STP process

The purpose of this study is to highlight the method STP process, analysing how the motivation for its increasing use and Its core benefits, also it compare and contrast the different segmentation criteria that could be used to segment both consumer and business markets, as well as the strategies used for product and brand positioning.

The purpose of this method by which whole markets are subdivided into different segments is referred to as the STP process. STP refers to the three activities that should be undertaken, usually sequentially, if segmentation is to be successful. These are segmentation, targeting, and positioning, and is structured around these key elements.


Market segmentation is the division of a market into different groups of customers with distinctly similar needs and product requirements. Or to put it another way, market segmentation is the division of a mass market into identifiable and distinct groups or segments, each of which have common characteristics and needs and display similar responses to marketing actions.

The purpose of market segmentation is to leverage scarce resources, in other words, to ensure that the elements of the marketing mix, price, distribution, products and promotion, are designed to meet particular needs of different customer groups.

The market segmentation concept is related to product differentiation. If you aim at different market segments, you might adapt different variations of your offering to satisfy those segments, and equally if you adapt different versions of your offering, this may appeal to different market segments.

An example in the area of fashion retailing might be if you adapt your clothing range, this is exactly what Marks and Spencer (M&S) did to attract a younger female shopper into their M&S stores and compete more directly with Next and Debenhams for share of this market.

The intricacies involved in market segmentation are said to make it an exacting activity. Griffith and Pol (1994) argue this point on the basis of multiple product applications, greater customer variability, and problems associated with the identification of the key differences between groups of customers. However, there have been numerous attempts to define and describe business segmentation, using a variety of variables and ranging from the severely product-based to customer needs-based orientation.

There are two main approaches to segmenting markets. The first adopts the view that the market is considered to consist of customers which are essentially the same, so the task is to identify groups which share particular differences. This is referred to as the breakdown method. The second approach considers a market to consist of customers that are all different, so here the task is to find similarities. This is known as the build-up method. The breakdown approach is perhaps the most established and well recognized and is the main method used for segmenting consumer markets. The build-up approach seeks to move from the individual level where all customers are different, to a more general level of analysis based on the identification of similarities (Freytag and Clarke, 2001)


Enhancing a company's competitive position by providing direction and focus for marketing strategies such as targeted advertising, new product development, and brand differentiation. For example, Coca-Cola identified through market research that its Diet Coke brand was regarded as feminine by male consumers. As a direct result the company developed a new product, branded Coke Zero, which is targeted at the health-conscious male segment of the soft drinks market.

Examining and identifying growth opportunities in the market through the identification of new customers, growth segments, or new product uses. For example Arm & Hammer was able to attract new customers when existing consumers identified new uses for their baking soda (Christensen, Cook, and Hall, 2005). Lucozade also changed the positioning and targeting from its original marketing strategy positioned for sick children and rebranded to target athletes as an energy drink.

More effective and efficient matching of company resources to targeted market segments promises the greatest return on marketing investment (ROMI). For example, financial institutions like HSBC and Barclays and large retailing multinationals such as Tesco and ASDA Wal-Mart are utilizing data-informed segmentation strategies to effectively target direct marketing messages and rewards to customers they have classified as offering long-term value to the company


The growing use of the STP process has occurred as a direct result of the prevalence of mature markets, the greater diversity in customer needs, and the ability to reach specialized or niche segments. As such marketers are increasingly segmenting markets and identifying attractive segments, in order to identify new product opportunities, develop suitable positioning and communications strategies, and effectively allocate resources to key marketing activities. Organizations will often segmentation research when they want to redefine their marketing strategy, investigate a declining brand, launch a new product, or restructure their pricing policy. Organizations operating in highly dynamic environments seek to conduct segmentation research at regular intervals, to keep in touch with changes in the marketplace.

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