How can I segment customers? STP model

The STP model—Segmentation, Targeting, and Positioning—is a practical tool for product managers. It helps in creating products that meet specific customer needs. Here’s how to use the STP model:

Segmentation

Start by dividing your market into different groups. These groups should share similar traits or behaviors. Common ways to segment include:

1. Demographic: Age, gender, income, or education.

2. Geographic: Region, city, or neighborhood.

3. Behavioral: Purchase habits, brand loyalty, or product usage.

4. Psychographic: Lifestyle, values, or interests.

Targeting

After identifying the segments, choose which ones to focus on. Evaluate each segment for its potential. Here are three main strategies:

1. Mass Segment: Target the entire market with a single offer.

2. Segmented Segment: Tailor different offers for multiple segments.

3. Niche Segment: Focus on a small, specific segment.

Consider factors like segment size, growth potential, and how well your product meets the needs of each group.

Positioning

Once you have your target segments, position your product to meet their needs. This involves creating a unique image or identity for your product. Key aspects to consider include:

1. Product Features: Highlight what makes your product unique.

2. Price: Decide whether your product will be affordable or premium.

3. Quality: Emphasize superior quality or value.

4. Use Case: Show how your product fits specific needs or lifestyles.

Practical Steps for Segmentation

1. Data Collection: Gather data on your current and potential customers.

2. Analysis: Identify patterns and group customers into segments.

3. Evaluation: Assess the attractiveness of each segment.

4. Selection: Choose the segments you will target.

Using the STP model helps product managers focus on the right segments, tailor products to meet specific needs, and create strong product positions. This approach leads to better product development and higher customer satisfaction.