THE COMPLETE GUIDE TO STP

MARKETING: SEGMENTATION, TARGETING & POSITIONING

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BY MARIANNE WRIGHT
• Table of Contents:

1. What is STP marketing

2. The STEP formula
3. Benefits of STP marketing
4. STP marketing example: The Cola Wars
5. How to build an STP marketing strategy
STP marketing is effective because it focuses on breaking your customer base into
smaller groups, allowing you to develop very specific marketing strategies to 
reach and engage each target audience. 

In fact, 59% of customers say that personalization influences their shopping

decision and another 44% said that a personalized shopping experience would
influence them to become repeat customers of a brand.

STP marketing represents a shift from product-focused marketing to customer-

focused marketing. This shift gives businesses a chance to gain a better
understanding of who their ideal customers are and how to reach them. In short, the
more personalized and targeted your marketing efforts, the more successful you will
be.
THE STEP FORMULA

• If you are looking for a simple way to remember and summarize the STP
marketing concept, the acronym STEP is extremely useful:
• Segmentation + Targeting Equals Positioning
• This formula clearly illustrates that each segment requires tailored
positioning and marketing mix to ensure its success. Let’s take a closer look
at each of the three steps in the STP marketing model.
Finally, STP marketing levels the playing field.
The framework allows small businesses and
startups to find success in their niche markets
when they normally wouldn’t have the reach to
compete with the larger whole-market businesses
in their industry.
The new iteration of Americas’ favorite beverage missed the spot
with a lot of loyal consumers, so Pepsi swopped in. In fact, as 
Mental Floss points out, “Coke’s headquarters received upwards of
1,500 calls a day, up from the usual 400, with virtually all of them
complaining about the change.”

Sensing the change in consumer sentiment, Pepsi began targeting

loyal Coke drinkers. The rival brand also refocused its
positioning – Pepsi started drumming up the fact that Coca-Cola,
supposedly, changed its classic Coke with New Coke to resemble
more the taste of Pepsi. Their marketing campaigns were brutal (well,
in today’s terms at least):
HOW TO CREATE AN STP MARKETING
STRATEGY: THE FULL STP MODEL

• We covered the three stages of the STP marketing model, looked at

the benefits and examples of this approach. While this provides you
with an excellent overview of the concept, we want to get into the
detail of creating an STP marketing strategy that serves your
business.
• Below you will find 7 steps to creating a solid marketing strategy
using the full STP model.
• Think of it as an iceberg. The very top peeking from under the water is
your SOM – that’s the portion of the market that you can effectively
reach.
• SAM is is the portion of the total available market that fits your product
or service offering. Whereas TAM is the total available market, in other
words, “the overall revenue opportunity that is available to a product or
service if 100% market share was achieved.”
• For example, back when Airbnb was starting to pitch investors, they
used the TAM, SAM, SOM model to explain their business potential.
Their total available market (TAM) then was valued at 
$1.9 billion dollars and included any type of accommodation that
travelers were booking worldwide.
As you can see,
this layering
method creates a
hyper-focused
audience segment
that allows you to
create an
extremely
personalized
experience. And
as we mentioned
before,
personalization
has a huge impact
on the success of
your marketing
efforts.
Your ideal audience
segment is one that is
both large and still
growing, and you are able
to reach with your
marketing efforts. You’ll
also want a segment that
aligns with your business
strategy – it makes no
sense to focus your
efforts on a segment of
men in Australia if you
are phasing out your
menswear and don’t offer
free shipping to Australia.
Here’s an example to illustrate a poor marketing mix: Let’s say
you want to sell a luxury skincare product to women in their
40s.

Your goal is to position it as a high-end addition to their

skincare routine that targets concerns related to mature and
aging skin. So you invest in print marketing and get your
product featured in a couple of popular women’s magazines that
skew towards the 30+ audience. You also make sure to price the
product accordingly so it indicates the luxury category.

However, your packaging is cheap and poorly designed, while

the product itself is sold in drugstores.

This inconsistency, which isn’t aligned with the overall

positioning strategy, will prevent you from reaching your target
audience in the first place; those who get reached will
experience dissatisfaction resulting in negative word-of-mouth,
which will eventually make your sales slumber.