Segmentation, Targeting, and Positioning (STP): Meaning and Importance

segmentation, targeting, and positioning

Segmentation, targeting, and positioning (STP) is one of the most important approaches in the modern marketing concept. When an organization decides about launching a product to the market, they have to pay special attention to market segmentation, targeting, and positioning. The success of any marketing campaign relies on the proper segmentation, targeting, and positioning of the product in the correct market.

This process of the segmentation, targeting, and positioning should be performed with a proper idea of all the available markets to the product and the niche market the product is produced for. It is important to identify the segmentation, targeting, and positioning individually to get a clear idea of how to place a product in the market with the ultimate benefit.


Market segmentation is the process of dividing the entire market of the product into small groups. This is mainly done based on people with similar needs. The organization has to identify the entire market they have the possibility of selling the product and divide the market into small sections with the people who prefer to consume the product for a similar reason.

Eg: An automobile manufacturer can segment the market as the people who want an economical car with limited space and good fuel consumption for city driving, The people who want luxury cars, people who want cars with off-road capability, people who need cars for long-distance driving that can use for commercial purpose, the cars with additional space to carry goods, etc.

Market segments are generally identified and defined by demographic factors, geographic factors, psychographic factors, or behavioral factors.

When segmenting the market, the producer has to identify that a single product is not capable of satisfying the entire market. Either he has to aim for one market segment and produce for that or he has to introduce several products that will satisfy the expectation of each market segment.


After identifying the available market segments for a particular product, the producer has to identify to which market segment they are going to cater by distributing the product. The process of identifying the most profitable market segment is called targeting.

The targeting process needs expert knowledge about every market segment available. A thorough analysis is necessary for each market segment to identify the pros and cons of targeting each segment. The producer has to consider legal and social factors as well in the process. Certain products can be seen more profitable in a market segment but it can carry a minimum age limit legally.

Eg: Tobacco, alcohol

Apart from that, the producer should be capable of providing for the expected demand from the target market. If the demand is higher than the supply of the product, there is a high possibility that the customers will move for alternative options.

The marketing team of the product should consider all these factors when deciding the best market segment to provide the most profit out of all the available segments.


Finally, the product should be communicated to the target market in a way that they can easily recognize where the product fits in the competition. This process of communicating the product to the customers is called positioning.  When positioning the product, it can be attained with the use of price, quality, exclusiveness, availability of the product, reliability, expected lifetime of the product, etc.

The process of positioning the product helps the customer to identify the reasons to buy the product out of all the options available. The positioning of a product is usually more successful if there are unmet expectations in the target market. It helps the product to achieve fulfill that unmet need and achieve a competitive advantage.

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