segmentation, targeting, and positioning model of marketing. Now that we have some context, let’s dive deeper into what the segmentation, targeting, and positioning (STP) model is.

What Is STP marketing?

Segmentation, targeting, and positioning (STP) is a marketing model that redefines whom you market your products to, and how. It makes your marketing communications more focused, relevant, and personalised for your customers.

In short, STP is a marketing approach where you segment your audience, target the best-fit audience segments for your product, and position your product to capture your target segment effectively.

The STEP Formula

The easiest way to remember the STP model is through the STEP formula, which is

Segmentation + Targeting = Positioning

A closer look at this formula tells us that the product positioning for each target segment is different. This forms the essence of the STP (Segmentation, Targeting, and Positioning) marketing model.

Let’s take a closer look at each of these parts of segmentation, targeting and positioning.

Segmentation: Identifying Your Market

When you start creating a GTM strategy for your product, you have an idea of who your audience is. You can target the entire group that fits the broad definition of your audience, but chances are a generic message may fail to resonate with a huge chunk of that group.

Segmenting the audience into smaller groups based on specific attributes gives you better clarity on who benefits the most out of your product and how. With this clarity, you can make your messages more focused and relevant to target groups.

While you can segment your audience using any criteria that best suits your business, the below criteria are commonly used:

How do you get started with segmentation?

To perform audience segmentation, you first need to know about your audience. Solutions such as Salesforce CDP (Customer Data Platform) allow you to unify data from across touchpoints – like sales, service, marketing – and use Artificial Intelligence (AI) to mine richer audience insights from it. You can enrich this with first-party data from other platforms like social media, websites, customer forums, etc. This helps marketers build a single, comprehensive view of all audiences using a central, user-friendly interface. With an accurate population count and AI-enabled features, you can create highly targeted and customised audience segments.

Segmentation gets you better results even when you’re nurturing your existing subscribers. Using tools like Salesforce’s Email Studio , you can segment your current subscribers’ list based on their profiles and send targeted email campaigns, improving your open and click rates. Segmenting your existing customer base also helps you make an informed guess about your larger audience. By extrapolating current customer data, you can identify potential audience segments and build your marketing strategy around them.

Segmentation with an example

Suppose your product is plant-based milk. Your general audience is people who want to move away from dairy-based products. You can segment this audience into two categories:

Segment A: people who are looking at dairy-free alternatives for lifestyle purposes, typically high-income groups.

Segment B: lactose-intolerant people looking for other options.

The message you use for these two segments is obviously going to be different from each other. Using tools like Data Studio, you can further segment the above two segments into groups that already use a competitor product and those that don’t. You can then hone your messaging according to it.

Targeting: Reaching the Right Audience

The next step in the STP model is targeting. This is the stage where you decide which segments you created during the segmentation phase are worth pursuing. You should ideally consider the below criteria to choose your targetable segments:

Size: Your audience segments must have enough potential customers to be worth marketing to. If your segments are too small, you may not get enough conversions to justify your marketing efforts.

Difference: There should be a measurable difference between any two segments. The lack of it leads to unnecessary duplication of efforts.

Reachability: The segments should be accessible to your sales and marketing teams and not be marred by technical or legal complications.

Profitability: The segment should have a low-to-medium customer acquisition cost (CAC) while bringing in high returns, i.e., the audience must be willing to spend money on your product.

Benefits: Different benefits attract different segments. In our plant-based milk example, Segment A would go for cruelty-free while Segment B for dairy-free.

Knowing which audience segments to target comes from having all-around visibility of those segments in one place. This makes comparing segments and weighing the pros and cons of targeting some segments over others easier.

In our example of plant-based milk, you’ve determined through research that veganism is all the rage, and roughly 60% of the people are searching for dairy-free alternatives. You also discover that approximately 80% of the people in your chosen demographic are lactose intolerant. Though the audience size is more significant in the second segment, you’re likely to get more returns when you go after the first segment as it consists of high-income groups who are ready to pay a premium for quality lifestyle-changing products.

Salesforce CDP helps unify such audience and customer data from multiple sources to get more comprehensive insights. With more data and insights, segmenting and targeting your audiences becomes much more precise and granular. Then, you can translate all of this data into action by using a tool like Journey Builder to create highly personalised and relevant journeys throughout customer lifecycles.

Positioning : Differentiating Your Brand

The final stage of the STP model, positioning, is where you use the insights gained from segmentation and targeting to decide how you’re going to communicate your product to chosen audience segments.

While segmentation and targeting are about customers, positioning is about your product from the customer’s perspective. You can consider positioning as the bridge that connects your product with the audience. This is the stage where you perform competitor analysis, figure out your value proposition, and communicate that to your customers.

Based on what your brand stands for, you can position your product in several ways. If you’re in the luxury market, you can appeal to the ‘desire for prestige’ among customers by positioning yourself as a status symbol. Or, if you fall in the budget category, you could differentiate yourself by offering more benefits to your target at a lower cost than your competitors.

The best way to approach positioning is by drawing a Product Positioning Map that has two key market attributes as its axes and plotting your competitors and you in it. This will give you a clear picture of how you stack up against your competition and where you should place your product to maximise profits.

How to make STP marketing actually work

Now that you’ve narrowed down your market, sharpened your segments, and have an attack plan, all that’s left to do is craft and deliver your message. This is where a core concept – personalisation – comes in. Looking back, the entire segmentation, targeting, and postioning model is geared towards making marketing personalised for customers, so your message and the channels through which you communicate it should reflect that.

Luckily, some solutions help you meet customers where they are and drive personalised, 1-to-1 engagement with them.

Salesforce Marketing Cloud offers a product suite that enables marketers to hyper-personalise every interaction across channels. Here’s how:

• Salesforce CDP allows you to unify all your customer data and build finer audience segmentation for better targeting
• With Email Studio , you can segment your subscribers using drag-and-drop, and deliver 1-1 marketing messages
• Social Studio lets you listen to customer conversations about your brand on social channels and engage and support customers on their preferred channels
• Using Advertising Studio , you can launch paid digital advertising to create 1-1 customer experiences
• Interaction Studio allows you to manage all your marketing interactions in real time so you can offer a personalised experience across touchpoints
• Journey Builder enables you to create personalised experiences at every touchpoint and stage of the customer lifecycle
• You can drive higher RoI by using Datorama ‘s analytics and reporting features
• With Pardot , you can build greater sales and marketing alignment to perform personalised, automated marketing at scale
• Manage all your mobile messaging efforts using Mobile Studio
• Delight and engage your best customers with Loyalty Management
• Combine the power of Salesforce and Google by integrating Google Analytics 360 into Marketing Cloud

Benefits of STP marketing

Improved engagement : Because you’re targeting precise audience segments with personalised messages, your audience finds you relevant and is more likely to engage and convert.

Reduced marketing costs : Since you’re going after only those segments with a high potential return on investment, you’re no longer wasting your budget on channels and segments that don’t work.

More robust product : Because you know precisely whom you’re pitching your product to, you can make improvements based on feedback from that audience segment, fostering focused product innovation.

STP case studies

Apple has nailed the STP model. It positions itself as a lifestyle, targeting those audience segments with a keen design aesthetic, who want to stand out from the crowd, and are well-off. Apple follows a “closed” software ecosystem with an emphasis on security. In doing so, it creates an aura of exclusivity that makes people feel privileged to own Apple products. Apple’s STP model works so well that the brand name has become synonymous with expensive, high-performance, luxury gadgets.

McDonald’s

McDonald’s name evokes images of a family with kids enjoying a ‘happy meal’ of burgers, fries, and Coke. McDonald’s target audience is low to middle-income segments, and it positions itself as an accessible, budget-friendly brand, consciously staying away from the luxury fine-dining market. You can find a McDonald’s on almost every street, which is a sign of its accessibility.

Apart from segmenting its audience by their income, McDonald’s also does geographic segmentation quite well. It customises its menu for each country based on cultural preferences, making it more appealing to its target audience segments.

Godrej Group

Godrej Group is a very popular and trusted Indian company that is serving customers across product categories – from household goods to real estate. Every Indian household is aware of Godrej’s products like furniture and locks. But to engage and make aware customers of other product categories as well, Godrej has adopted social listening as a tactic to identify what their target audiences are talking and reading about. They are using audiences’ content consumption patterns to shape their content marketing strategies in a manner that deliver maximum engagement and awareness.

Coca-Cola is one brand that has the entire world as its market. But it also has cut-throat competition in the form of another brand, Pepsi. To gain a competitive edge over Pepsi, it introduced new variants such as Diet Coke and Coke Zero to target niche, health-conscious audience segments. It also brought in more flavoured variants to target the younger, experiential population.

Beyond segmentation and targeting, Coca-Cola positions itself as a drink that brings families and friends together. This is evident from its advertisements, which typically feature get-togethers, festivals, and celebrations in which Coke plays an integral role.

How to create an STP model for your business: Implementation strategy

We’ve covered the basics of the STP marketing model with benefits and examples. Now, it’s time to get down to the brass tacks; that is, see how you can implement a segmentation, targeting, and positioning model for your business step-by-step.

