How to Use the STP Analysis Method


Introduction to STP Analysis

STP stands for segmentation, targeting, and positioning, and it is a method of marketing used by companies to strategize their products and services for potential customers. It is a way for companies to differentiate their product from their competitors and create an effective marketing mix.

In this article, we will discuss the basics of STP analysis and how it can help your business.

What is STP Analysis?

STP Analysis is an approach used in marketing to understand the target customers of a business, as well as the overall market. The acronym stands for “Segmentation, Targeting, and Positioning”; each element addressing a different component of strategic marketing.

Segmentation involves breaking down the total addressable market and dividing it into more manageable groups based on shared characteristics and needs. Segmentation is essential to ensure that appropriate messages are delivered to the right people at the right time.

Targeting describes how marketers narrow down their segmentation and choose which subset of customers they will focus their efforts on. They consider factors such as economic status, demographic profile, literacy level and other relevant data to identify preferred target markets.

Positioning refers to how a brand or product is perceived in comparison with competitor offerings; it focuses on positioning within the minds of customers in order to create recognition and loyalty. To accomplish this, marketers will emphasize certain features or benefits in order to differentiate itself from competitors while staying true to its core values. This can be accomplished through various tools such as pricing strategies and advertising messages tailored for each target audience.

Benefits of STP Analysis

The STP Analysis is a marketing strategy that helps businesses to understand and segment the market, target customers more effectively, and position their products in order to compete with competitors. It stands for Segmentation, Targeting, and Positioning. This method provides an effective way for companies to evaluate their current situation in the industry, identify customer needs and respond to them accordingly.

Segmentation involves the grouping of customers into homogeneous segments based on certain characteristics such as demographics, psychographics, lifestyle/behavioral characteristics or geographical area. Through segmentation, companies can gain an understanding of the various needs of different customer groups and adjust their programs / products strategically according to those specific needs.

Targeting is then used to choose from these segments which ones the company should focus on in order to achieve higher ROI (Return On Investment). When it comes to targeting markets or potential buyers, there are broadly two options – mass targeting (for low budget campaigns) or niche targeting (for higher budgets campaigns). Additionally target markets can also be chosen by considering factors such as geographic location or interests within a particular segment.

Positioning involves creating a differentiated image/message within each of these chosen segements so that they stand out from competitors. It entails crafting brand identity through insights drawn from research related to psychology of consumer decision-making and behavior; it requires matching up customer requirements with unique product features offered by the business. Some successful positioning strategies include:

  • Authorisation & endorsements from established authorities
  • Offering unique products
  • Undercutting competitors with lower costs
  • Delivery of superior service
  • Leveraging common associations (such as brands associated with luxury items etc.)

Through positioning businesses can create an image for themselves that supports the corporate objectives while staying true within the customer expectations /requirements & trust level created by consistent communication & long relationship building efforts along with effective customer support & satisfaction.


The segmentation step of STP analysis is used to divide a target market into smaller, distinctive groups of consumers. This helps businesses identify different groups of people who have different needs and wants, and therefore can be targeted in different ways. Segmentation allows businesses to understand their market better so that they can create effective marketing campaigns.

This section will explain how to use the STP Analysis Method for segmentation:

Identify target market segments

Identifying the right target market segments will ensure you gain the most out of your marketing efforts. The STP Analysis Method (which stands for Segmentation, Targeting and Positioning) is an effective way to identify and assess your business’s potential market segments.

This method requires a thorough understanding of who your existing customers are, what motivates them and how they interact with your products or services. Here are the three key steps for conducting a successful STP analysis:

  1. Segmentation: Segmentation is the process of breaking down a large, homogenous market into smaller and more distinct segments in order to better target each segment with tailored messages. During this step, you must study characteristics such as geography, demographics (age, gender, income level), lifestyles and behaviors. From this data you can create profiles of ideal customer types that fit within each segment – helping you determine which markets would be best suited to benefit from what you have to offer.
  2. Targeting: Once you’ve identified which segments contain potential customers that could successfully benefit from your offering, it’s time to select which ones to target. You should take into account factors such as how profitable those customers would be; whether they’re easy or difficult to reach; how loyal they typically are; and whether they respond well to certain types of marketing campaigns or messaging strategies. Here’s where careful research and thoughtful consideration will help point out any hidden opportunities that may exist within these industries or sectors.
  3. Positioning: Positioning involves crafting effective messaging for each individual segment in order to influence customer perceptions about the product or service being offered. It involves determining which features will have the greatest impact on each individual customer type; what frustrations might exist in their decision-making journey; as well as tailoring any messaging strategies on budget constraints or sales defects going forward. The goal here is to ensure that all communication speaks directly to their specific needs while providing a clear message on why they should select your offering over another competitor’s offering.

