Segmentation, Targeting, and Positioning Model (STP)
STP takes a broad market, breaks it into segments, picks the ones worth chasing, then decides exactly how you want to be seen in the minds of that segment.
Market width narrows in three steps down to one chosen position in the customer's mind.
Reach for this when…
- You're trying to be 'for everyone' and converting almost no one.
- Two customer groups want opposite things from the same product.
- Your positioning statement changes every time a different person writes it.
How to run it
- Segment the market by need, behaviour, or value, not just demographics.
- Evaluate each segment for size, growth, fit with your capability, and reachability.
- Target the segment or segments you will actually build for and price for.
- Position: define the one thing that segment should believe about you versus alternatives.
- Write that positioning down and check every product and message against it.
A worked example
Situation. Kaur Tamm launched Tamm Snacks, a healthy-snack producer in Tallinn, Estonia, with a range that tried to appeal to health-conscious adults, budget shoppers, and children's lunchboxes all at once.
Applied. He segmented by actual buying occasion, targeted only the health-conscious commuter segment, and positioned the range as the fast, guilt-free option for people eating at their desks.
Result. Sales in convenience stores near office districts tripled once the packaging and messaging stopped trying to speak to three different buyers at once.
The catch
STP looks linear but positioning failures usually trace back to a lazy segmentation step - segment badly and no amount of clever positioning fixes it. It also assumes you can afford to walk away from segments you don't target; in a small business that discipline is often the hardest part.
If your positioning statement could describe your biggest competitor too, you haven't actually positioned anything.
Origin: Philip Kotler, who synthesised the framework from Wendell Smith's 1956 work on market segmentation and Al Ries and Jack Trout's work on positioning (1969 onward).