Broadly, the STP Model involves three steps: Segmenting the market, targeting the segment that is believed to generate the most profit and positioning the product being sold in the most valuable way possible to the chosen segment. The letters of the STP Model specify the three steps that need to be followed to move through the model.

Step 1: Segment the market. Divide up the individuals in the market that need the product or service being offered according to characteristics they have in common. This process will allow the marketing team to more clearly understand the needs of the market, deliver more targeted and effective advertisements and potentially find new customers. The market can be divided according to demographics (e.g., age, gender, income, location, occupation etc.), psychographics (e.g., hobbies, personality type, etc.), lifestyle choices (e.g., hobbies, sources of entertainment, vacation destinations etc.), beliefs and values (e.g., religious, political, cultural, etc.), stage of life (e.g., elderly, teenagers, etc.), geographic region (e.g., climate, country, neighborhood, etc.), behavior (e.g., past product usage, brand loyalty, etc.) or amount of benefit obtained by the product or service.

Step 2: Target the segment that will bring in the most profit. In order to make this determination, consider what portion of the market has the most potential to provide the largest contribution to the company’s bottom line (i.e., the amount of money that will be spent advertising to this group is less than the amount that will be brought in as a result), the current size of the segment, as well as how much potential the segment has to grow. Also, determine whether the products or services being offered by the organization will best be able to meet the needs of this particular group of individuals and whether the people in the segment will be receptive to the messages being sent. Additionally, make sure that the market has been divided effectively (i.e., there should be qualitative or quantitative differences between the segments).

Step 3: Determine how the product or service will be positioned to appeal to the targeted segment. Capitalize on the features of the goods being offered that are perceived as valuable to that particular segment. Additionally, think about what the needs of that segment are and what they are hoping to derive from using the organization’s products or services. Then, lay out how those desires are met and highlight the valuable features of the product or service in the marketing materials that are published.

The STP Model can be supported by a product positioning map or a value proposition, which will help identify how each market segment will respond to the advertisements.

Unlike most traditional Segmentation Targeting and Positioning Model techniques, Praxie’s online STP Model collaboration tools allow any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device.