Market Segmentation

Why

All people are not equal, and you can't please everybody. So focus your project on the people most likely to buy and use your product in the early stages.

Keep other customer segments for later.

When

As soon as you have an idea about the kind of problem you want to solve. You may not even be clear about you product yet.

How

Identifying and understanding potential market segments is an ongoing and iterative process, but the main steps are:

Step 1: Brainstorm

Start by brainstorming a wide variety of potential customer segments. Including "crazy ideas" and longshots. Think about as many potential segments as possible.

For business-to-business ideas:

  • List the industries that may benefit from your idea.

  • List the type of people working in those industries, that may be your end users.

  • Identify the different tasks your end users perform (to understand what you may help them do).

For business-to-consumer ideas:

  • List what kinds of people may benefit from your idea.

  • Split up the different groups in subsegments. And maybe even sub-subsegments.

  • Identify the different tasks you end users perform where they may want your product.


Step 2: Narrow down

Select the most interesting market segments based on an evaluation. Ask questions like:

  1. Can the target customer pay?

  2. Is the target customer easy to find and reach?

  3. Does the target customer have a compelling reason to buy?

  4. Can competitors block your way to the customer?

  5. Is the market consistent with your values and goals?


Step 3: Primary Market Research

Speak to people in selected customer segments - or seach informations about their problems and needs - to verify that they actually have a problem or a need.

Resources

See videos above.