Step 1: Define your market

The world may be your market, but breaking it down into manageable segments is how you conquer it. To know the market segment in which you can hit the bullseye, you start by defining your Total Available Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM). Let’s look at what each of these is:

Total Available Market (TAM) : TAM is the total market demand for a product or service. In other words, it’s the biggest available market for the brand. TAM is the maximum revenue that a business can generate if it achieves 100% of its market share.

Serviceable Available Market (SAM) : SAM is a subset of TAM, that is, a portion of the total available market that fits your product or service. You can define SAM by geographical or product specialisation constraints.

Serviceable Obtainable Market (SOM) : SOM is a subset of SAM, that is, the segment of the serviceable available market that you can realistically reach after considering factors like product differentiation, budget, and competition.

In the case of Coca Cola, its TAM is the entire beverage market, while its SAM would be soft drinks. Its SOM is the market that Pepsi does not capture. For Diet Coke, the SOM would be health-conscious, sugar-free drinkers.

Step 2: Create audience segments

Now that you know your market definition, you can segment the audience within that definition.

You can segment the audience based on geography, demography, behaviour, or psychography, but ideally, a mix of all four can help you achieve clearly differentiated segments. The more segmentation layers or variables you add, the more delineated your segments would be.

For example, suppose you’re selling a luxury makeup product. In that case, you can target high-income working women (demographics) in India (geography), who follow makeup handles on social media (behaviour) and are willing to spend money on premium makeup products (psychography).

This kind of repeated layering and segmentation creates focused audience groups that you can target with hyper-personalised messages. Research by McKinsey found that companies that excel at personalisation generate 40% more revenue from those activities than average players.

Step 3: Identify the more attractive segments

Have all the segments data in one place and evaluate the attractiveness of each segment. You can use metrics like return on investment, segment size, and growth potential in your evaluation. Again, solutions like Salesforce Data Studio and CDP help gather data and get comprehensive visibility into different audience segments, improving segmentation.

Step 4: Evaluate your competition

With your audience segmentation sorted, it’s now time to look at your product and determine how it stacks up against your competition. Prepare a table that lists down all of your product capabilities and your competition’s, do a SWOT analysis, identify gaps, and figure out the most viable entry point into your desired customer segment.

Step 5: Fix your positioning

The groundwork on segmentation and targeting is now out of your way, so you can focus on positioning your product to grab the lion’s share of the market. You can follow any one or a mix of the following positioning strategies:

• Competitor-based positioning : where you show in what aspects better than your competitor.
• Consumer-based positioning : how well your product aligns with consumer needs.
• Price-based positioning : how you’re competitively priced and give customers more value for their money
• Benefit-based positioning : how your customers benefit from buying your product, either individually or over your competition.
• Attribute-based positioning : what your unique selling point or value proposition is, above and beyond benefits and price.
• Prestige-based positioning : how customers get a status boost from buying your product.

Step 6: Determine your marketing mix

The final step of the segmentation, targeting, and positioning model is to choose your ‘marketing mix’ that helps reinforce your positioning. The marketing mix consists of four Ps – Product, Price, Placement, and Promotions.

Product represents factors like quality, benefits, features, design, services, support, availability, and edge over the competition.

Price reflects what customers are willing to pay for the product. It covers list price, discounts, payment methods, etc. Pricing your product much lower than your competitor might fetch you immediate benefits but will be detrimental to revenue in the long run.

Placement covers “where” your product is available. It includes ecommerce, physical stores, inventory, logistics, trade channels, etc.

Promotion takes into account “how” your product reaches your customer. It covers marketing campaigns, advertising, public relations, sales promotions, word of mouth, influencer marketing, and so on.

STP model is a scientific, tried-and-tested marketing approach that helps businesses identify segments where they can indeed provide value, personalise their marketing communications, and reap sizeable profits.

If you want to get started on your segmentation, targeting, and positioning journey, you could give solutions like the Salesforce Marketing Cloud a try. The products inside Marketing Cloud provide you deep insights about your audience, help you identify the most viable segments, and hyper-personalise communications across channels, leading to 1-1 customer connect.

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In today’s modern marketing, Segmentation, Targeting, Positioning or STP marketing is a standard strategic practice. Marketing leaders claim it to be one of the most efficient and streamlined communications practices.

The STP marketing strategy focuses on selecting the most valuable segments for a business and then creating a marketing mix and product positioning strategy for each segment.

In this comprehensive guide, we delve into each aspect of the STP in marketing, providing clarity and actionable insights for businesses aiming to optimise their market approach.

What is STP in Marketing?

STP in Marketing stands for Segmentation, Targeting and Positioning. As said earlier, once you identify your market and group them into look-alike audiences with similar and shared interests and values, you can position your products according to their needs. You tend to effectively communicate with those particular groups using the benefits that those groups of people are looking for.

What is the STP Marketing Model?

The STP of marketing is a hyperfocused method to communicate and position your products before the right audience. Once you identify and categorise your audience based on similar interests, outlook, and other specific factors, you can tailor your marketing messages towards each group in a more relatable and effective way. Likewise, you can appeal to different types of audiences more powerfully.

During the market segmentation phase, first, identify a basis for segmenting your target customers. You also need to determine important characteristics to differentiate each market segment.

Next, during the targeting and positioning strategy phases, we must evaluate the commercial value of each segment. Then, we can design an elaborate product positioning for each customer segment. This includes a tailored marketing mix based on your knowledge of that segment.

1. Segmentation: Dissecting the Market

Segmentation is the initial and crucial step in the STP marketing process. It involves dividing a broad market into smaller, more defined groups.

One thing to remember is that the positioning and messaging for each segment should highlight the value your customers can draw and are currently missing out on. This proves to be more effective rather than relying on a one-size-fits-all marketing approach, as in the words of Seth Godin,

“When you speak to everyone, you speak to no one“

Let’s take a look at the different bases for segmenting your audience. Segmentation must be specific to truly understand the persona to make the next process effective.

Types of Audience Segmentation in B2B and B2C STP Marketing :

• Demographic Segmentation

The B2C STP marketing involves dividing the market based on demographic factors like age, gender, income, education, ethnicity, marital status, household, profession, type of residence, etc. Moreover, for the B2B business, the first step of the STP marketing process involves company size, industry, location, revenue, etc. These information bites help the business understand different industries and their needs for better communication.

• Firmographic Segmentation

Firmographic segmentation emphasises the distinct attributes of a business. This includes the number of employees, purchasing power, organisational structure, and budget conditions. The firmographic information helps a B2B company understand the decision-making process within an organisation. It further helps in creating personalised communication and messages for key stakeholders.

• Geographic Segmentation

Here, you tend to divide the market based on geographic boundaries such as country, region, or city. Geographic data helps businesses understand cultural nuances, regulatory variations, and localised demands. This enables you to tailor your marketing efforts accordingly.

• Psychographic Segmentation

This segmentation is mostly for B2C as it focuses on lifestyle, values, attitudes, and interests. A luxury car brand, for instance, might target consumers valuing prestige and status. It enables you to group people with similar values to appeal to them through communication that sticks to them.

• Behavioural Segmentation

In B2C, the segmentation happens based on consumer behaviour, like usage rate, loyalty, benefits sought and reactions to marketing aspects. A software company might segment its market into regular, occasional, and first-time users.

In B2B, behavioural segmentation groups customers based on their actions, preferences, and interactions with the business. You can also acquire this information from website interactions, purchase history, email engagement, and content consumption. Understanding each segment helps businesses design personalised marketing strategies and cultivate long-term relationships.

2. Targeting: Pinpointing the Ideal Audience

After segmenting the market, the next step is targeting. This involves selecting the segment(s) that the business will focus on. Here’s a list that tells you the things you need to assess the commercial value of each segment.

• Segment Size: The market you are targeting must be of a substantial size to justify the segmented group sizes. If the market size itself is small, the segmenting may get smaller.
• Difference between Segments: Each audience group you created in the earlier step, must have a reasonable difference(s).
• Money: The projected profits must be higher than the cost of all the marketing plans and efforts.
• Different values/benefits for different groups: To communicate your product value effectively, you must identify the values that each segment looks for. Likewise, you can showcase those benefits and increase chances for monetary conversion.

3. Product Positioning: Establishing Market Standing

Positioning involves crafting a distinct image of your brand in the customer’s mind. In this step, you can use the insights that you acquired from the previous two steps: segmentation and targeting. Those insights will help you understand how to communicate your product value to your audience groups. One example is that if you are planning to sell to a price-conscious segment, your positioning must focus on highlighting the product as a high-value lifestyle item.

Multiple brands tend to find gaps in the market using a positioning map. Such a map helps you compare two different variations on a spectrum.

The purpose of this map is to find a gap in the market positioning that would show an uncharted opportunity that you can leverage and position your product likewise with less competition in that space. In this dummy example above, perhaps, you’ll find that no one offers economical big family cars.

