The concept of Segmentation, Targeting, and Positioning (STP) forms the backbone of strategic marketing. Initially, 'Segmentation' involves breaking down a broad target market into subsets of consumers with common needs or characteristics. This could hinge on numerous factors such as demographics, geographic regions, psychographics, and behavioral traits.

The next stage is 'Targeting,' where the entity selects one or more segments to focus its marketing efforts. Target markets are chosen based on their attractiveness, which may be determined by factors like segment size, growth potential, profitability, competitive positioning, and resonance with the organization's objectives and resources.

Lastly, 'Positioning' is the strategic process that aligns the business’s offering with the needs of the targeted segments. It is achieved by developing a unique selling proposition (USP) that differentiates the product in the marketplace and highlights its unique value to customers.