Segmentation targeting positioning

Segmentation targeting positioning (STP) is a three step sequence: split the market into groups, choose which groups to serve, then decide what you will mean to them. The value is the order, because each step hands its answer to the next one.

You cannot target before you segment, and you cannot position before you target. A position is a claim aimed at a named audience — it has nowhere to land until that audience exists on paper.

Three OA entries already cover the first letter. audience segmentation and behavioral segmentation explain how to split a market well. This page is about what happens to that split next.

Key takeaways

• STP runs in one direction: segment, then target, then position.
• Segmentation describes the market, targeting is a funding decision, positioning is a claim.
• A segment is only real if it would change your offer, price, channel or message.
• Positioning claims must be defensible, because advertising law treats them as claims.

How it works

Each step takes the previous step’s output as its input. Segmentation produces groups, targeting picks the ones worth funding, and positioning writes the sentence those chosen buyers should be able to repeat back to you.

Segmentation is subtractive. Discard every split that would not change the product, the price, the channel or the message, and you usually land on four to eight groups — not the nine clusters that look thorough in a deck.

Targeting is where money appears. Score each segment on size, growth, fit and reach cost, then fund the shortlist and say out loud which groups you are not serving — that second half is the one teams skip.

Targeting also sets how many positions you will owe. Serve three segments and you are writing three claims, three price points and three sets of proof, which is a far bigger commitment than the shortlist looks.

The chosen segments need faces. A buyer persona template turns a statistical group into a person a copywriter can write to, which is the bridge between step two and step three.

Positioning is the claim itself. A brand positioning framework forces that claim into a fixed shape: for whom, against what alternative, and with what proof behind it.

The alternative half matters most. A competitive positioning framework names the rival or the status quo you are being chosen instead of, because a position with no alternative is just a description.

Test the claim by trying to contradict it. If no sensible competitor would ever say the opposite, you have written a hygiene statement — and nobody picks a supplier on hygiene.

Market identification is recognised occupational work. The O*NET profile for marketing managers lists conducting commercial surveys to identify potential markets among the tasks the role performs.

Positioning also has a legal floor. The Federal Trade Commission tells advertisers that claims must be truthful and evidence based, which rules out any position you cannot substantiate on request.

Run the sequence again when the market moves, not on a calendar. A new entrant, a pricing shift or a change in regulation can invalidate the targeting decision while leaving the segmentation perfectly intact.

Examples

The sequence looks the same in consumer and business markets, but the unit of analysis changes at every step. Four worked cases follow, and in each one the position is written last.

A Philippine outsourcing provider segments by buyer size and contract shape. It targets mid market firms buying their first offshore team, then positions on speed to a working pod rather than on the lowest hourly rate.

That same split would be useless to a provider chasing enterprise renewals, which is the point: the segmentation only earns its keep against the target the business has actually chosen.

A consumer subscription box segments by order frequency and basket size. It targets weekly bulk buyers, then positions against the supermarket trip rather than against rival boxes.

A payroll software vendor segments by headcount band and country count. It targets firms operating in three or more countries, then positions on compliance coverage, because that is what its chosen target actually buys on.

A clinic chain segments geographically first. It targets catchments within a twenty minute drive, then positions on same week appointments, a claim that only means anything to people who can reach the door.

Related terms

• audience segmentation: the first step on its own, covering how a market is split into useful groups.
• behavioral segmentation: the basis that splits on what buyers did, usually the strongest predictor available.
• brand positioning framework: the fixed shape the third step’s claim gets written into.
• microsegmentation: segmentation taken down to very small groups, which only pays when activation is automated.
• product marketing framework: the wider body of work that carries a finished position to market.

FAQ

What does STP stand for in marketing?

Segmentation, targeting and positioning. It is a three step sequence that moves from splitting a market to claiming a specific place inside a chosen part of it. The vocabulary is standard in both consumer and business marketing.

Why does the order matter?

Each step consumes the previous step’s output. You cannot choose a target before the groups exist, and a position has no audience to land on until a target is chosen.

How many segments should you end up with?

Four to eight for most commercial teams. Beyond that nobody can remember them, and no budget can fund separate treatment for each one. Fold the small groups into a neighbour and serve them with a variant.

Is STP the same as audience segmentation?

No. Audience segmentation is the first step only, while STP is the whole sequence through to a written position.

Who owns the positioning step?

Product marketing usually owns the written claim, while commercial leadership owns the targeting decision before it.

Browse Outsource Accelerator’s outsourcing research and resources to see these three steps in live commercial teams.