Here are a few common aspects that help you position your product:

• Symbolic Aspect: This factor focuses on the impression or status that comes along with owning a particular product. For example, luxury and premium brands smartly use this symbolic aspect to signify the essence of exclusivity, power and prestige.
• Functional Aspect: The functional factor is mostly regarding solving problems or discomfort that your audience is currently facing. This is all about finding your customers’ pain points and positioning your product to resolve their biggest issues.
• Experiential Aspect. This focuses on your audience’s feelings whenever they use your product. Brands like Hallmark employ experiential positioning to appeal to customers’ emotional connections with their brands.

These are the three common factors that will help you in your positioning. However, you can customise it to match your business requirements.

STP Marketing Examples: 3 Brands That Use STP Marketing

The STP marketing model is thus an effective process to communicate to your audience about your product’s value. Due to the hyperfocused messaging and targeting of the STP marketing model, the chances of monetary conversion increase. However, to understand this concept in action, here are certain STP marketing examples of brands that use this technique of effective communication.

1. Starbucks : Starbucks targets high-income big spenders in the busy urban region, technology adopters, health-conscious professionals, and drivers of change. Likewise, by segmenting the coffee market and targeting higher-income, convenience-seeking customers, Starbucks positioned itself as a premium coffee brand, different from traditional coffee shops.

2. Nike : Nike targets athletes and fitness enthusiasts, positioning itself as a provider of innovative, high-quality sportswear. Nike targets middle-aged consumers with high disposable income and develops its relationship with younger audiences to ensure future growth. This also helps them build life-long brand enthusiasts. Moreover, the brand also taps into the youth demographic, noted as the favourite footwear and apparel brand for teens in 2019 in the US .

3. Apple: Apple dominated STP marketing as it had a highly specific segment and didn’t target the whole world. The brand taps into a segment that includes high-income and well-off people who care about details like design, performance, and luxury. Apple simultaneously marketed itself as a high-end premium brand using symbolic and experiential positioning.

Understanding the Role of Pricing in STP Marketing

Pricing methods are crucial for drawing in customers from various groups. When setting prices for your products or services, think about what each group likes. Some people might look for cheaper options, while others might prefer high-quality things. Do some research to find out how much people are willing to spend on products like yours. This way, you can set prices that match what people expect and are competitive.

As the market gets complex, pricing is becoming a more powerful factor to drive profit margins. Hence, a growing need for a strong Artificial Intelligence-powered pricing tool can help you automate your pricing process and also offer uniform discounts to your channel partners leaving healthy profits for each channel. You can research into whether you Should Invest in Pricing Software or Not .

Download Whitepaper: The Ultimate Guide to the Perfect Pricing Software

1. Segmentation and Price Sensitivity:

In the segmentation phase, understanding the price sensitivity of different market segments is crucial. Different groups may have varying levels of price sensitivity. For example, luxury buyers might be less price-sensitive compared to value-driven consumers. Pricing strategies need to reflect these differences to cater effectively to each segment.

2. Targeting with Price as a Key Differentiator:

When targeting specific segments, pricing can be a decisive factor. For businesses, choosing a target segment often involves assessing which groups are most profitable, and pricing strategies play a significant role in this assessment. For instance, targeting premium segments might involve setting higher prices to reflect the perceived value and exclusivity of the product.

3. Positioning Through Pricing Strategies:

Pricing is a powerful tool in positioning your product or service in the market. A high price point can position a product as premium or luxury, while competitive pricing can position it as an affordable, value-for-money option. The price must align with the overall brand image and the expectations of the targeted segment.

Download Whitepaper: A Comprehensive Guide to Pricing for Pricing Managers

Practical Pricing Applications in STP Marketing

Here are some practical pricing tips for your STP marketing strategy:

• Dynamic Pricing Strategies:

Dynamic pricing , where prices change based on demand, competition, or other factors, can be highly effective in STP marketing. For instance, a software company may use the dynamic pricing solution to attract small businesses with more affordable options while offering premium features at higher prices to larger corporations.

• Psychological Pricing:

Psychological pricing techniques, such as charm pricing (e.g., $9.99 instead of $10), can be particularly effective in more price-sensitive segments, making products appear more affordable.

• Tiered Pricing Models:

Offering multiple pricing tiers can cater to different segments simultaneously. For example, a basic, standard, and premium pricing tier can appeal to budget-conscious consumers, the general market, and luxury-seekers, respectively.

• Price Promotions and Discounts:

Strategic use of discounts and promotions can attract specific segments. For instance, seasonal discounts can target budget-conscious shoppers, while exclusive offers can attract premium segment customers looking for unique deals.

In STP marketing, pricing isn’t just about setting a cost for products or services; it's a strategic tool that interacts intricately with each stage of the STP framework. Effective use of pricing in segmentation, targeting, and positioning can significantly enhance market penetration, customer satisfaction, and profitability. Businesses must carefully analyze their market segments to develop pricing strategies that align with their overall STP marketing objectives.

Download Whitepaper: An in-depth study of the Top 10 Smart Pricing Platforms for 2024

Best Practices for STP Marketing: How to Create an Effective STP Marketing Strategy?

Using an STP marketing strategy can make your business more successful in its target market. Here’s how to do it with the STP marketing model:

1. Understand Your Market: First, figure out the total size of your market, how much of it you can serve, and how much you can actually reach. This helps you know the number of potential customers.

2. Divide Your Audience: Use the advice in this article to split your audience into groups based on where they live, their age and lifestyle, how they behave, and other factors. You'll end up with different groups at this point.

3. Choose the Best Groups: Find out which groups fit your marketing plans best. See which groups are most likely to bring in money and focus on them.

4. Check Out Your Competitors: Don’t forget about your competitors. Compare what you offer to what they do. Look into what they do well and where they don’t. Make sure what you offer is something the market needs and gives people a good reason to choose you.

5. Decide How to Position Your Product: Decide how you want people to see your product or service. This could be based on its symbol, how it works, the experience it gives, its price, how it's different from competitors, or its status.

6. Plan Your Marketing Mix: Use the 4 Ps of marketing - Product, Price, Place, and Promotion - to complete your marketing plan. Think about what your product does, how much it costs, where you can sell it, and how you will promote it."

The STP model is more than a marketing framework; it's a strategic approach to understanding and serving the market effectively. By meticulously segmenting the market, accurately targeting consumer groups, and positioning the brand uniquely, businesses can achieve a competitive edge, enhanced market relevance, and improved customer engagement.

Do you want a free demo to try how SYMSON can help your business with margin improvement or pricing management? Do you want to learn more? Schedule a call with a consultant and book a 20 minute brainstorm session!

HAVE A QUESTION?

Frequently asked questions.

STP in marketing stands for Segmentation, Targeting, and Positioning.

STP of marketing is a strategy framework that involves dividing a broad market (Segmentation), focusing on specific groups within that market (Targeting), and tailoring marketing messages to resonate with those groups (Positioning).

One brand example of STP in marketing is Apple as it targets a specific high-income and well-to-do group of people who care about details and finesse. They care about design intricacy, ease-of-use and good performance.

The STP marketing process works by first identifying distinct groups within a market based on various criteria (Segmentation), then selecting one or more of these groups as the focus of marketing efforts (Targeting), and finally developing marketing strategies and messages that appeal to these targeted groups (Positioning).

STP in marketing refers to a three-step process where businesses Segment their market into different groups, Target specific segments based on their potential value, and Position their brand or products in a way that appeals to these targeted segments.

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STP Marketing Explained: Examples and Tips

We all know that marketing is the foundation of any small business. The reason why we promote our businesses is that we want to get more business. Without marketing, our businesses would not exist.

But is it true?

Is your business really successful? Do you know the TRUE difference between your business and businesses like Nike, McDonald’s, Starbucks, Apple etc.?

These companies are successful not because they spent more money on marketing than all other companies. They were successful because they created a unique identity. No matter what kind of business you have or the service you offer, you need to market it your unique way. You want to make sure that people remember your business, and when they think of the solution – they think of YOU!

STP marketing Introduction

STP stands for Segmentation, Targeting, and Positioning. The idea behind this technique is that to be successful in marketing you need to focus on who your customers are, where to find them and how you’re going to position yourself next to the competitors.

One of the most important things about marketing is that you need to know your target group and communicate to them in a way they understand and respond to.

How does STP help in marketing?

STP helps you to identify your target group, find them and create communication that makes the competition irrelevant. Let’s see what it means in more detail:

• Understanding what kind of people are interested in what you have to offer. It is important to understand this so you can communicate with them through a communication channel where they spend their time.
• Once you know what kind of people are interested in your product or service, the next step is to find them and focus on them. You need to send a message that makes sense for each group and motivates them to reach out and contact you.
• Last but not least, once they get in touch with you, what are you going to tell them that makes your business unique? The idea is to create a message that separates you from the competition.

What are the 3 steps involved in STP marketing?

STP marketing model includes three steps – Segmentation, Targeting, and Positioning. These three elements are crucial to your success as a marketer. If you follow these steps carefully, you’re going to be able to keep the customers you attracted for as long as possible.

1- Segmentation

The first step in the process is to segment your audience. This means that you will separate them into different groups depending on their needs, wants, and interests.

