The Basic STP Process

 

Understanding the Basic STP model

In marketing, STP stands for market segmentation, targeting  (or target market selection) and product positioning.

Most marketing textbooks will show the STP as three broad steps. In the following diagram, the three foundation stages of segmentation, targeting and positioning are shown, along with a final implementation stage of marketing mix development.

It is important to understand that the STP process (the first three stages) is always followed by the development and implementation of a marketing mix.

A good way to think about the STP process is that it is a analytical approach that helps the firm make important ‘where’ (target market selection) and ‘how’ (product positioning) to compete marketing strategy decisions.

Therefore, the additional of the fourth stage in the diagram simply highlights the need to effectively execute these strategic decisions.

You should note the use of the arrow in the model, which indicates that STP is a sequential process. The starting point is always market segmentation, which allows the marketer to view different consumer needs and categories in the overall market. Typically a marketer would look between three to ten market segments when dividing up one particular market. The marketer can then assess which segments best fit with the firm’s strategy and resources, as well as assessing the current and future attractiveness of each segment. (Please see how target markets are selected’.)

 

The STP process for marketing

Based on this market segment analysis and evaluation, the firm will select one or more of the market segments to form part of their marketing program. The market segment that they select is then referred to as a target market. Therefore, a target market is simply one of the many market segments available to the company that the firm has deliberately selected for the purposes of their marketing programs.

After selecting a target market, the organization needs to consider how it will construct its marketing program to achieve success. There are two parts to this as shown in the diagram above. The first is positioning, which is how the firm wants its products to be perceived (understood) by consumers in that particular market. (For more details, please refer to What is positioning?). Once the desired positioning has been determined an appropriate and supportive marketing mix then needs to be developed and implemented by the firm.

For a greater understanding of the STP model, you should review the Full STP Process.