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Foundation · Scale-up

STP Model

STP is the foundational framework of modern marketing strategy: Segment the market into distinct groups, Target the most attractive segments, and Position your offering to win in those segments. Developed by Philip Kotler, STP forces marketers to accept that you can't be everything to everyone — and that the most profitable path is to choose a segment, understand it deeply, and position specifically for it.

When to use this framework

  • →You're defining or redefining your marketing strategy
  • →Your messaging feels generic because you're trying to appeal to everyone
  • →You're entering a new market and need to decide who to serve
  • →You need to allocate budget across different customer segments
  • →Marketing and sales disagree on who the ideal customer is
Related:Positioning Statement Template Value Proposition Canvas The Brand Key

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Worked Example

Nike (athletic footwear market)

1. Segmentation — Divide the Market

Break the total market into distinct groups with similar needs, behaviours, or characteristics.

Which variables did you use to segment? Geographic (region, city size), Demographic (age, income, company size), Psychographic (values, lifestyle, attitudes), Behavioural (usage rate, loyalty, benefits sought).

Primary: Behavioural (activity type, performance level, purchase motivation). Secondary: Demographic (age, income), Psychographic (attitude toward sport and fitness, lifestyle). Key insight: segmenting by activity and motivation is more useful than demographics alone — a 25-year-old casual jogger and a 25-year-old marathon runner have completely different needs.

Describe the first segment: who they are, what they need, how they behave, and approximately how large the segment is.

Performance Athletes: Serious competitive athletes (runners, basketball players, footballers) who train 5+ days/week. Need: best-in-class performance technology. Willing to pay premium. Size: ~15% of total athletic footwear market but drives brand credibility and aspiration for all other segments. High loyalty.

Describe the second segment.

Active Lifestyle / Fitness Enthusiasts: Regular exercisers (gym, yoga, running, CrossFit) who train 2-4 times/week. Need: good performance + style. Price-sensitive on performance gear but willing to pay for athleisure/lifestyle. Size: ~35% of market. Growing fast due to wellness trend.

Describe the third segment.

Casual / Fashion-Led: Wear athletic shoes primarily for style and comfort, not sport. Need: on-trend design, brand status, comfort. Size: ~50% of market. Huge volume but low brand loyalty — trend-driven. Nike competes with fashion brands, not just athletic brands here.

2. Targeting — Select Your Segments

Evaluate each segment and choose which one(s) to serve. Rate each on attractiveness and your ability to serve it.

Size, growth rate, profitability, competitive intensity.

8

How well can your company serve this segment? Resources, capabilities, brand alignment.

10

Attractiveness × Fit. Higher = more attractive target.

—

Size, growth rate, profitability, competitive intensity.

9

How well can your company serve this segment?

9

Attractiveness × Fit.

—

Size, growth rate, profitability, competitive intensity.

7

How well can your company serve this segment?

8

Attractiveness × Fit.

—

Will you pursue concentrated (one segment), differentiated (multiple segments with different offers), or undifferentiated (mass market) targeting?

differentiated

3. Positioning — Win in Your Segment

For [target segment], [brand] is the [category] that [key benefit] because [reason to believe].

For serious athletes who demand peak performance, Nike is the athletic brand that combines cutting-edge innovation with the inspiration of sport's greatest athletes, because decades of R&D (Nike Air, Flyknit, ZoomX) and partnerships with elite athletes (Jordan, LeBron, Kipchoge) prove that Nike makes the best-performing gear in the world.

What makes you meaningfully different from alternatives in this segment? These must be valuable, deliverable, and communicable.

1. Innovation leadership — Nike Air, Flyknit, Vaporfly, self-lacing technology. More R&D investment than any competitor. 2. Athlete partnerships — deepest roster of elite athletes across all sports. Jordan Brand alone is a $5B+ business. 3. Brand meaning — 'Just Do It' transcends product features. Nike stands for human potential, not just shoes. 4. DTC ecosystem — Nike App, SNKRS, Nike Training Club create a direct relationship that competitors can't match.

What do you need to match competitors on? These are table-stakes — you don't win on them, but you can't lose on them.

1. Comfort — must match Adidas Boost and New Balance Fresh Foam on everyday comfort. 2. Sustainability — must match Adidas (Parley, Futurecraft) and Allbirds on environmental credentials. Consumers increasingly expect it. 3. Price range — must have accessible price points ($80-120) alongside premium ($200+) to compete in the mid-market. 4. Availability — must be available in key retail channels while growing DTC.
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