You need to understand who your customers are and how they behave if you ever want to succeed as a marketer or any other kind of businessperson.

Once you’ve segmented your customers, you’re going to choose the ones that seem most interesting and target them specifically. You need to focus on those who are likely to spend money with you, and for this reason, it’s best to find out how much they earn.

2- Targeting

The next step is targeting. This is where we get to the nitty-gritty of marketing. Once you’ve segmented your customers, you need to get their attention and make them notice you.

You will have to learn how your target group communicates online and offline. You can do this by joining relevant forums or fan pages and subscribing to magazines and similar publications.

You can learn more about your target group via social media – Facebook and Twitter. You can also use hashtags such as #retail or #marketing to get more targeted results.

3- Positioning

Once you’ve segmented, targeted, and found out where your customers are, the final step is positioning.

For this step, you will have to choose the keywords that your customers are using when looking for products or services just like yours. You need to become an authority in your niche if you want people to take you seriously.

You also need to build trust with your customer by offering valuable content and sharing information on social media. This way, you’ll be able to build a relationship with them, and in the long run, they’ll feel more inclined actually to buy something from you.

The STP marketing technique is important for your business because it helps you focus on your target group to attract customers and keep them engaged for as long as possible.

What are the Examples of STP marketing?

There are several examples of successful STP marketing cases. Here are some of them:

1- Cola wars

The cola wars between Coca-Cola and Pepsi in the 1980s are a great example of STP marketing. These companies were fighting to become the most popular soft drink, so they had to position themselves correctly when it came to targeting.

Coca-Cola replaced their Coke with a “new” Coke. They also started advertising by hiring big stars such as Michael Jackson and Madonna.

Pepsi continued with sustained marketing and positioned itself as a new generation soft drink. They also targeted loyal Coke drinkers after Coke introduced the “new” Coke. They did this by positioning themselves as the reason why Coke introduced the “new” Coke. They were able to attract the Coke loyalists who preferred the “old” Coke.

Pepsi invested in advertising via different channels. They also did a lot of guerilla marketing that involved using different tactics to lure their target audience into drinking Pepsi instead of Coke.

Apple is another brand that uses STP marketing by giving the best user experience out there. The iPhone was launched in 2007, and people loved it. It came with a brand new design, and people were looking for the new Apple product.

Apple did heavy markets its product by positioning itself as an innovative product. Everyone wanted to get their hands on the iPhone and learn more about its features.

Today, Apple is one of the biggest companies globally, and this is thanks to constant innovation and a strong brand.

British Telecom is another great example of STP marketing. The company adopted STP model to cater to its various customer groups.

They target individual customers and other customers with different offerings. BT has developed lots of products and services that suit different customers. This way, they’re able to reach an audience that’s much larger than their original one.

They also position themselves as a forward-thinking company that offers the best technology, attracting more customers.

4- Virgin Holidays

Virgin Holidays is another good example of the successful use of STP marketing. The company created six different segments of its customers. They used segmentation, positioning, and targeting to promote holidays.

Nike uses STP marketing to reach a wide variety of customers. The company positions itself as a sports product and offers different products for different people, such as Air Force 1 shoes, Nike running shoes, or Nike+ training programs.

6- McDonald’s

McDonald’s uses targeting by offering different menu items for different demographics. A teenager or a student would go to McDonald’s for a burger, while people who work their morning shifts might go for breakfast meals.

This makes it easier for customers to choose what they want and makes them feel more satisfied with their meal. This way, the company can attract a wider audience that will most likely return as customers.

These are just three examples of STP marketing. Plenty of other successful companies have used this marketing strategy to attract new loyal customers. As you can see, this is a very effective marketing strategy that you should consider when planning your next campaign.

How to make STP Marketing work for you?

The STP marketing approach requires you to make different decisions about finding your target group, especially now that there are so many options available for companies that want to expand their brand awareness .

STP works great in today’s digital age because it helps you become an authority in your niche without spending too. To make STP Marketing work for you, you will need to do the following:

• You’ll have to consider what strategies work best for your target audience and adjust your strategy accordingly.
• You’ll also have to start focusing on building a relationship with your customer and finding out more about their needs. Only then will you be able to offer them products that your target audience wants.
• You need to know who you’re catering to and what kind of product they’re looking for.
• The more you know about what they’re looking for and what problems they have, the easier it will be to build a relationship with them and get them to buy from you.
• You need to invest in new digital channels such as social media and content marketing for STP marketing to work.

STP marketing helps you boost your business and improve your chances of generating leads when people are searching for something specific.

Generating leads and closing sales is much easier once you have your target audience in mind. You will need a powerful marketing strategy to succeed as a business owner.

The more you know about your target audience, the easier it will be to sell them your products. Marketing is key in today’s digital age when people have so many options for where they shop and what they buy.

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The Complete Guide to STP Marketing: Segmentation, Targeting & Positioning [2024 Update]

The STP marketing model, or segmentation targeting and positioning, is a framework that helps you identify your most valuable customer segment and develop your marketing mix and product positioning strategy specifically for that audience.

This enables you to maximize profitability with limited resources by focusing on your most valuable customers!

Today, we’re providing a step-by-step guide to developing an effective STP marketing strategy. We’ll also examine the important benefits of this framework and some successful examples.

Let’s dive in!

Skip to What You Need

Developing an STP Marketing Strategy Step-by-Step

1.  market segmentation.

There are many ways to slice and dice your customer data and create audience segments.

Customer segmentation criteria can be divided mainly into four groups:

• Demographic segmentation: age, gender, household income, race, marital status, family size, occupation, etc.
• Geographic segmentation: continent, country, region, city, zip code, etc.
• Psychographic segmentation: interests, wants and needs, attitudes, lifestyle, etc.
• Behavioral segmentation: past purchases, basket size, purchase frequency, site dwell time, use of promotions and coupons, etc.

This step leads to more tailored and impactful marketing initiatives, i.e., customer-centric marketing.

For example, a beauty brand may develop unique campaigns for various age demographics, emphasizing that the product suits each group’s specific skin needs.

Taking it further, product development could conduct market research within each market segment and develop product positioning strategies accordingly. This can include variations in ingredients, packaging, or marketing communications to appeal to different customer segments.

2.  Identifying the Target Market

If you have the budget, technology, and human capital to invest in numerous marketing channels while personalizing messages to each segment, it is perfectly fine to attempt to appeal to different market segments all at once.

However, more often than not, a marketing manager needs to pick a target segment (or segments) that best aligns with the brand’s competitive advantage, best attracts buyers to the product, resonates with marketing messages, converts easily to customers, and can be reached at a lower cost, i.e., maximum commercial attractiveness .

Let’s not forget the customer acquisition cost!

You can estimate the total market value for your most attractive segments. However, it is the serviceable obtainable market that matters.

If the acquisition cost is significantly higher for the most attractive segment, e.g., competition is so fierce that you can only realistically convert a small slice of the pie, you might be better off pursuing the next most valuable customer segments to achieve maximum revenue.

Sometimes, the audience segment is quite apparent. Other times, it requires some soul-searching:

• What is your brand’s value proposition?
• Do you have a superior offering to your competitors within the target market?
• How do your potential customers perceive you?

With a well-defined targeting strategy, you can craft messages that resonate deeply with your customer group.

Using data analytics is crucial for continuously refining and understanding this audience profile.

3. Product Positioning Strategy and Content Customization

You might still have the same product, but depending on your target audience segments, how you highlight its value proposition might differ.

For the same wellness app, you might focus on ease of use for a less tech-savvy baby boomer segment while highlighting the ability to customize the app for a millennial segment.

In contrast to consumer-based positioning, brands must not neglect competitor-based positioning. This is your competitive analysis within the target customer base.

It is helpful to draw up a product positioning map . A basic one will have two key positioning factors significant to your product, e.g., price vs. functionality, practical vs. fun, etc. You get the idea!

The map provides the opportunity to clearly define your product differentiation strategy. It can also identify gaps between your product vs. your competitor’s, whether from the actual utilities or from customers’ perceptions.

One of the most significant advantages of positioning strategy is the ability to create bespoke content for different groups.

This could involve crafting blog posts, videos, or social media content to address your target customers’ unique interests or challenges.

Content marketing typically generates three times the number of leads as standard outbound marketing while costing 62% less . An audience-based content marketing approach means creating different versions of the same content, each highlighting your unique selling proposition but tailored to different target audiences.

4. Marketing Mix and Targeted Content Delivery

Following positioning strategies is the actual marketing campaign execution.

How you deliver your campaign is highly dependent on your segmentation targeting.

Your marketing mix determines how and where you deliver customized content to maximize your reach to different market segments.

Brands might leverage Instagram’s visual appeal to attract younger demographics, while platforms like LinkedIn are more suited for B2B marketing strategies . TikTok is a no-brainer if you go after Gen Z, whereas you will find the most baby boomers on Facebook.

Personalized email marketing, based on user behavior or interests, is another highly effective way to engage your target audience. These emails could offer tailored product suggestions, personalized deals, or content that aligns with the recipient’s interests or past purchasing behavior.