Analyze each segment’s needs and preferences

The key to successful segmentation is thorough analysis of each segment. Analyzing each segment’s needs and preferences involve gathering detailed information and identifying potential differences in the market. This must be carried out in order to gain an accurate understanding of the marketplace, identify what differentiates each segment from another, and develop insights into how best to tailor marketing efforts for maximum relevance and effectiveness. To achieve this requires knowledge about both consumers and their market environment.

When undertaking this step in STP analysis, questions to consider include:

  • Who makes up each segment? Who are the target customers?
  • What are their basic demographic characteristics?
  • Do they have shared needs and wants around which strategies can be developed?
  • How do they differ from one another? What sets them apart from others?
  • What attitudes or behaviors toward products or services do they have that vary across segments?
  • To what external influences are they exposed (e.g., economics, lifestyle)?
  • How accessible are they to marketing efforts, or how difficult will it be to reach them with messages tailored for them?
  • What resources are available for communicating with them effectively (e.g., media outlets)?


The STP analysis method is a popular tool used by marketers to plan their marketing activities. It stands for segmentation, targeting, and positioning, and it is the first step to understanding the needs of the consumer and their target market.

Targeting is an important step of the STP process, as it helps marketers determine which segment of the population they should focus their efforts on. In this section, we will discuss the different strategies for targeting the correct population for a product or service:

Evaluate the attractiveness of each segment

Once the market has been divided into clearly defined segments, the next step in the STP analysis is to evaluate the attractiveness of each segment. This means considering multiple factors related to sales volume, customers’ needs, growth trends and competitor activity.

To properly assess each segment’s potential for success, companies need to investigate customer interests and needs. After all, customer preferences are a key determinant in deciding whether or not they will purchase a product. When evaluating target markets, marketers should ask themselves questions like “What types of customer needs are we best able to meet?” and “What factors will draw customers to our offering instead of our competitor’s?”

Marketers must also consider other factors like how competitive each segment is. How much does it cost for entry into this market? Are there any legal or regulatory issues that need to be taken into account? Also how quickly is the potential customer base growing or shrinking? All these factors influence whether or not it makes sense for a company to invest resources in any given segment.

By evaluating factors such as competition level, customer needs and growth trends, companies can accurately assess which prospects offer the most potential for success and decide which ones they should target. Only then can they proceed with an effective marketing plan that optimally meets the demands of their target audience and leads them towards achieving their long-term business objectives.

Select the segments to target

Selecting the right market segments to target is a critical step in creating a successful marketing strategy. The STP (segmentation, targeting and positioning) analysis is a method you can use to determine the best way to segment your markets to reach your desired customers.

  • Segmentation: This process involves dividing the market into distinct groups based on characteristics such as age, gender, lifestyle, interests and geography. To do this effectively, you should first analyze your current customer base data and use demographic clusters that are likely to buy from you in the future.
  • Targeting: Once you’ve identified potential segments through market segmentation, you can begin to select which of these segments will become your primary target markets. This process may involve trade-offs between groups that have greater potential versus those with smaller potential or other considerations such as budget constraints or geographic accessibility. You must also decide whether or not to pursue multi-segment or concentrated segment positioning strategies.
  • Positioning: This final step involves developing a carefully crafted message that differentiates your products/services from competing offers while highlighting the benefits they provide customers in each of your chosen target markets. Your messages should be tailored according to the needs of each individual segment and should take into account areas such as focus attributes, price points and value offerings specific to each group.


STP stands for Segmentation, Targeting, and Positioning, and is an important analysis method used in marketing. When it comes to positioning, the idea is to gain a clear understanding of who your target market is, and how to make your offer stand out from your competitors. This analysis can help you:

  • Identify the right target audiences.
  • Develop effective messages.
  • Select the right distribution channels.

Knowing how to use the STP analysis method effectively can give you a competitive edge in the market.

Develop a positioning statement for each target segment

Positioning involves creating an identity for your product or services in the mind of the consumer. It is important to write a positioning statement for each target segment that you are looking to reach as it will help guide your marketing and promotional materials.

