STP
Segmentation, Targeting, Positioning
What is STP?
- Segmentation, Targeting, Positioning: the 3 steps
- Divide the market → choose a group → claim a position
- The basic framework of marketing strategy
When STP is done properly, the first things to change are the sales list and the proposal cover. Before, inquiries were handled in the order they arrived, and every industry got the same template with only the logo swapped. After STP, who you will not meet this quarter is decided first. In other words, the output of STP is not a polished market map but the sales team’s call priorities and the opening line of the proposal. If it does not get that far, it stays on a workshop flip chart.
B2B segmentation uses different variables than consumer markets. The first cut uses broad variables such as industry, company size, and region. The second cut uses finer ones: whether purchase decisions are driven by the business unit or the procurement team, how mature the company is in adopting your kind of solution, and what problem it is trying to solve. But dividing the market does not automatically produce segments. A segment holds only if you can size it, you have a way to reach it, and it responds differently to your offer. If any one of the three is missing, it is not a market division but one manager’s preferred way of sorting things.
Targeting comes in three forms: undifferentiated, which treats the whole market as one; differentiated, which makes a different offer to each segment; and concentrated, which puts all resources into one segment. A company of around 50 people can usually manage concentrated targeting, or at most differentiated targeting across 2–3 segments. Segments, ICPs, and personas often get mixed up. A segment is the group you have carved out, an ICP describes the companies within it that you win most often, and a persona is the person on the approval chain at one of those companies. Positioning is not a slogan but something only you can say, so if the statement would fit comfortably in a competitor’s proposal, you do not have a position yet.
The most common point of failure is the fear that “narrowing the target will cut sales.” That fear produces a target like “all industries, mid-size and above” that excludes no one. Proposals fall back to a generic template, and the win rate slides because the team can’t even get the industry terminology right. What you narrow is not who you sell to, but who you approach first. It doesn’t mean turning away inquiries from outside the target; it means putting your ad spend, content, and sales hours behind the target. Another trap is setting your positioning once and using it for three years. The moment a competitor copies the same wording, that position is gone, so once a year, lay it side by side with competitors’ proposals and review it.
John KimInstructor John Kim, author of B2B Marketing Design and CEO of Nanum Consulting
Euijung KimBrand strategist with 30 years in advertising, formerly a division head at Daehong CommunicationsThe concept of market segmentation was introduced by Wendell Smith in a 1956 paper, and Philip Kotler later bundled segmentation, targeting, and positioning into STP and popularized it as the standard framework for marketing strategy.
Consider a hypothetical case. Company A, a corporate training firm with 48 employees and KRW 7.2 billion (≈ US$5,386,800) in annual revenue, had been stuck in the KRW 7 billion (≈ US$5,237,200) range for three years. It sent out an average of 22 proposals a month but won only 9%, and its three salespeople pursued everyone from startups to large corporations.
- When the head of sales split the last two years’ 312 wins by industry, employee count, and whether the client had a training manager, the top 3 segments accounted for 68% of total revenue.
- The marketing lead pulled out the numbers: “Startups under 300 employees take our quote and vanish.” The win rate in that segment was 6%, and the average contract value was KRW 4.8 (≈ US$1) million, one-seventh of the KRW 32 million (≈ US$23,900) from mid-sized manufacturers.
- The CEO objected, saying “narrowing the target will cut sales in half,” but they agreed to focus on mid-sized manufacturers for just six months and verify the numbers every quarter.
- In interviews with 12 client training managers, one complaint came up nine times: “Night shifts make a full-day classroom session impossible.” That produced the position “2-hour on-site training built around shift schedules.”
- They replaced the homepage hero and the proposal cover with this one line, and moved the 8 leadership and CS courses to the back of the catalog. The three reps’ weekly call list was also swapped for a list of mid-sized manufacturers.
- Six months later, monthly proposals fell from 22 to 11, but the win rate rose from 9% to 27%, average contract value went from KRW 19 million (≈ US$14,200) to KRW 34 (≈ US$1) million, and quarterly revenue grew 1.4x.