Implementing successful targeted marketing strategies involves utilizing customer data to foresee future behaviors and adapt marketing communications accordingly. This could entail analyzing past purchases to anticipate future product interests.

Ad retargeting targets potential customers who have previously engaged with your brand but haven’t purchased. By showcasing specific products they showed interest in, companies can enhance the likelihood of converting these interactions into sales. A common use case is finding those who have browsed your site or even placed a product in the cart on other sites and displaying the said product.

Partnering with influencers who have a strong connection with your target segment can significantly boost your marketing efforts. These partnerships involve collaborating with influencers whose follower base aligns with your target audience .

5. Feedback and Optimization

Continuous feedback collection and campaign analysis are essential.

Consumer attitudes , wants, and purchasing behaviors can change often, moving in and out of your target market.

Your competitors’ market positioning can also change, making your past segmentation targeting assumptions invalid.

This ongoing evaluation helps refine strategies , leading to constantly evolving and improving marketing efforts.

The Role of Big Players: Facebook and Instagram

Over 140 billion reels are played daily across Facebook apps , and 94% of marketers use Facebook advertising regularly .

Moreover, with users spending about 30 minutes a day on the app , Instagram continues to be a significant platform for targeted marketing efforts.

To learn about targeted marketing social media strategies on Facebook, check out this video by Nick Theriot :

STP Strategies and Execution

The execution of a STP strategy is an intricate blend of personalized content, insightful data analysis, and a profound understanding of the target audience’s needs. By concentrating on these key elements, you can develop compelling marketing campaigns that truly resonate with your audience, ultimately driving successful conversions.

5 Top Benefits of STP

1. enhanced customer experience.

Understanding and catering to a certain target audience enables marketing efforts to be more tailored.

This level of customization improves the overall customer experience, as consumers are presented with content, offers, and products that align with their unique preferences and interests.

This relevance not only captures attention but also fosters a positive perception of the brand , enhancing the customer journey.

Targeting also facilitates two-way communication. By focusing on an engaged audience, businesses can gather feedback and insights directly from their consumers.

This leads to continuous improvement and a deeper understanding of customer needs. As such, this cycle of feedback and adaptation further improves the customer experience.

2. Increased Return on Investment (ROI)

Targeted marketing strategies are renowned for their cost-effectiveness.

This is primarily because they focus resources on segments with higher total market demand and are more likely to engage or convert.

By avoiding the scattergun approach of traditional marketing, targeted strategies ensure that every dollar spent is more likely to reach and resonate with the intended audience.

This efficiency translates into a higher ROI, as marketing efforts yield tangible results in the form of leads, conversions, and revenue.

Segmentation targeting also allows for continuous improvement. Marketers can monitor their marketing efforts, link performance to segment preferences and behaviors, decipher segment insights, and improve future campaigns.

This ability to measure and tweak campaigns will improve your marketing ROI over time.

3. Improved Brand Loyalty and Engagement

Targeting on relevant social media platforms can significantly boost customer engagement and brand loyalty .

You can foster a deeper connection with your customers by delivering content that resonates with their interests and needs. This connection goes beyond mere transactions; it builds emotional ties, leading to long-term loyalty and advocacy.

In addition, the STP model allows you to create a community around your brand. Engaging with customers on a personal level, responding to their comments, and sharing content that aligns with their values helps build a loyal community .

This community not only supports the brand but also acts as its ambassador, further extending its reach and influence.

4. Competitive Advantage

A well-executed STP strategy gives your business a competitive edge.

In a crowded market, addressing a defined audience’s specific needs and wants helps companies stand out.

You can distinguish yourself from your competitors, who might be pursuing a larger audience, by focusing on niche markets or specific customer groups.

Additionally, the STP model enables your business to build a strong brand identity.

Companies can position themselves as experts in their industry by continuously catering to a specialized target audience.

This specialization builds credibility and trust, making your brand the go-to choice for consumers within that target market.

5. Higher Conversion Rates

Personalized campaigns, by virtue of their relevance, are more likely to inspire action, whether it’s making a purchase, signing up for a newsletter, or engaging with content.

This specificity ensures that marketing efforts reach and appeal to those most likely to respond positively .

Additionally, the marketing model allows for the optimization of the customer journey.

By understanding the path that customers take from awareness to purchase, you can create targeted campaigns that guide them through each stage effectively.

This strategic approach lowers friction in the purchasing process, which leads to increased conversion rates and higher customer satisfaction.

Top Benefits of STP Marketing and Why They’re Important

• Enhanced Customer Experience
• Increased Return on Investment (ROI)
• Improved Brand Loyalty and Engagement
• Higher Conversion Rates

STP in Action: Successful Marketing Examples

1. hbo’s “house of the dragon” campaign.

HBO’s advertising strategy for “House of the Dragon,” the “Game of Thrones” prequel, focused on engaging younger viewers.

Their approach resulted in the extensive use of TikTok. By creating an official Game of Thrones TikTok account and posting teasers, HBO built up anticipation and sustained interest in the series.

The use of TikTok’s stitch and duet features allowed fans to share and react to episodes together, boosting viewership and demonstrating the effectiveness of targeted social media marketing.

2. Old Spice’s “Smell Like a Man” Social Media Campaign

Old Spice’s “Smell like a Man” campaign, launched in 2010, is a classic example of effective targeting.

The brand utilized social media platforms, including Facebook and Twitter, to create interactive videos that responded to comments, engaging both men and women with humor and creativity.

This approach not only advertised Old Spice’s products but also significantly increased its audience reach and social media followers, demonstrating the campaign’s viral impact and audience engagement.

Here’s one of the ads that aired in 2010 for Old Spice’s “The Man Your Man Could Smell Like” campaign, posted by Old Spice :

Final Thoughts on STP

In conclusion, as we navigate through 2024, STP strategies are a keystone in the realm of digital marketing, offering businesses a methodical approach to connecting with their audience effectively .

By understanding and leveraging the intricate web of customer data, preferences, and behaviors, companies can create marketing opportunities that resonate on a personal level.

The STP marketing model transforms how brands communicate with and bond with their consumers, from customer segmentation to targeting to innovative applications in content customization and social media engagement.

In essence, this approach is not just about reaching an audience; it’s about engaging with the right audience in the most meaningful way , marking a new era in marketing’s evolutionary journey.

Frequently Asked Questions

How does stp marketing benefit businesses in today's digital landscape.

STP marketing offers numerous benefits, including enhanced customer experience, increased ROI, and improved brand loyalty. By focusing on specific audience segments, businesses can create more personalized and effective marketing strategies. For a detailed exploration of targeted marketing benefits and how they impact modern digital marketing, read the full article.

What are some successful STP marketing campaign examples?

Successful campaigns like HBO's "House of the Dragon" and Old Spice's social media strategy showcase the power of targeted marketing. These campaigns effectively used social media and content personalization to engage their target audience. To discover more about these campaigns and other examples, delve into the complete article.

What strategies are crucial for effective STP marketing?

Key strategies in STP marketing include market segmentation, targeting, content customization, personalized email marketing, and leveraging social media platforms. These strategies ensure businesses reach and engage their target audience effectively. For an in-depth understanding of these strategies and how to implement them, refer to the comprehensive guide in the full article.

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STP marketing segmentation targeting and positioning process

Do you know the secret behind the success of Apple, Nike, BMW, Arbnb? It is a perfect mixture of the market segmentation positioning and targeting. STP businesses definitely know your needs and give it to you.

That’s why when browsing through their websites, magic happens, and in 1-2 minutes, you see product recommendations that perfectly match your preferences and tastes. 

That is the wizardry of STP marketing at work. 

In fact, by segmenting customers into athletes, fitness enthusiasts, and casual sneaker lovers, Nike achieved +20% revenue growth, +30% CR, and established a strong brand identity within each targeting segment.

It sounds easy. But does it really so?

Based on the 7-years of practice in STP marketing, we at Dashly definitely can say — it’s not.  

In this article, you’ll find out what an STP is, the best examples of how it works, and a step-by-step strategy for STP marketing implementation for your business.

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What is STP in marketing

STP refers to Segmentation, Targeting, and Positioning process in marketing, which together form a framework for successful marketing strategies.

STP marketing is a strategic approach that involves dividing a larger market into smaller segments, identifying the most relevant target audience within those segments, and positioning products or services to meet their needs and preferences.

The concept of STP business focuses on understanding customer diversity and tailoring growth marketing efforts accordingly. STP meaning can be summarized as the process of segmenting, targeting, and positioning to effectively reach and engage customers.

STP marketing is an incredibly effective approach due to its emphasis on breaking down the customer base into smaller, more manageable groups. This segmentation allows companies to tailor their marketing strategies to each specific target audience, resulting in higher engagement and conversion rates.

The importance of personalization in marketing cannot be overstated, as evidenced by consumer behavior: 

• A significant 59% of customers acknowledge that personalized experiences greatly influence their shopping decisions. 
• Additionally, 44% have revealed that a personalization increases their likelihood of becoming repeat customers.

