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Effective Market Segmentation
Market segmentation divides a broad market into subsets to identify and implement strategies to better target and sell them a product or service. The underlying aim is to own or dominate a particular segment by focusing on it alone. You then either leave other segments to others or you also serve that segment but tailor features and messages to align what you have to what they want.
A particular segment has several important characteristics and requirements. It can be uniquely described, has durable common needs, is reachable via communication and distribution channels, responds to marketing initiatives in a similar manner, and is large and lasting enough to constitute a viable market.
Finding your segment means knowing who you can create value for, what your model customers look like, and who your most important customers are.
Markets are generally segmented according to common characteristics. Note this is only a starting point to trying to determine what your market may look like, and the factors are not mutually exclusive.
For example, looking at this market segmentation table, you might target local students who are technically savvy with an interest in skateboarding who subscribe to Spotify. Now what might you be able to offer them that they value?
Once you get an idea of what you might offer, you could construct a tree as follows. You first segment the market by what you believe are user classes. Note this may not end up the way it is. Only further questions and discussions with potential customers will bring the segments into focus, and allow you to design your key messages and the channels to reach them.
You might find that after an investigation that there are further segments, for example, seniors and university students, or that teens don't value design as much as professionals do because the use of latest technologies and cutting edge design confers status as a technical wizard. You may find that better segmentation can be done via geographical features. Remote locations may need satellite linking capabilities and adventurers may need more rugged models.
Once you have determined you have what you believe is a segment you can cater to, you move on to creating a value proposition. As well as making sure you provide true and significant value to your intended customer, you will also be able to clarify your segment characteristics.
© 2015 John B Voorpostel CPA, CA, CMB
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