The goal of a positioning statement is to make sure that your communication clearly reflects the key benefits and values associated with your product or service that will resonate with each of your target segments. This goes beyond physical characteristics or pricing; it should focus on how you are presenting yourself as a company and outline expectations of quality, values, customer service and more.

Creating compelling, meaningful position statements requires thorough research and thoughtfulness. You should use all the data you have gathered from various sources – such as surveys, customer feedback, research studies – to create supporting statements that quantify and demonstrate why consumers should form relationships with your brand.

Your positioning statements should incorporate both quantitative and qualitative information about what products/services you are offering – price points, features/benefits, return policies, etc., – in order to properly differentiate yourself from other competitors within each target segment market. Additionally, connecting personal experiences or stories to support how these benefits positively impact customers’ lives can be very impactful in addition to helping increase engagement with potential customers.

Overall, developing strong positioning statements for each target segment can help not only solidify a unique identity for your products/services but also aid in increasing awareness among customers concerning how beneficial working with you could be!

Develop a unique value proposition for each target segment

Creating a unique value proposition is key to any successful positioning strategy. A value proposition explains what makes your product or service different from the competition and identifies the benefits it offers customers. It should be tailored to each target segment and emphasize the main benefit that segment finds most attractive.

When creating a unique value proposition, consider three elements:

  1. Identifying who can benefit from your product: Why do customers need what you’re offering? What problem(s) does it solve? What results can customers expect?
  2. Comparing different offerings in the marketplace: How does your product or service stand out from those of competitors?
  3. Building customer relationships: What factors influence how customers feel about their purchase—including customer service, quality, ease of use and availability?

Once you have these elements in place and have developed your substantive value propositions for each target segment, make sure they don’t conflict with each other and come together to form a cohesive message that effectively targets all segments. You’ll also want to ensure that all segments receive transparent, honest messaging regarding the benefits they will experience if they decide to purchase your product or service.


The STP analysis method can be an extremely useful tool when it comes to understanding consumer behaviour and identifying the right target audience. It can help you better understand the consumer behaviour and design appropriate strategies and tactics to reach your target market.

In conclusion, it is a great tool for getting insights into your market and helping you craft successful strategies.

Summary of STP Analysis

The STP Analysis method is a framework used by marketers to understand their target market and to plan marketing activities. By segmenting the target market, targeting segments, and positioning the brand in relation to existing competition, marketers are able to create powerful strategies that will drive profitability and growth for their business.

The cornerstone of STP Analysis is understanding the customer; it helps companies identify their key customer segments, decide which of these customers they will serve, and develop strategies for engaging them effectively. By segmenting customers based on factors such as geographical area, demographic characteristics, lifestyle choices, or buying behavior—firms can develop targeted marketing tactics that reach even deeper into customers’ hearts and minds.

Next comes target marketing; through this step companies focus on particular customer groups based on similar traits or advantages offered by their offering. Thirdly is product (or service) positioning; this stage involves developing a unique image in the mind of customers related to what they offer or where they stand relative to their competitors in terms of features or pricing. Finally is planning; companies need to determine how they are going to reach their desired market by setting objectives, plans of action/responses, and budgets according all prior–mentioned decisions.

In conclusion, STP Analysis provides marketers with a holistic view of the market which will help them come up with well-designed strategies that are tailored around customer’s needs & wants – leading businesses towards more profits & ultimately higher growth rate.

Benefits of STP Analysis

The STP analysis method provides marketers with a clear approach to breaking down different sectors of the market, defining customer needs and targeting the right product or service at the right people. This process can help businesses to identify potential opportunities, as well as any areas of weakness in their current marketing strategy.

The key advantages of using STP Analysis are:

  1. Improved Targeting and Segmentation – Allows for better understanding of customer needs and target audiences, leading to improved targeting with more appropriate messages or products.
  2. More Focused Promotional Strategies – Helps businesses craft more specific strategies that use methods most likely to engage customers in their chosen market segment.
  3. Improved Customer Retention – Through further understanding of customer needs, businesses are able to build relationships that last longer and have happier customers who become brand advocates.
  4. Increased Efficiency – Outlines a larger view of the marketplace, allowing businesses to make more informed decisions about their markets and how they allocate resources effectively to maximize sales potential more efficiently.
  5. More Powerful Positioning Strategies – Identifies the most important benefits a product needs in order to compete effectively in its chosen market segment; this allows marketers to create powerful positioning statements that differentiate them from their competitors.