Marketing Technique – STP

A common method for defining a target market is STP, which stands for Segmentation, Targeting, and Positioning. The main advantage of the STP approach is that it forces you to focus on the customer rather than on the product.

First, you divide the overall market into segments of people with common characteristics and needs. You must select a segmentation approach that fits your needs. Four common approaches are:

  • geographic segmentation ( country, region, state, province, etc.)
  • demographic segmentation ( age, gender, education, occupation )
  • behavioral (what they buy, how often, where, how they use the product)
  • psychographics (lifestyle, hobbies, activities, opinions, values )

Once you have divided your audience into different segments, you’ll assess those segments in terms of size, the likelihood of purchasing your product, profitability, and reachability. Based on your assessment, you will select one or more segments to be your target market.

Positioning is what allows you to set your product or services apart from the competition in the minds of your target audience. It is about creating, for each of your target markets, a message and a marketing mix that is most likely to appeal to that audience

Interesting STP Links
YouTube Video: What is Segmentation, Targeting and Positioning – Learn Marketing with Stories
The Complete Guide to STP Marketing: Segmentation, Targeting & Positioning
Segmentation, Targeting and Positioning (STP) Model

Market Analysis

During the Market Research phase, you gathered facts. During the Market Analysis phase, you will analyze those facts to understand better your customers, competition, and industry you operate in.

When conducting a market analysis, you should cover the following three angles:

  1. Industry analysis to assess the general industry environment in which you compete
  2. Target market analysis to identify and quantify the customers that you will be targeting for sales.
  3. Competitive analysis to identify your competitors and analyze their strengths and weaknesses.

Industry Analysis
Conducting an industry analysis is usually easy because market reports for industries are readily available on the Web. Find out the industry’s size, how it is segmented, and who the big players are.

Three commonly used methods for performing industry analysis are: 
Competitive Forces Model (Porter’s 5 Forces) 
– Broad Factors Analysis (PEST Analysis) 
– SWOT Analysis 

To find out more on each of the three above methods, read our Industry Analysis post.

Target Market Analysis
No one can afford to market to everyone. Defining a target market allows you to focus your marketing dollars on the market that is the most likely to buy from you.

Your target market analysis should answer who, what, when, where, why, and how. Find out who your potential customers are by defining their age, gender, ethnic background, education, occupations, and income levels. What are their lifestyles, attitudes, interests, hobbies, aspirations, and needs? When are they going to buy in terms of seasons, days, or hours? Where do your potential customers live, work, shop, hang out? Why would they purchase from you rather than the competitors? How do they search, find, select and buy?

Competitive Analysis
You must get a comprehensive understanding of where you are positioned within the competitive landscape.

Who are your direct competitors?
What is their market share?
What are their strengths and weaknesses?
Who are your indirect competitors?
What products and services do they offer?
How do they market their products?
How do they price their products and services?
Where do they stand in terms of the use of technology?
What are they doing right?
What other products and services can be substituted for yours?
Where will you position yourself in terms of size, price, quality, or other? What makes you unique?

A good article on competitive analysis can be found at