STP marketing puts the focus on customers instead of just the product. This change gives businesses a chance to really understand who their best customers are and how to effectively connect with them. When companies use personalized and targeted marketing, they are more likely to succeed in a competitive market.

Let’s get deeper into the STP marketing process.

Segmentation targeting and positioning process in marketing

The easiest way to remember this framework is the STEP formula:

Let’s delve into each of these steps to gain a deeper understanding of their significance. And the first part of the STP process is Segmentation 👇

Segmentation

It involves dividing a broader market into smaller, more homogeneous groups based on shared characteristics, needs, or behaviours. These characteristics could include demographics (age, gender, income), psychographics (lifestyle, values, personality), geographic location, or purchasing habits.

• Geographic segmentation involves categorizing your audience based on their location, such as country, region, state, or province. 
• Demographic segmentation is the process of dividing your audience based on characteristics like age, gender, education level, occupation, and income. 
• Behavioral segmentation, on the other hand, focuses on how customers engage with your business, considering factors like their purchasing habits, frequency of purchases, and browsing behavior. 
• Lastly, psychographic segmentation involves segmenting your audience based on their personality traits, lifestyles, interests, hobbies, and opinions.

The goal of segmentation in the STP process is to identify distinct customer segments that have common needs, desires, or behaviors. It offers businesses several benefits: 

• including increased customer satisfaction, 
• better resource allocation, 
• improved customer acquisition and retention rates, 
• the ability to cater to specific market niches, 
• it also helps businesses identify opportunities for product or service differentiation and market expansion.

Segmentation should be data-driven and based on research and product metrics framework analysis to ensure accuracy and effectiveness. 

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Here is how we teach Dashly users to segment their target audience

Among the multiple approaches to client segmentation we prefer User Journey. It is based on actions customers make and customer interviews. By analyzing customer journeys, you can divide users into segments depending on what features they use, how active they are, and what difficulties they face most often. 

How to apply the User Journey approach to segmentation:

• events like “visited pricing page,” “subscribed,” “started onboarding,” etc.
• lead properties, for instance, UTM parameters, Geography, CRM, E-commerce, email, phone.
• tags — a special mark that you can add to a lead or a group of leads so you can easily find and segment them in the future, for example, “loyal” or “waiting for an update”. 

• Build funnels with stages that customers go through in your product. 
• Interview your customers to adjust data. 

STP marketing segmentation example from Dashly growth marketing team :

Segment A: CMO and marketing managers within SaaS companies trying to improve the quality of their lead generation and conversion rate.

Segment B: Chiefs of the support department within SaaS companies trying to provide fast personalized customers assistance and save agent’s time. 

Leverage segmentation for more powerful communication and higher conversions

Read also: Your  Growth Marketing Strategy Template  with guide and examples

The next step in the STP process in marketing is targeting. This is when you decide which segments created during segmentation are worth pursuing. 

Here are the most popular criteria to consider when choosing your targetable segments:

• Size: Ensure your segments have enough potential customers for effective marketing.
• Difference: Look for measurable differences between segments to avoid duplicating efforts.
• Reachability: Make sure your segments are accessible to your sales and marketing teams without any complications.
• Profitability: Target segments with low-to-medium customer acquisition cost (CAC) and high returns.
• Benefits: Different segments are attracted to different benefits.

Sure thing, that’s far the end of all possible targeting criterias STP business uses:

Having a comprehensive view of these segments in one place helps compare them and make informed decisions on which ones to prioritize.

Example of targeting within STP process in marketing:

In our previous example of support managers segment via research, we defined that 40% of CSOs within SaaS companies want ticketing system snd 60% of CSOs within SaaS companies are looking for a customer support automation tool that has integration with socials and messengers. 

Due to the Dashly feature set, we’ll focused on the second segment.

Read also: 25  Growth Marketing Books  to Skyrocket Success

Positioning

It is the final step in the STP process of marketing. Positioning involves creating a unique and compelling brand image in the minds of consumers within the targeted segments. 

To establish a strong and favorable perception of the brand in the target audience’s mind, you should define the key attributes, benefits, and values that the brand offers to its target customers. These unique selling propositions (USPs) are then effectively communicated through marketing messages and brand experiences.

Here are three key factors in positioning that can give you a competitive advantage:

• Symbolic positioning : Elevate your customers’ self-image and sense of belonging. The luxury car industry illustrates this concept well; luxury cars not only serve a functional purpose but also enhance customers’ self-esteem and image.
• Functional positioning : Address your customers’ needs and provide them with tangible benefits. By solving their problems effectively, you can differentiate your product or service from competitors.
• Experiential positioning: Emphasize the emotional connection your customers have with your brand, product, or service. By creating memorable experiences and evoking positive emotions, you can forge a strong and lasting bond with your customers.

The most successful product positioning is a combination of all three factors. One way to visualize this is by creating a perceptual STP map for your industry. Focus on what is important for your customers and see where you and your competitors land on the map.

STP marketing examples 

STP marketing is impossible without examples from famous brands that have utilized segmentation, targeting, and positioning strategies to create impactful products and gain a competitive edge. 

We provided a short analysis of real-life cases to better understand the power of STP in marketing. So, let’s explore some STP marketing examples and grasp the immense potential of this strategy.

Here is a list of the market segmentation targeting and positioning examples from famous brands:

Apple segments its market based on various factors such as demographic (age and occupation), psychographic (lifestyle and values), and behavioral (technology usage and preferences). This STP example targets segments with innovative and high-quality products like iPhones, MacBooks, and Apple Watch.

Coca-Cola ‘s STP marketing example is based on geographic, demographic, and psychographic segmentation. They target different segments with products like Coca-Cola Classic (general audience), Diet Coke (health-conscious consumers), and Coca-Cola Zero Sugar (young and active individuals).

Nike uses various segmentation variables like demographics (age, gender), psychographics (lifestyle, preferences), and behavioral (athletic activities, purchase history). This stp marketing example targets segments with specific products like running shoes, basketball shoes, and sportswear.

McDonald’s STP is a great example of a market segmentation based on demographics (age, income), psychographics (lifestyle), and behavioral (eating habits, preferences). They offer different menu items and promotions targeting segments like children (Happy Meals), health-conscious individuals (Salads), and budget-oriented consumers (Dollar Menu).

BMW segments its market based on demographics (income, age), psychographics (lifestyle, values), and behavioral (driving habits, preferences). This is a great example of targeting segment of luxury car enthusiasts with different models like the BMW 3 Series (entry-level luxury) and the BMW 7 Series (high-end luxury).

Airbnb uses geographic, demographic, psychographic, and behavioral factors to segment its market. They target segments such as travelers seeking unique accommodation experiences, budget-conscious individuals, and those looking for local and authentic stays.

These examples showcase how businesses employ the STP analysis to understand their target audience and tailor their products, services, and marketing messaging to specific segments.

How to do STP: segmentation targeting and positioning strategy

stp marketing example

stp example

Inaccurate data collection, overlapping segments, changing customer behaviour, and limited resources are just few of challenges that businesses meet on the way to STP marketing implementation. Overcoming these stp strategy issues requires careful planning, data-driven decision-making, and continuous monitoring. 

To help you, we collected the Dashly team experience in an ultimate segmentation, targeting, and positioning (STP) strategy. 

Here is a step-by-step guide on how to do STP:

1. Understand the STP model

The first step in the STP framework process is to grasp the essential components and objectives of this marketing strategy. Segmentation focuses on dividing the market into distinct groups based on shared characteristics. Targeting involves selecting the most relevant segments to focus your marketing efforts on. Finally, positioning is about creating a unique brand identity that sets you apart from competitors.

2. Conduct market research

STP strategy requires gathering data and insights about your target market. Analyze demographic information, such as age, gender, education, and occupation. Understand the psychographics of your audience, including their personality traits, lifestyles, and opinions. Consider behavioral factors like how they interact with your business.

3. Segment your market

In order to develop an effective STP (Segmentation, Targeting, Positioning) marketing strategy, it is essential to utilize various segmentation variables such as geographical, demographic, behavioral, and psychographic factors.

By incorporating these segmentation variables together, you can hone in on specific niche segments within your target market, allowing for a more impactful marketing effort.

If you divide your serviceable obtainable market into men and women based on demographic variables, you still have a broad audience segment. However, by incorporating additional segmentation variables, you can create a more precise audience that will yield the greatest impact.

For example, you may choose to target women in the United States who have a preference for luxury products and demonstrate behavior such as following you on social media or visiting your website in the past. By applying the STP marketing model and incorporating these variables, you can effectively tailor your marketing campaigns to reach this specific audience.

Thus, you can create a hyper-focused audience segment that will turn your STP marketing model into an extremely personalized experience. 

4. Choose your target segments

Once you have segmented your market, evaluate each segment’s size, customer led growth rates, reachability, price sensitivity, profitability, and brand loyalty. 

Here is an example of the STP marketing model for audience targeting evaluation: 

With this information, you will be able to evaluate the overall attractiveness of each segment in terms of dollar value. Select one or more target segments that align with your business objectives. These segments should represent a viable customer base and present opportunities for growth.

