STP Marketing Framework: Segmentation, Targeting & Positioning
STP (Segmentation, Targeting and Positioning) is a strategic marketing framework used to identify customer groups, select the most attractive market segments and establish a differentiated position for a brand or product. It helps businesses focus marketing resources on the right audiences and deliver relevant value propositions.
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1. Segmentation
Segmentation is the process of dividing a broad market into smaller groups of customers who share similar characteristics, needs, preferences or behaviours.
1.1 Segmentation Types
1. Demographic Segmentation
Groups customers based on age, gender, income, occupation and education.
Example: Young professionals or high-income households.
2. Geographic Segmentation
Groups customers according to location, country, city, region and climate.
Example: Customers in the UAE or Saudi Arabia.
3. Psychographic Segmentation
Groups customers based on lifestyle, interests, values, attitudes and personality.
Example: Entertainment enthusiasts or technology enthusiasts.
4. Behavioural Segmentation
Groups customers according to purchasing habits, product usage, loyalty and engagement.
Example: Frequent users, occasional buyers and loyal subscribers.
5. Needs-Based Segmentation
Groups customers according to their problems, expectations and desired outcomes.
Example: Customers seeking affordable entertainment or family content.
6. Value-Based Segmentation
Groups customers according to their current or potential business value.
Example: High-value subscribers and customers with strong lifetime value potential.
The first four are traditional segmentation bases. Needs-based and value-based approaches provide additional ways to refine customer groups.
1.2 Segmentation Quality Criteria
Effective market segments should meet five criteria:
Measurable: Can be identified and quantified.
Substantial: Large or profitable enough to serve.
Accessible: Can be reached through appropriate channels.
Differentiable: Respond differently to marketing activities.
Actionable: Can be effectively served by the business.
1.3 Customer Personas
A customer persona is a research-based representation of a typical customer within a market segment.
Personas help businesses understand customer motivations, needs, preferences and behaviours.
Examples:
Family Viewer: Interested in kids and family entertainment.
Movie Enthusiast: Looks for the latest movies and exclusive content.
Sports Fan: Interested in live sports and sporting events.
Arabic Content Viewer: Prefers Arabic entertainment and regional programming.
Typical persona attributes include demographics, goals, motivations, pain points, preferences, purchasing behaviour and preferred communication channels.
Personas should be based on customer research and actual behavioural data rather than assumptions.
2. Targeting
Targeting is the process of evaluating market segments and selecting those that offer the best business opportunities.
2.1 Segment Evaluation
Businesses should consider the following factors when evaluating market segments:
Market Size: Number of potential customers.
Growth Potential: Expected market expansion.
Profitability: Revenue and margin potential.
Accessibility: Ability to reach the segment.
Competition: Competitive intensity.
Strategic Fit: Alignment with business objectives.
Customer Lifetime Value: Potential long-term customer value.
Business Capability: Ability to serve the segment effectively.
Segment Attractiveness vs Competitive Strength
Segment Attractiveness: Is the market commercially attractive in terms of size, growth and profitability?
Competitive Strength: Can the business compete successfully through its capabilities, resources and differentiation?
2.2 Segment Scoring Model
A weighted scoring model helps compare market segments objectively.
Example evaluation weights:
Market Size – 20%
Growth Potential – 20%
Profitability – 25%
Accessibility – 15%
Strategic Fit – 20%
Score each criterion from 1 to 5.
Weighted Segment Score = Sum of (Criterion Score × Criterion Weight)
The highest-scoring segment may represent the most attractive opportunity, subject to business capabilities and strategic priorities.
2.3 Targeting Strategies
1. Undifferentiated Marketing (Mass Marketing)
One product and one marketing strategy for the entire market.
Example: A basic subscription offering promoted to a broad audience.
2. Differentiated Marketing (Segmented Marketing)
Different offerings or campaigns for different customer segments.
Example: Separate campaigns for families, sports fans and movie enthusiasts.
3. Concentrated Marketing (Niche Marketing)
Focus on one specific and well-defined market segment.
Example: Premium services targeting movie enthusiasts.
4. Micromarketing (Individual Marketing)
Highly personalised marketing for individuals or very small customer groups.
Example: Personalised recommendations based on individual viewing behaviour.
3. Positioning
Positioning is the process of establishing a unique and desirable place for a brand or product in customers' minds compared with competing alternatives.
It communicates why customers should choose one offering over another.
3.1 Brand Positioning vs Product Positioning
Brand Positioning
Establishes overall brand perception.
Focuses on brand identity, reputation and long-term differentiation.
Applies across the broader brand portfolio.
Product Positioning
Establishes the perception of a specific product.
Focuses on product features, benefits and competitive advantages.
Can vary across different products and offerings.
3.2 Positioning Strategies
1. Attribute-Based Positioning
Highlights specific product features or characteristics.
Example: Advanced technology or superior performance.
2. Benefit-Based Positioning
Emphasises the benefits customers receive.
Example: Convenience, time savings or improved productivity.
3. Price and Quality Positioning
Positions products based on affordability, value or premium quality.
