Detailed Elaboration of Product Segmentation, Targeting, and Positioning


Do you know what STP marketing is and its role in boosting revenue and conversions for your business? We will show you how segmentation, targeting, and positioning can be applied to marketing by illustrating real-life examples. 

In modern-day marketing, segmentation targeting positioning is an important concept that has become one of the primary foundations for setting up a winning strategy. The lack of it would lead to generic and difficult-to-personalize marketing campaigns that wouldn’t be able to convert to the extent where the business would be deemed effective. 

The STP Model is designed to put you in control of your business, so let’s examine the intricacies of the model and see how it can be implemented and yield amazing results from your business platform. 

What Is the STP Process? 

An STP marketing strategy involves product segmentation, targeting, and positioning: A three-step approach to examining your product or service and how you communicate its benefits. 

You can achieve STP marketing success by dividing your market into segments, targeting select customer segments with marketing campaigns tailored to their preferences, and adjusting your positioning based on their expectations and desires. 

Marketing, segmentation, targeting, and positioning are effective because they allow you to reach and engage your target audiences by breaking down your customer base into smaller groups. 

The majority of customers, i.e., 59%, said that their shopping decisions are influenced by personalization, and another 44% said that a personalized shopping experience leads to repeat purchases. 

As a result of STP marketing, product-focused marketing is being replaced with customer-focused marketing. By embracing this shift, businesses will have the opportunity to better understand who their ideal customers are and how they can reach them to market to them effectively. The more targeted and personalized your marketing efforts are, the greater the chance your marketing campaign will succeed. 

STEP Formula 

STP can be easily remembered using the STEP formula: 

Segmentation Targeting = Positioning 

Upon closer inspection, we can see that the product positioning varies depending on the target segment. As a result, the STP marketing approach is segmentation, targeting, and positioning. 

Segmentation, targeting, and positioning are all parts of the process. Let’s look at each of them in more detail. 


In the STP marketing model, the segmentation process is the first step in setting up the marketing strategy. There is only one main objective here: to create different groups of customers based on multiple criteria and traits that you choose to use. Audience segmentation of a product can be classified into four main categories, which are: 

  • Demographic Segmentation: Establish different segments within your audience based on their age, gender, education level, etc. 
  • Psychographic Segmentation: By breaking your audience down by lifestyle, opinions, hobbies, activities, etc., you will better understand “who” your potential customers are. 
  • Geographic Segmentation: Divide your audience into countries, regions, states, provinces, etc. 
  • Behavioral Segmentation: Based on how your audience interacts with your business: what they buy, what they browse, how often they buy, etc. 


The STP marketing model’s second step is identifying the segment target market. In this step, you should focus on examining the segments you have already created to determine which ones have the highest probability of generating the conversions you wish to achieve. 

In order to achieve maximum profitability, you should target an active, highly profitable segment with a low acquisition cost. 

  • Size: Take into account the size of your segment and its potential for future growth. 
  • Reachability: Take into account the ease or difficulty of reaching each segment of your audience. Take into account the cost of acquiring a new customer (CAC) for each segment. Profitability is lower when CAC is higher. 
  • Profitability: Identify the segments of your target market that will be most willing to spend money on your service or product. Comparing the lifetime values of customers in different segments. 

When choosing an audience to market segmentation target, there are countless factors to consider, so make sure that all the factors you consider align with your target audience’s needs and challenges. 


Lastly, in this framework, positioning is the last step to promote your product or service in a way that allows your target audience to perceive your product or service as different from the competition. The opportunity for you to stand out from your competition is to identify what sets you apart from the other businesses that are doing something similar to you. 

You should have been able to identify your niche quite easily as you considered all the different factors in the first two steps that you considered during the analysis process. You can gain a competitive edge by focusing on three factors when it comes to market segmentation, targeting, and positioning: 

  • Functional Positioning: Provide your customers with genuine benefits and solve their problems. 
  • Symbolic Positioning: Create a sense of belonging for your customers or boost their ego. An excellent example is the luxury car industry, which serves the same purpose as any other vehicle while raising the customer’s self-esteem. 
  • Experiential Positioning: Make sure your brand, product, or service has an emotional connection with your customers. 

