Use the example to applying the STP Model

Step 1: Segment Market

The company’s organization, product or brand can’t be all things to satisfy all people. This is why you need to use market segmentation to divide your customers into groups of people with common characteristics and needs.
There are many different ways to segment the target markets. For example, we can use the following approaches:

Demographic – By personal attributes such as age, marital status, gender, ethnicity, sexuality, education, or occupation.
Geographic – By country, region, state, city, or neighborhood.
Psycho-graphic – By personality, risk aversion, values, or lifestyle.
Behavioral – By how people use the product, how loyal they are, or the benefits that they are looking for.

Example

The Adventure Travel Company is an online travel agency that organizes worldwide adventure vacations. It has split its customers into three segments.
Segment A is made up of young married couples, who are primarily interested in affordable, Eco-friendly vacations in exotic locations. Segment B consists of middle-class families, who want safe, family-friendly vacation packages, it makes easy and fun to travel with children. Segment C comprises upscale retirees, who are looking for stylish and luxurious vacations in well-known locations such as Paris and Rome.

Step 2: Target The Best Customers

Next, you decide which segments to target by finding the most attractive ones. There are several factors to consider here.

First, look at the profitability of each segment. Which customer groups contribute most profit to the company.
Next, analyze the size and potential growth of each customer group.
Last, think carefully about how well your organization can service this market.

Example

The Adventure Travel Company analyzes the profits, revenue and market size of each of its segments. Segment A has profits of $8,220,000, Segment B has profits of $4,360,000, and Segment C has profits of $3,430,000. So, it decides to focus on Segment A, after confirming that the segment size is big enough (it’s estimated to be worth $220,000,000/year.)

Step 3: Position Your Offering

In this last step, your goal is to identify how you want to position your product to target the most valuable customer segments.
First, consider why customers should purchase the product rather than those of the competitors. Do this by identifying your unique selling proposition to understand how each segment perceives your product, brand or service. This will help you determine how best to position your offering.

Next, Create a value proposition that clearly explains how your offering will meet this requirement better than any of the competitors’ products, and then develop a marketing campaign that presents this value proposition in a way that your audience will appreciate.