Example: Budget versus premium products.
4. Competitor-Based Positioning
Differentiates a brand against competing alternatives.
Example: Positioning as an alternative to an established market leader.
5. Usage-Based Positioning
Focuses on specific usage occasions or situations.
Example: Entertainment for family evenings.
6. Customer-Based Positioning
Targets a specific customer group with relevant messaging.
Example: Technology solutions designed for professionals.
3.3 Positioning Essentials
Points of Parity (POP)
Essential attributes or benefits that allow a brand to compete within its category.
Points of Difference (POD)
Distinctive attributes or benefits that make a brand more attractive than competitors.
Reasons to Believe (RTB)
Evidence that supports the brand's promises and claims.
Value Proposition
The overall value and benefits a product or service promises to deliver to its target customers.
3.4 Positioning Statement
A positioning statement communicates the target audience, product category, unique benefit and reason to believe.
Formula:
For [Target Audience],
[Brand/Product] is the [Product Category]
that provides [Unique Benefit]
because [Reason to Believe].
Illustrative Example:
For entertainment enthusiasts, our streaming service provides a premium entertainment experience through a compelling collection of regional and international content.
A positioning statement is an internal strategic guide that informs brand messaging, product development and marketing communications.
3.5 Perceptual Mapping
A perceptual map is a visual tool used to understand how customers perceive competing brands based on two selected attributes.
Illustrative dimensions:
X-axis: Affordable to Premium.
Y-axis: General Entertainment to Specialised Content.
Applications:
Understand competitor positioning.
Identify market gaps.
Discover differentiation opportunities.
Evaluate brand perception.
Guide positioning decisions.
Perceptual maps should be based on customer research rather than internal assumptions.
4. STP Workflow
A practical sequence for developing and executing an STP strategy:
Research: Understand the market, customers and competitors.
Segment: Divide the market using relevant segmentation criteria.
Create Personas: Develop and validate customer profiles.
Evaluate & Select: Assess segment attractiveness and competitive strength, then select priority segments.
Position: Define the value proposition and competitive differentiation.
Execute: Translate the strategy into marketing activities and customer experiences.
Measure & Refine: Monitor performance and improve the strategy based on customer insights.
5. STP in Digital Marketing
STP provides the strategic foundation for targeted and personalised digital marketing.
SEO
Develop content and keyword strategies aligned with customer needs and search intent.
Paid Advertising
Target selected customer segments through Google Ads and social media.
Website & CRO
Create relevant landing pages and optimise customer journeys.
CRM & Segmentation
Group customers based on demographics, interests and behaviour.
Marketing Automation
Build segment-specific campaigns and lifecycle journeys.
Personalisation
Deliver relevant recommendations, content and offers.
Analytics
Measure segment-level acquisition, conversion, revenue and retention.
6. STP and the Marketing Mix (4Ps)
STP defines the strategic marketing direction, while the 4Ps translate that strategy into execution.
Product
Develop offerings that meet target customer needs.
Align product features with customer expectations.
Price
Establish pricing aligned with customer value and willingness to pay.
Develop suitable pricing and promotional strategies.
Place
Select appropriate distribution channels.
Ensure product availability across relevant markets and platforms.
Promotion
Communicate relevant messages to target audiences.
Select suitable marketing channels and campaigns.
STP determines: Who should we serve, and how should we differentiate?
4Ps determine: What should we offer, how should we price it, where should we distribute it and how should we promote it?
7. KPIs & Performance Measurement
STP performance should be evaluated across customer acquisition, revenue, retention and brand performance.
Segmentation
Segment size and growth.
Customer profile coverage.
Targeting
Customer Acquisition Cost (CAC).
Target audience reach.
Conversion rate.
Target segment penetration.
Revenue & Profitability
Segment revenue.
Contribution margin.
Segment profitability.
Campaign Return on Investment (ROI).
Customer Value & Retention
Customer Lifetime Value (CLV).
CLV/CAC ratio.
Average Revenue Per User (ARPU).
Retention rate and churn rate.
Repeat purchases.
Brand & Market Performance
Brand awareness.
Brand consideration.
Brand preference.
Brand perception.
Market share and share of target market.
Performance should be analysed at the segment level wherever possible to identify which audiences generate the greatest business value.
8. Similar & Related Frameworks
JTBD (Jobs to Be Done): Understand customer motivations and desired outcomes.
Value Proposition Canvas: Match customer needs with product value.
Customer Persona: Represent typical target customers.
Business Model Canvas: Understand how a business creates and captures value.
Marketing Mix (4Ps / 7Ps): Translate strategy into marketing execution.
SWOT Analysis: Evaluate strengths, weaknesses, opportunities and threats.
PESTEL Analysis: Analyse the external business environment.
Porter's Five Forces: Evaluate industry competition.
Key Takeaways
Segmentation: Who are the different customer groups?
Targeting: Which customer groups should we prioritise?
Positioning: Why should these customers choose us?
Ultimate Objective: Deliver the right product to the right customer with a differentiated and relevant value proposition, while maximising customer satisfaction, competitive advantage and business profitability.
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