What is the STP Process?

About the STP process in marketing

The STP process is an important concept in the study and application of marketing. The letters STP stand for segmentation, targeting, and positioning. The STP is a fundamental concept in marketing success, as without it firms would have relatively generic marketing strategies and would generally fail to compete effectively.

In some marketing textbooks, the STP process is essentially that textbook’s description of how to construct marketing strategy – as target market selection and positioning are key strategic decisions for a brand.

Please note that STP is sometimes broken into STDP in some marketing textbooks as well, where the D stands for differentiation. However, differentiation is essentially a component of positioning. You can read about the STDP process here.

STP is a linked process

The steps in STP is commonly referred to as a process, with segmentation being conducted first, then the selection of one or more target markets and then finally the implementation of positioning.

Although the letters STP represent three important concepts in marketing, they are essentially one integrated process and  work together to deliver a top-level marketing strategy, which is then executed by the marketing mix.

The goal of the STP process is to guide the organization to the development and implementation of an appropriate marketing mix, as highlighted in the following diagram.

As suggested by the above diagram, the intention of the overall STP process is to improve the firm’s marketing mix design. In other words, the construction of the marketing mix collectively creates the product positioning, which in turn appeals to the target market consumer.

STP answers key strategic marketing questions

In marketing, the STP components and process answers multiple important questions for the firm, such as:

  • Where to compete? Is answered by market segmentation and then the selection of the target market.
  • How to compete? Is answered by the positioning strategy and the implementation of a supportive marketing mix.

the role of STP in marketing As you can see from the above diagram, the STP marketing process progressively defines the marketing strategy decisions for a firm. At the outset, the firm needs to consider what market they are competing in – which is addressed by the segmentation of a defined market.

The market segmentation task allows attractive and viable segments to be identified, which then allows the firm to further fine-tune its marketing decisions and answers the question “where to compete?” And the final part of the STP process is identification of a suitable positioning for the product or brand within the selected target market – which answers the question “how to compete?”.

Definitions of segmentation, targeting and positioning

Market segmentation can be defined as:

  •  The process of splitting a market into smaller groups with similar product needs or identifiable characteristics, for the purpose of selecting appropriate target markets.

Targeting (or target market selection) refers to:

  •  An organization’s proactive selection of a suitable market segment (or segments) with the intention of heavily focusing the firm’s marketing offers and activities towards this group of related consumers.

And positioning (which is sometimes referred to as product positioning) is:

  • Positioning is the target market’s perception of the product’s key benefits and features, relative to the offerings of competitive products.

STP models

There are two alternate models that help marketing students understand the STP process.

The introductory model simply uses the three letters of STP to highlight the core elements of the process, namely segmentation, targeting and positioning.

This approach is shown in the following diagram and discussed in the Basic STP Process section.

Basic STP Process of segmentation, targeting and positioning

While this basic model is a good starting point for understanding the overall process, there are a number of smaller steps that should also be understood, which are outlined in the following diagram and discussed in the Full STP Process. By reviewing this more detailed approach, students will gain a much greater understanding of this important marketing concept.

Full steps for the overall segmentation, targeting and positioning process

The advantage of the above nine step STP process in marketing is that it provides some details and clearer steps on what the marketer has to do to work through the process.

In addition to the three basic STP steps, the above diagram makes it clear that firms need to firstly define their overall market, and then after the segments are identified they need to be evaluated for their effectiveness and segment profiles then need to be developed.

Following that, the most attractive and appropriate market segments for the firm are selected to be their target market/s. And you will note, that following the development of their positioning strategy, then the marketing mix is then designed around the needs of the target market and the desired product positioning.

Please review the article on the full steps of the STP process in marketing.

And also review the article on STDP = segmentation, targeting, differentiation and positioning.

Academic Readings

Market segmentation: strategies for success