Knowledge in Action: Segmentation, Targeting, Positioning (STP)

Segmentation, Targeting, and Positioning (STP) is a framework that appears in nearly every marketing plan. Whether you’re a marketing student writing a campaign strategy or a small business owner trying to attract new customers, you’ve probably encountered it before.

But let’s be honest: sometimes it feels disconnected from reality.

Take the Google Pixel. It suits virtually every smartphone user, so why should we bother segmenting?  Isn’t it technically suited to everyone?

Or think about nutritious snacks, isn’t the point to appeal to as many people as possible? Why not just advertise loudly and make everyone hear about the product?

These are fair questions. And if you’ve asked them, this article is for you.

Rather than treating STP as a theoretical checklist, we’ll explore how to make it work in the real world. Think of this less as a textbook exercise and more as a budgeting tool: how can I spend £1,000 on marketing and achieve the best possible return?

By introducing this constraint, we’ll see how STP can become a practical tool, providing meaningful outcomes.

The Aim

First things first: what’s the aim of STP?

It’s not just about understanding who could potentially benefit from your product or service. For that, frameworks like TAM–SAM–SOM might be more appropriate; they’re designed to map the broader market opportunity.

STP has a different purpose. It’s about focus.

Imagine a small or medium-sized business with limited financial resources or even a large company operating under a campaign budget. Let’s introduce a practical constraint: we’re building a marketing plan with a £1,000 budget.

In this context, the purpose of STP is to maximise return on investment. That means using segmentation, targeting, and positioning to spend the budget in a way that drives the highest possible impact.

Think of it this way:

  • TAM–SAM–SOM tells investors: “Here’s the size of the market opportunity.”
  • STP tells your marketing team or sponsor: “Here’s how we’ll use our resources to create results.”

So, we start by identifying what kinds of customers exist (Segmentation), selecting which ones offer the best return for us (Targeting), and then crafting a message that resonates with them (Positioning). This way, STP becomes a decision-making tool, not just a box to tick in your plan.

 

Segmentation: What kinds of customers exist

We have two options here: either make a lot of noise with our £1,000 budget and hope someone relevant hears us, or look more closely at the people in the market to understand them better.

We chose the second! Because marketing for SMEs isn’t about reaching everyone. It’s about getting a return. Right people, right message.

Let’s assume our product is: Sustainable Protein Powder.

Naturally, we start with demographic segmentation. Why? Because consumption patterns and motivations vary across different demographic groups. We need to speculate which factor is relevant and measure the size of each segment based on the data:

  • Gender: Relevant

Men generally consume more supplements; women often care more about sustainability.

  • Age: Relevant

Supplement consumption is higher in certain age groups (e.g., 18–38).

  • Location: Relevant

Affects our channels and may be shaped by competition or supply chains.

  • Income: Relevant

Influences purchasing power.

  • Occupation: Could be relevant

Does occupation influence the type of sports people engage in? Needs more research.

  • Lifestyle: Relevant

e.g. fitness-focused individuals.

  • Attitude toward the environment: Highly relevant

Especially important for sustainable products.

  • Religion: Barely relevant

Not a major factor in this case.

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Note I

Sometimes we can infer these differences based on experience or common sense. But access to industry data (like from Statista or Passport) can provide sharper, evidence-based insights. Something students can leverage really well.

Next, we look at behavioural factors, like attitudes toward sustainability, healthy diets, or active lifestyles. We can stay surface-level (and risk wasting the budget), or dive into consumer insights. For example:

  • Knowing that X% of females aged 18–24 go to the gym more than three times a week helps estimate the segment size.
  • Or that Y% of males who go to the gym regularly cite price as the top deciding factor when purchasing protein powder.
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Note II

For innovative products, the Diffusion of Innovation model can help. It segments adopters into Innovators (2.5%), Early Adopters (13.5%), Early Majority (34%), Late Majority (34%), and Laggards (16%). If your product is new to the market, you might want to focus on Innovators: people who are venturesome, risk-tolerant, and eager to try new things. This also shapes your Positioning strategy.

Targeting: Which ones offer the best return

Now that we understand the makeup of our market, the next step is to identify which segment(s) could give us the best return on our limited £1,000 marketing budget. We’re not just asking who could benefit from our product, but rather: which group(s) offer the best fit, lowest cost to reach, and highest return on investment?

Here are some practical criteria to guide that judgment:

Fit

Which segment aligns best with our product’s value proposition?

In the case of sustainable protein powder, we might decide to focus more on female segments. While men may consume more supplements overall, their primary decision drivers often revolve around price and performance. On the other hand, women in certain demographics may place more emphasis on sustainability, which aligns more directly with our product’s unique selling point. Similar reasoning can be applied to income levels and lifestyle choices, segments where sustainability is not just a bonus, but a buying motivator.

Size and Growth

Is the segment large enough, or at least growing, to justify our investment?

Our £1,000 should go toward a group that can generate meaningful engagement or sales, not a niche so small that we never reach critical mass.

Accessibility and Reachability

Can we reach them through communication and distribution channels?

This is critical. Our chosen segment should be present on platforms we can afford to advertise on, and ideally, we should already have or easily build a way to serve them.

Competition

Is this segment already saturated with competitors?

If everyone is targeting the same high-potential group, returns may diminish. Less contested segments can sometimes yield better results.

Taken together, these filters help us narrow down the most viable segments.

Let’s assume, after applying these criteria, we identify our ideal segments as:

  • Segment A: Female, 25–38, earning £30k+, works out 3+ times/week, environmentally conscious, lives in the same city as our business.
  • Segment B: Female, 18–24, earning £28k+, regular gym-goer, environmentally conscious, lives in a nearby town.

Positioning: The message that resonates the most

Once we’ve identified our target segments, the next question is: How do we talk to them?

Positioning is about crafting a message that resonates with your target audience, something that feels relevant, differentiated, and credible. It’s not just about listing the features of a product; it’s about communicating the right one.

For our sustainable protein powder, we want to communicate in a way that connects directly with the needs, values, and pain points of our chosen segments. This is where a tool like the Ideal Customer Persona can really help.

Creating the Ideal Customer Persona

Let’s take one imaginary individual from our primary target segment and build a detailed profile:

Sarah is a 28-year-old back-end developer. She hits the gym at least three times a week and loves going hiking with friends on weekends, which helps her disconnect from long hours at the computer. She’s involved in her company’s sustainability initiatives and often gets frustrated with the excessive plastic packaging used by major brands. Sarah shops at a local green store and prefers products that are responsibly sourced. She’s wary of overly processed food, as it feels like it diminishes her efforts in the gym.

Now, compare how two different positioning statements might land with someone like Sarah:

  • “Protein for Everyone”
  • “The Local Eco-Conscious Athlete’s Fuel”

Guess which one gives us a better return on our limited marketing investment?

Conclusion: From Framework to Focused Action

STP often feels like just another abstract marketing framework, especially when you’re working on a student project or running a business with limited resources. But once we introduced a real-world constraint (say, a £1,000 budget), the purpose of each step became clearer.

Segmentation helped us understand the landscape. Targeting guided us to focus on where we could maximise the return. And positioning allowed us to speak directly to those who matter most.

In short, we reframed STP from a theoretical exercise into a decision-making tool. It’s not about marketing to everyone; it’s about making every move count. Whether you’re planning a campaign for a client or trying to grow your own business, STP can be a sharp tool as long as it’s grounded in real goals, real people, and real constraints.

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