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Compelling Business Plans That Work

Marketing: How? The Power of Market Segmentation

How do you do Marketing? The answer is in market segmentation—you “engineer” your market.  Successful product introductions address all these topics:

  • Target End User    <-– This blog article
  • Compelling Reason to Buy
  • Whole Product
  • Partners and Allies
  • Distribution
  • Pricing
  • Competition
  • Positioning

This is a necessary and sufficient set.  If you’re comfortable with this list, then you “get” marketing.  This article only starts looking at this list.

I like the mantra: “Think Big. Start Small.”  Starting small is all about market segmentation.  The last article talked about the importance of market leadership – becoming a big fish in a small pond, then annexing the next pond, and ultimately becoming a big fish in a big pond.  You might visualize it like this:

The bowling analogy for becoming a market leader, then annexing the next pond.

The power of segmenting markets and attacking them in a logical sequence is another gem that I learned from Geoffrey A. Moore when he was a partner of Regis McKenna Inc.  Others refer to this as a bowling pin or domino strategy.  Choose a metaphor that works for you.

Why segment?  The primary reason is it focuses both marketing and development resources on a specific customer group.  In doing so it identifies the real competitors, and helps the team anticipate new opportunities in emerging segments.

There is no best way to segment your customers.  Do it in a way that is actionable for you.  It might be helpful for you if you can cluster your customers into groups with common problems that talk to each other at trade shows and meetings, and who read the same journals or blogs.  This is actionable because you can effectively communicate to them and they will share it with each other.

Typically teams initially tell me the dozen or so markets that their product (or service) serves.  We work to clarify and focus so their precious resources are used wisely.

Going to market without clear market segmentation is like trying to light logs with newspaper.  Your money disappears in a short burst of flames without much success.

In Other Words ….

Another brilliant metaphor reveals the importance of segmenting your market!

Isn’t this a great way to describe the power of a market segmentation strategy?  Thank you Geoffrey A. Moore!