What is STP analysis?
STP analysis is a marketing framework for building a product or service strategy in three steps: Segmentation (divide the market), Targeting (choose who to serve), and Positioning (define your stance).
Trying to sell the same product to an entire market tends to leave it only half-right for everyone. STP analysis starts from the premise that you shouldn’t try to sell to everyone: first split the market into groups (segments), then choose which group you’re going to compete for, then decide how you want to be seen within that group.
It works well as a sequence with the other business-analysis frameworks: use 3C analysis (Customer / Company / Competitor) to understand your market, then STP analysis to decide who to serve and how to be seen, then 4P analysis to build the concrete plan (see the 3C analysis article, see the 4P analysis article).
Where this works well
- When you want to decide who a new product or service is really for
- When you have several kinds of customers and need to choose where to focus
- When you want to check whether you’ve ended up looking just like a competitor
- When you want your team to put into words “who is this product actually for”
About the sample diagram
The “STP Analysis” folder in the demo above has an overview showing the S → T → P flow as boxes and arrows, plus three diagrams that work through each step in detail (STP Analysis-Step1 through Step3). They correspond to steps 1-3 in “Building an STP analysis in ThinkTray” below, so switching to the diagram with the same number in the tree as you read lets you see each step up close.
- S (Segmentation) — a table card listing five candidate segments by age, traits, and where they buy (STP Analysis-Step1)
- T (Targeting) — a “growth potential” x “fit with our strengths” map that plots the five candidate segments and shows which one was chosen as the first target (STP Analysis-Step2)
- P (Positioning) — a “price” x “individuality” map that places the brand alongside competitors and puts the intended position into words (STP Analysis-Step3)
The sample is built around the same fictional handmade-goods brand as the 4P analysis article, Canvas & Thread, which makes canvas tote bags and accessories and sells them through its own online shop and at craft markets. Swap in your own product or service when you use this for real.
Building an STP analysis in ThinkTray
Step 1: List candidate segments (S)
Start by splitting your likely customers into a few groups. Age, lifestyle, the trouble they’re trying to solve, or where they shop are all useful, meaningful ways to draw the lines.
Use the ”🪟 Table” tool on the toolbar to build a table, with candidate segments as columns and traits as rows. The sample lists five candidates:
- Teens-20s, birthday gift shoppers — students without an adult’s budget, shopping for a close friend; cares a lot about how it looks on social media
- 20s-30s, gift shoppers — busy as a new working adult, shopping for a birthday or anniversary gift; also cares how it looks on social media
- 30s-40s, practical buyers — family expenses keep piling up; wants a durable, timeless design; values the materials
- 40s-50s, one-of-a-kind seekers — life has settled down a bit; wants something no mass-market brand offers; interested in things like custom embroidery
- 50s and up, plays it safe — retirement is coming into view; wants a fair price for a reasonable item; looks for a safe, inoffensive gift for the recipient
This table is shown in the tree as “STP Analysis-Step1.”
Step 2: Evaluate the candidates on a 2x2 map (T)
You can’t put equal effort into every candidate. Plot the five segments from step S onto a “growth potential” x “fit with our strengths” map, and pick one to go after first.
Use the line tool (L) to draw the vertical and horizontal axes, and the card tool (R) to place each segment’s card along them. In the sample, gift-giving demand has strong growth potential and fits well with a brand that’s good at posting on social media, so “20s-30s, gift shoppers” was chosen as the first target. “Teens-20s, birthday gift shoppers” is also a tempting candidate for the same social-media reason, but to keep the focus on a single target, it’s left with a note reading “maybe next time.”
This map is shown in the tree as “STP Analysis-Step2.”
Step 3: Define the position you’re going for (P)
Once you have a target, decide how you want to be seen within that group. Pick two axes that matter to the target when they’re choosing between options — such as price and individuality — and place your brand alongside competitors.
In the sample, a mass-market chain (low price, mass-produced) and a high-end atelier (high price, one-of-a-kind) sit at opposite ends, and Canvas & Thread is placed in between as an affordable, one-of-a-kind option. Finally, sum up that stance in a single sentence — a positioning statement.
“One-of-a-kind gifts worth giving, at a price busy 20s-30s say yes to.”
Having that sentence in hand gives you something concrete to check against later, when you build out a 4P analysis (Product, Price, Place, Promotion).
This map and positioning statement are shown in the tree as “STP Analysis-Step3.” To look back at the whole S → T → P flow, open “STP Analysis” (the overview diagram) in the tree.
Tips
- Don’t narrow the candidates too soon — settling on just one from the start leaves nothing to compare against. Starting with around three to five candidates works well.
- Choosing a target also means letting some go — you don’t need to write off the segments you didn’t pick, but the point is deciding where to put your effort.
- Positioning is relative — think not just about your own traits, but about how you look different next to competitors.
- Put it into one sentence — a short positioning statement keeps later decisions, in a 4P analysis or as a team, from drifting.
- Revisit it regularly — redraw the STP analysis whenever the market or competitors change.
STP (Segmentation, Targeting, Positioning) builds on the market segmentation concept Wendell R. Smith proposed in 1956, later brought together into a single S-T-P process by Philip Kotler. Wikipedia