The STP worksheet: segment the market, choose the target, set the position

Segmentation, targeting and positioning (STP) is the sequence at the heart of marketing strategy: divide a market into groups with different needs, choose which groups to serve, and decide how you want those groups to see you. The worksheet takes you through the three steps on one page, so that the choice is written down and can be challenged. Each term is in the glossary: segmentation, targeting, positioning.

The idea of market segmentation entered the marketing literature with Wendell R. Smith's 1956 paper in the Journal of Marketing, which argued that neither supply nor demand is homogeneous and set segmentation against product differentiation as an alternative strategy: one bends supply to fit demand, the other bends demand towards supply¹. Philip Kotler's textbooks turned it into the standard sequence: Kotler and Armstrong's Principles of Marketing, now in its 19th global edition², and Kotler and Keller's Marketing Management³ both teach segmentation bases (geographic, demographic, psychographic and behavioural), criteria for useful segments, targeting strategies from undifferentiated to concentrated, and positioning.

Two later arguments shape how the worksheet is used. Daniel Yankelovich and David Meer warned in the Harvard Business Review in 2006 that the psychographic profiling passing for segmentation had become a mostly wasteful diversion, and urged tying segmentation to a specific strategic decision⁴. And the targeting step should not shrink the audience too far: the Ehrenberg-Bass Institute's John Dawes estimated that in business categories only a small minority of buyers are in the market at any one time, so most communication must reach people who will buy later⁵. The positioning step uses Keller, Sternthal and Tybout's frame, parity and difference⁶.

1. Describe up to four segments on the bases that predict the decision at hand. Give each a plain name and a one-line description of its need.
2. Score each segment on the same criteria: size and growth, whether you can reach it, whether its needs are distinct, the competition, and the fit with your strengths.
3. Choose a targeting strategy one offer for all, different offers for several segments, or a concentrated focus on one.
4. Write the position for the chosen segment, and carry it into the positioning statement.

Illustrative: the fictional Ourika Roasters.

• Segments café regulars who brew at home; office managers buying for teams; gift buyers at holidays; new home brewers who just bought a machine.
• Scores café regulars score high on reach (they are in the cafés) and fit; gift buyers are seasonal; office managers need invoicing the roaster cannot yet offer.
• Target concentrated on café regulars for launch, with new home brewers next.
• Position the coffee subscription for people who want the counter's freshness at home.

• Segments built from available data, not from needs Age bands are easy to buy and rarely explain choice⁴.
• No criteria Choosing the segment the team likes, then justifying it.
• Targeting as exclusion Ads aimed only at today's buyers miss the many who will buy later⁵.
• Positioning skipped A target without a position leaves every team to invent one.

• Wendell Smith's 1956 paper, as summarised by Oxford University Press¹.
• Kotler and Armstrong² and Kotler and Keller³; Yankelovich and Meer⁴.
• Dawes's 95:5 rule⁵; Keller, Sternthal and Tybout⁶.
• On IMC Report: touchpoints and the journey.