What Is STP? How to Use It in Marketing, with Examples

STP analysis is an essential framework for building a marketing strategy. You divide the market through Segmentation, decide which segment to pursue through Targeting, and clarify your own position through Positioning—the initials of these three steps form "STP." This article explains, in beginner-friendly terms, the meaning of STP, how to carry out each step, examples by industry, and how to apply STP to the increasingly popular OMO initiatives (OMO measures).

What Is STP? The Basic Framework of Marketing Strategy

STP analysis is a framework systematized by the management scholar Philip Kotler for capturing a market and designing a strategy. It consists of three steps whose initials form "STP": Segmentation (dividing the market), Targeting (selecting the market to pursue), and Positioning (clarifying your own position).

The purpose of STP is to concentrate limited management resources on the markets that lead to results. If you try to sell everything to everyone, your message becomes blurred and your costs are spread thin. By dividing the market, setting your aim, and clarifying the value only you can offer, it becomes clear "to whom, what value, and how to communicate it"—STP serves as the map for that strategy.

S | Segmentation (Dividing the Market)

Segmentation is the process of dividing a market into groups (segments) that share common needs or attributes. By breaking a vague "whole market" into meaningful smaller clusters, the later steps of targeting and positioning can be carried out concretely.

There are four representative axes (variables) for dividing a market.

• Geographic variables: Country/region, city size, climate, population density, and so on. Useful when you tailor products to differences in regional climate or business customs.
• Demographic variables: Age, gender, income, occupation, family structure, education, and so on. The most basic and easy to handle, and often the starting point for analysis.
• Psychographic variables: Values, lifestyle, personality, interests, and so on. Because they get at the motivation of "why people buy," they help build a brand around empathy.
• Behavioral variables: Purchase frequency, usage occasion, desired benefits, brand loyalty, and so on. Because they are based on actual behavior, they make it easier to predict responses to campaigns.

What matters is that dividing is not the goal in itself. Segmentation becomes meaningful only when, as a result of the split, each segment clearly "wants something different."

T | Targeting (Selecting the Market to Pursue)

Targeting is the process of choosing, from among the multiple segments you have created, the market your company should pursue. Rather than going after every segment, you narrow down to markets that leverage your strengths and are sufficiently attractive.

Targeting approaches can be broadly divided into three types.

• Undifferentiated marketing: Approaching the entire market with the same product and message. Suited to mass markets and daily necessities, but easy to get buried in highly competitive markets.
• Differentiated marketing: Preparing different products or messages for each of several segments. This widens coverage but increases costs.
• Concentrated marketing: Concentrating management resources on a single segment. It pairs well with small and mid-sized companies and startups that have limited resources, and lets you build a strong presence in a specific field.

When evaluating which segment to pursue, look comprehensively at market size, growth potential, the competitive situation, and the fit with your strengths. Using criteria like the "6R" described later helps prevent gaps in your evaluation.

P | Positioning (Clarifying Your Own Position)

Positioning is the process of defining how you want to be perceived, relative to competitors, in the minds of your target customers. Do you want to be chosen for "low price," or for "quality" or "experience"? You clarify the position you want to leave in customers' memory.

A convenient tool for organizing positioning is the "positioning map." You take two factors that customers value when making a purchase as two axes, place your company and competitors on the plane, and look for open positions (room for differentiation).

Examples of axis combinations that are commonly used include the following.

• Price (high / low) × Quality (high / low)
• Functionality (rich / simple) × Design (high / low)
• Specialization (focused / general) × Ease (casual / serious)

The key is to choose axes that are meaningful to customers. When you can set axes based on what customers truly care about, rather than the maker's convenience, your positioning becomes persuasive.

How to Carry Out STP Analysis (4 Steps)

The basic flow for STP is as follows.

1. Segment the market: Use the variables above to divide the market into meaningful groups.
2. Evaluate segments and choose your market: Assess each segment's attractiveness and fit with your company, and decide your target.
3. Design your positioning: Define the position you want to secure among target customers, along with how you differ from competitors.
4. Translate into the 4P (marketing mix): Reflect it in concrete measures for product, price, place, and promotion.