5. Position your brand

Positioning is all about creating a unique brand image that appeals to your target segments. You can follow any one or a mix of the following positioning strategies:

• Competitor-based positioning: Highlight areas where your products excel compared to your competitors, showcasing the unique advantages your offerings bring to the table.
• Consumer-based positioning: Emphasize how well your products meet the specific needs and desires of consumers. Align your brand with their preferences and position yourself as the ideal solution.
• Price-based positioning: Showcase competitive pricing that offers customers exceptional value for their money. Demonstrate that your products provide more benefits and features compared to the competition at a comparable price.
• Benefit-based positioning: Communicate the numerous benefits customers gain by purchasing your products — individually or when compared to competing options. Highlight advantages such as enhanced performance, efficiency, or convenience.
•   Attribute-based positioning: Identify and emphasize the unique selling points or value propositions that make your brand stand out beyond its inherent benefits or pricing. Showcase characteristics like innovation, sustainability, design, or craftsmanship to create a distinctive position in the market.
• Prestige-based positioning: Position your products as a symbol of status and exclusivity. Showcase how purchasing and using your brand’s offerings elevate customers’ social status and appeal to individuals seeking prestigious and cutting-edge solutions.

Differentiate your brand by highlighting its unique attributes, benefits, and values. Craft marketing messages and communication strategies that effectively communicate your brand positioning to your target audience.

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6. Determine a marketing mix

The last and final step in “how to do segmentation targeting and positioning” process is to actually implement your strategy. For that, you will need to determine a marketing mix that will support your positioning and help you reach the target audience (s) that you’ve chosen.

A marketing mix consists of the so-called 4 Ps: 

• Product takes into consideration factors like variety, quality, design, branding, features, packaging, services, availability, and convenience.
• Price takes into consideration factors like pricing strategy, list price, penetration price, premium, discounting, payment methods, credit terms, and payment period. Are your target audience segments price sensitive?
• Place takes into consideration factors like channels, coverage, location, inventory, logistics, and trade channels.
• Promotion takes into consideration factors like digital marketing, public relations, social media, sponsorship, influencer marketing, content marketing, product placement, sales promotion and marketing communications.

A carefully-curated marketing mix will ensure business success. However, if you do leave gaps in it, all the precious work you did at the previous stages might go to waste .

STP marketing case study examples

let’s flesh out the STP marketing examples with more depth in terms of audience segmentation and how these businesses target a specific segment:

1. HubSpot (SaaS Industry) STP model

Audience Segmentation : HubSpot has crafted a detailed segmentation strategy, which includes dividing their market based on the size of the businesses (small, mid-market, and enterprise), their level of marketing savviness, and their specific needs for CRM, sales, and marketing automation tools.

Targeting a Specific Segment : Focusing on the segment of small businesses that lacked a dedicated marketing team, HubSpot tailored its targeting strategy by promoting its simple user interface and comprehensive set of tools that could be managed without a specialized team. They amplified this approach with educational content that empowered these smaller businesses to efficiently manage their marketing campaigns, generate leads, and convert them to sales—all within HubSpot’s platform. This specific targeting effectively resonated with small business owners looking for a one-stop-shop solution that could scale with their growth.

2. Example of STP model from Warby Parker (E-Commerce Industry)

Audience Segmentation : Warby Parker segments its audience by demographic factors such as age and income levels, but also by lifestyle preferences, including individuals who are fashion-forward but also value-conscious.

Targeting a Specific Segment : Particularly, Warby Parker targets the millennial segment that is known for being style-conscious yet budget-savvy. They cater to this demographic through their Home Try-On program, which allows customers to select frames online and try them at home for free. This program specifically addresses millennials’ desire for convenience, their inclination to shop online, and their aversion to making purchasing decisions without a ‘try before you buy’ experience. Their targeted engaging social media campaigns and the emphasis on a socially responsible purchasing decision with the “Buy a Pair, Give a Pair” program echo the values of this segment.

3. Duolingo (EdTech Industry) STP example

Audience Segmentation : Duolingo’s segmentation includes age, motivation for learning a language (such as travel, education, or career advancement), and the level of language proficiency.

Targeting a Specific Segment : When Duolingo targets the segment of young professionals interested in learning a new language for career enhancement, the app’s positioning as a flexible, on-the-go learning tool comes into play. For this target segment, Duolingo highlights the ability to practice language skills in short, manageable lessons that fit into a busy lifestyle, and emphasizes the professional and personal benefits of being bilingual or multilingual. The app uses professional-related content and success stories as part of its nurturing process, directly appealing to the career growth aspirations of this segment.

These examples illustrate how specific audience segmentation can lead to precise targeting efforts. Each of these companies has mastered the art of not only identifying smaller, well-defined parts of the market but also effectively crafting their messaging and service offerings to meet the unique needs and preferences of these segments. This approach ensures that marketing efforts are not watered down but resonate deeply with the chosen segment, leading to better conversion rates and customer loyalty.

To sum up STP marketing model

The STP framework model is iterative, meaning you should continuously evaluate and refine your strategies. Monitor market changes, consumer behaviors, and competitors’ activities. Stay agile and adapt your segmentation, targeting, and positioning strategies accordingly.

By following these steps, you can effectively implement the segmentation, targeting, and positioning marketing strategy. Remember, thorough market research, careful segmentation, precise targeting, and strong brand positioning are key elements for success.

FAQ on STP marketing

What is a stp.

What is the stp? STP means for segmentation positioning and targeting. It is a strategic marketing approach that involves dividing a market into distinct segments, selecting the most appropriate target audience, and positioning a product or service in a way that resonates with that specific audience.  

What is STP marketing

The answer to “what is segmentation, targeting, and positioning in marketing” lies in its definition. Stp meaning is based on a marketing model that redefines whom you market your products to, and how. It makes your marketing communications more focused, relevant, and personalised for your customers.

What does STP stand for in business

STP in business stands for Segmentation, Targeting, and Positioning. It is a strategic marketing model that involves breaking down a larger market into smaller, distinct segments (segmentation), selecting the most appropriate segment (s) to focus on (targeting), and creating a favorable perception of a product or brand in the minds of the target audience (positioning). By implementing an STP approach, businesses can more effectively understand and cater to the specific needs and preferences of their target customers.

Segmentation vs targeting

Market segmentation & targeting are parts of the STP marketing strategy. But theer is a difference: 👉  Segmentation involves dividing a larger market into smaller, distinct groups based on specific characteristics or variables. 👉  Targeting, on the other hand, is the process of selecting one or more of these segments as the focus of a marketing strategy. In short, segmentation is the act of dividing, while targeting is choosing which segments to prioritize and focus on.

What is stp marketing model

The STP model breaks down marketing strategy into Segmentation, Targeting, and Positioning. For instance, a classic example of the STP model is a fashion brand that segments by age, targets young adults, and positions with trendy styles. This approach tailors marketing efforts efficiently.

Benefits of STP marketing

• Tailored targeting: STP marketing allows businesses to focus on specific segments, delivering personalized messages for better engagement.
• Customer satisfaction: By understanding unique segment needs, businesses can create products/services that satisfy customers, leading to higher satisfaction levels.
• Competitive advantage: Effective positioning based on segment preferences helps businesses stand out and attract customers ahead of competitors.
• Resource optimization: this strategy ensures resources are allocated efficiently by focusing efforts on the most promising segments.
• Improved ROI: Targeting viable segments increases the likelihood of sales and profitability, resulting in a higher return on investment.
• Effective marketing: this model delivers more impactful messages by directly addressing segment needs and desires.
• Customer understanding: In-depth research and analysis of segments provide businesses with a deeper understanding of their target market.
• Market adaptation: quickly adapt to changing market conditions by staying aligned with evolving customer preferences.

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Examples of stp branding

• Tesla ‘s electric vehicles are positioned as luxury cars with a focus on sustainability and cutting-edge technology. This branding strategy has allowed Tesla to attract environmentally-conscious consumers, making it a leading brand in the electric vehicle industry.
• Dove targets segments of women who embrace natural beauty and body positivity. Their branding emphasizes inclusivity and self-acceptance, making Dove a trusted and empowering brand in the beauty industry.
• Spotify segments the music streaming market by targeting diverse music listeners. Their branding emphasizes personalized playlists, curated music recommendations, and convenience, positioning Spotify as a leading streaming platform.
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Segmentation, Targeting & Positioning (STP) in marketing: Explained with Examples

Segmentation, Targeting, and Positioning (STP) is a fundamental approach marketers use to analyze and plan the strategic positioning of their products or services. Let’s break down each of these concepts:

• Segmentation  is the process of dividing a broad market into distinct consumer groups with everyday needs, preferences, or characteristics. Segments can be defined in many ways, such as demographic (age, gender, income), geographic (location, climate), psychographic (lifestyle, values), and behavioral (usage rate, loyalty) factors.
• Targeting : Aftermarket segments are identified, marketers must decide which segments to focus on. This decision depends on factors such as the segment’s profitability, the company’s ability to serve the segment effectively, and how competitive the segment is.
• Positioning : Once the target segments are selected, the company must decide how to position its products or services in the market. Positioning involves developing a marketing mix that will appeal to the target market. It’s about creating a unique, clear, and desirable place for the product in the minds of target customers relative to competing products.