All three factors must be considered when trying to establish a successful product positioning strategy. For example, creating a perceptual map for your industry is one method for visualizing this. Identify what is important to your customers and see where you fall on the map when compared with your competitors. 

Why Is the STP Process Important? 

Marketing communications plans can be created using the STP model because it aids marketers in prioritizing propositions and in developing and delivering personalized and relevant messages for varying audiences. 

The goal of your research-based market segmentation phase aims to identify factors that differentiate each market segment and identify a base for segmenting your target customer base. 

When developing your targeting and positioning strategy, you must evaluate each segment’s potential and commercial attractiveness. Then you need to create detailed product positioning for each segment you select and a marketing mix tailored to the segment. 

Benefits of the STP process 

Let’s find out the key benefits of the STP process below: 

  • Cost-Savings in Marketing: By focusing on the segments that are likely to deliver a high return on investment, you don’t waste your budget on ineffective channels. 
  • Improved Engagement: You’re more likely to engage and convert your audience because you’re targeting precise audience segments with personalized messages. 
  • Enhanced Product Durability: By knowing precisely who your product is intended for, you can make adjustments based on feedback from that audience segment. 

Steps Involved in the STP Process 

Listed below are the steps involved in the segmentation targeting positioning process: 

  • Defining the Market 

Any company with the greatest resources can’t possibly compete in the global market because it is too big and too vast. In light of this, you must break the process down into smaller chunks and make sure that you clearly define the part you are aiming for. Typically, when it comes to evaluating your business opportunity, you will need to define your SOM, SAM, and TAM: Serviceable Obtainable Market (SOM), Serviceable Available Market (SAM), and Total Available Market (TAM). 

  • Segment Audiences 

Your target market has been adequately defined, so it’s time to segment it based on factors such as geography, demographics, behavior, and psychographics. In conjunction with each variable, you can create niche segments that make a real impact on your overall marketing efforts. Each segmentation variable helps you tap into a different aspect of your audience. 

  • Profile Segments 

Once you’ve identified your viable market segments, developing segment profiles is time. As with customer personas, segment profiles are detailed descriptions of the people in each segment and act as subsets of your main persona. 

  • Each Segment Should Be Evaluated for Its Commercial Appeal 

By cross-referencing your findings with market data and consumer research, you will assess which of your constructed segments will bring the most return on investment. A number of factors should be considered, including segment size, growth rates, price sensitivity, and brand loyalty. You can then evaluate each segment’s overall value by using this information. 

  • Select Target Audience 

Your next step is to decide which segments are the most viable for your target audiences based on the detailed information you have collected. As part of your business strategy, you’ll have to consider the segment’s attractiveness and competition. 

  • Create a Positioning Strategy 

The next step is to create a positioning strategy that will allow you to compete effectively with the chosen target audience. Consider your competitors and determine how to position your product effectively to gain the most market share. 

STP for Small Businesses 

Small businesses can develop products and marketing communications targeted to their most valuable customer segments through the (segmentation targeting positioning) STP model. In this way, you can build engaging and personalized campaigns, resulting in a high conversion rate from visitors to customers. 

Examples of the STP process 

Apple: The STP model has been nailed by Apple. With a sharp design aesthetic, targeting wealthy demographics with a desire to stand out and be different, it positions itself as a lifestyle brand. Apple adheres to a closed system that emphasizes security in terms of the software ecosystem. As a result, people feel privileged to own Apple products because of the aura of exclusivity they create. With Apple’s STP model, expensive, high-performance luxury gadgets are synonymous with the brand name. 

Coca-Cola: Coke has a worldwide market, which makes it one of the most valuable brands in the world. Pepsi, another brand, is a fierce competitor. The introduction of Coke Zero and Diet Coke gained a competitive edge over Pepsi. Younger, experiential audiences were also targeted with more flavored variants. 

Coca-Cola positions itself as a drink that fosters family and friend relationships. Its advertisements show that Coke is usually featured in get-togethers, festivals, and celebrations. 


Using the STP model, businesses are able to find segments where they can provide value, personalize their marketing communication, and generate sizeable profits. 

So, now you’re aware of the STP model, its process, and its benefits for a business organization. If you’re willing to widen your concepts, you must enroll in the IIM Indore & UNext’s PG Certificate Program in Product Management course.

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