Note that STP is not complete on its own. In practice, it gains consistency when you position it within a sequence: use 3C analysis and SWOT analysis to understand the market, competitors, and your own company, then carry out STP, and finally give it concrete form through the 4P.

STP Examples | Approaches by Industry

STP can be used regardless of industry. Here we organize representative patterns as approaches by industry (these are typical examples commonly seen in each industry).

Example: Video Streaming Services

Segment by behavioral variables such as genre preferences and viewing times, and concentrate on the "segment that wants to savor content" (concentrated / differentiated). A design worth considering is to position not on low price but on the richness of original content and a comfortable viewing experience.

Example: Coffee Chains

Targeting the segment seeking a "third place that is neither home nor work," and positioning on the quality of space and experience rather than price competition—this is a classic example of positioning built around experiential value.

Example: Cosmetics Brands

A differentiated approach is common: segment finely by demographic and behavioral variables such as age and skin concerns, and prepare brands or lines for each concern. They position on stances that address concerns, such as "for sensitive skin" or "anti-aging focused."

What all these examples share is that they "use STP to find territory where they don't have to compete on price." By defining who chooses you and for what value, you become able to compete on grounds other than price.

How to Apply STP to OMO Initiatives

A recent focus in marketing is OMO (Online Merges with Offline). OMO refers to the idea of removing the barrier between online and offline and designing the customer experience as one integrated whole. And the foundation for building effective OMO initiatives (OMO measures) is, in fact, STP.

OMO initiatives tend to look like a story about channels—"linking an app with stores" or "integrating e-commerce and physical store inventory"—but simply connecting channels does not lead to results. Unless you answer the STP question of "to whom and what value do we deliver," your efforts will spin their wheels. The three steps of STP function as follows in OMO initiatives.

• Segmentation: Integrate online data (e-commerce, app, web behavior) and offline data (in-store purchases, visit history) to build segments based on actual behavior across channels. You can draw a far higher-resolution picture of the customer than in an era when online and offline were viewed separately.
• Targeting: Decide which of the integrated segments should be prioritized for which channel experience. For example, you might aim at the "segment that compares and considers online, then makes the final purchase in store."
• Positioning: Design a consistent brand perception both online and offline. If the app experience and the in-store experience are inconsistent, even a well-intended OMO initiative can backfire.

Concrete links between OMO initiatives and STP include the following.

• Segment-specific coupons using integrated data: Integrate app membership data and in-store purchase data, and vary the optimal coupons and recommendations by segment.
• Online measures that drive store visits: Identify segments with a high likelihood of visiting from online behavior (targeting), and guide them naturally to the store experience.
• A consistent cross-channel experience: Unify positioning so that the same brand value comes across wherever customers touch it—e-commerce, app, or store.

In this way, the success or failure of OMO initiatives depends far more on "how clear your STP is" than on channel integration itself. Conversely, once STP is set, OMO initiatives become easier to translate into concrete actions of "to whom, what value, and through which combination of channels to deliver it."

Note that to integrate customer data spanning online and offline and to visualize the results of measures at the segment level, it helps to have a foundation that centralizes data, making practical work smoother. If data is fragmented by channel, you cannot even create the integrated segments that OMO initiatives presuppose.

Points for Making STP Analysis Succeed

Finally, here are the points for making STP work in practice.

• Evaluate segments with the "6R": Assess whether a segment is worth pursuing from perspectives such as Realistic Scale, Rank, Reach, Rival, Response (measurability of response), and Rate of Growth.
• Judge with data, not assumptions: Rather than a hunch that "this segment will probably buy," decide segments and targets based on actual customer data.
• Review regularly: Markets and customers change. Do not fix an STP once made; keep updating it while watching the data.
• Maintain consistency with the 4P: Check the overall coherence so that your defined positioning and your product, price, place, and promotion do not clash.

Summary

STP is the basic framework of marketing strategy: dividing the market (Segmentation), setting your aim (Targeting), and deciding your position (Positioning). It becomes a "map" for concentrating limited resources on markets that yield results and for being chosen on grounds other than price. And even in efforts that span online and offline, such as OMO initiatives, what ultimately decides success is the clarity of STP—"to whom and what value do we deliver." Start by capturing your own customers with data and dividing them into meaningful segments, and take your first step in STP.