Let’s understand Segmentation, Targeting, and Positioning (STP) in Marketing in detail

Segmentation .

• Demographic Segmentation : This is perhaps the most common form of market segmentation, where the market is divided into groups based on variables such as age, gender, income, occupation, education, religion, race, and nationality. For example, a clothing brand might target different age groups with different styles and designs.
• Geographic Segmentation : This method divides customers into segments based on their physical location. It could be as broad as a country or region or as specific as a city or neighborhood. A company might market winter clothing in colder climates and summer clothing in warmer ones, for example.
• Psychographic Segmentation : This segmentation is based on lifestyle, personality traits, attitudes, values, and interests. For example, a travel company might market adventure packages to thrill-seekers and relaxation packages to those seeking tranquility.
• Behavioral Segmentation : This divides customers based on their knowledge of, use of, or response to a product. It could be based on customer loyalty, purchase frequency, readiness to buy, benefits sought, usage rate, etc. For instance, a software company may offer casual versus power users different packages.
• Technographic Segmentation : This relatively new form of segmentation, enabled by the rise of technology, categorizes customers based on their relationship with technology – their use, knowledge, and ownership of different technologies. For example, a tech company might target early adopters with its cutting-edge products.

The ultimate aim of segmentation is to identify high-yield segments – those segments that are likely to be the most profitable or have growth potential – so that these can be selected for special attention. Although several factors may be employed in the segmentation process, it’s important to ensure that the segments created are measurable, accessible, substantial, differentiable, and actionable. This is known as the criteria for effective segmentation.

Example of Segmentation

Let’s imagine that we have a company that produces fitness equipment – treadmills, stationary bikes, weights, and so on.

• Demographic Segmentation : The company might start by looking at demographic information. They could segment the market by age and income, for instance. Perhaps their products are particularly popular with people aged 25-45 with a higher-than-average income level. This makes sense because fitness equipment can be quite expensive and is often purchased by people concerned about their health, which tends to correlate with age and income.
• Geographic Segmentation : Next, the company could look at geographic data. They might discover that they sell more products in urban areas than in rural ones. This could be because people in urban areas have more disposable income and less access to outdoor activities.
• Psychographic Segmentation : The company could then segment by lifestyle and attitudes. They might find that their products are popular with people who value a healthy lifestyle and enjoy the convenience of working out at home. They may also find that their customers are motivated by goals like weight loss, muscle gain, or maintaining an active lifestyle.
• Behavioral Segmentation : The company could segment the market based on behavioral factors. They might find that their most loyal customers are those who initially bought a large piece of equipment, like a treadmill, and then returned to buy smaller items, like weights or yoga mats. They could also look at usage rates and find that customers using their equipment daily are likelier to recommend their products to others.

By conducting this segmentation, the fitness equipment company now has a much clearer picture of their ideal customer: a high-income, 25-45 year old, urban-living individual who values a healthy lifestyle, uses the equipment daily, and is motivated by fitness goals. They can now tailor their marketing messages to appeal to this segment, making their marketing efforts more effective and efficient.

Targeting 

Targeting is the second step in the STP (Segmentation, Targeting, and Positioning) process. After the market has been segmented into distinct groups, the next step is to select which segments to target with your product or service. The process involves evaluating the attractiveness of each segment and deciding which ones to focus your marketing efforts on.

There are several targeting strategies that a business can adopt:

• Undifferentiated (Mass) Marketing : In this strategy, the company ignores segment differences and targets the whole market with one offer. This approach focuses on what is common in the needs of consumers rather than on what is different.
• Differentiated (Segmented) Marketing : The company targets several market segments and designs separate offers for each. For example, a car company might produce different models for different income levels.
• Concentrated (Niche) Marketing : Here, the company targets a large share of one or a few smaller segments or niches. Businesses with limited resources often choose this strategy as it allows them to focus their efforts and specialize.
• Micro-marketing (Local or Individual Marketing) : In this strategy, the company tailors products and marketing programs to suit the tastes of specific individuals and locations. This includes local marketing (tailoring to specific cities or neighborhoods) and individual marketing (tailoring to individual people).

The choice of which strategy to adopt depends on company resources, product variability, product life cycle stage, market variability, and competitors’ marketing strategies.

The targeting step aims to identify the segments most likely to respond to the company’s offerings and where the company’s resources can be most effectively used. It’s about finding the best match between your products or services and the customers most likely to need or want them.

Explain of Targeting

Let’s continue with the example of the fitness equipment company we used while explaining segmentation.

After the company has segmented the market, it has several distinct groups to consider. Let’s assume they identified these four main segments:

• Young adults (18-24) who are students or just starting their careers. They have lower incomes and limited space for large fitness equipment.
• Adults (25-45) with higher incomes who value a healthy lifestyle and enjoy the convenience of working out at home.
• Older adults (46-64) are interested in fitness to maintain health and mobility but may have specific needs or limitations.
• Gyms and fitness centers that require commercial-grade equipment.

Now the company needs to decide which of these segments to target. They consider the attractiveness of each segment based on several factors, including size, profitability, accessibility, and the company’s ability to serve the segment effectively.

• The young adult group is large, but they have limited income and space, which might not make them the best target for high-end fitness equipment.
• The adults with higher incomes who value a healthy lifestyle make an attractive segment because they have the financial resources and motivation to buy fitness equipment.
• Older adults also could be a viable segment. However, catering to them might require developing or modifying products to meet their specific needs, which could be costly.
• Gyms and fitness centers represent a lucrative segment, but they often have specific needs and high standards for durability. Competing in this space might require a considerable investment.

After evaluating these options, the company might target the second segment (adults 25-45 with higher incomes who value a healthy lifestyle) because it has the financial resources, motivation, and space for its products. They might also target the fourth segment (gyms and fitness centers), but they recognize that they must invest in developing more durable, commercial-grade equipment.

By choosing specific segments to target, the company can focus its marketing efforts on the consumers who are most likely to purchase their products, leading to higher sales and better returns on their marketing investment.

Positioning

Positioning is the final step in the STP (Segmentation, Targeting, and Positioning) process. It involves creating a unique, consistent, and recognized customer perception of a brand or a product in the target market. It’s about crafting the brand’s image so the target customers can distinguish it from the competitors’ offerings.

The main goal of positioning is to create a unique impression in the customer’s mind so that the customer associates something desirable and different with your brand that they do not associate with other brands.

There are several ways a brand or product can be positioned:

• By Product Attributes : A product can be positioned based on its attributes or qualities. For example, a car might be the most fuel-efficient car in the market.
• By Benefits : The product can also be positioned based on the benefits it offers to customers. For instance, a shampoo might be positioned as the one that makes your hair the shiniest.
• By Use or Application : A product can be positioned based on its use. For instance, a coffee brand might be the perfect start to your day.
• By User : Positioning is done by associating a product with a user or class of users. For instance, a clothing brand might position itself as the brand for the adventurous and outdoorsy.
• By Competitor : Positioning can also be done relative to the competition. A brand might position itself as superior to competitors on certain key aspects. For example, a smartphone might be positioned as having a better camera than its competitors.
• By Price or Quality : Lastly, products can be positioned based on price or quality. A brand might position itself as an affordable or luxury, high-quality option.

To establish effective positioning, a company often uses a positioning statement or a unique selling proposition (USP) to communicate the unique benefits or characteristics of the product, service, or brand to the targeted segment. It’s vital that this positioning is consistent across all marketing efforts and touchpoints to create a coherent and recognizable brand image.

Explain of Positioning

Let’s continue with our hypothetical fitness equipment company as an example for positioning.

Let’s say the company has decided to target two segments: adults aged 25-45 with higher incomes who value a healthy lifestyle and gyms/fitness centers that need durable, commercial-grade equipment.

Now, the company needs to position its products to appeal to these segments and differentiate them from competitors.

• For the individual consumer market (adults aged 25-45) : The company might position its fitness equipment as a “home luxury fitness” brand. Their marketing messages could focus on their products’ high quality, durability, and advanced features. They could emphasize how their equipment supports a healthy lifestyle without having to leave home and how investing in their products is an investment in long-term health and well-being. They might also highlight their sleek design that fits well in a modern, upscale home.
• For the commercial market (gyms and fitness centers) : The company could position its products as “commercial-grade fitness equipment that withstands the test of time.” Their messaging could emphasize their products’ durability, reliability, and cost-effectiveness over time. They could also highlight features that might be important to this segment, such as easy maintenance, warranty, and excellent customer service.

In both cases, the company must ensure that its positioning is reflected in every aspect of its marketing mix (product, price, place, and promotion) and is consistent across all marketing channels. This helps to build a strong, recognizable brand image that resonates with their target customers and sets them apart from their competitors.

Remember, the goal of positioning is not just to differentiate the product but to make it stand out as superior in certain meaningful ways in the minds of the target consumers.

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