It’s been said that the world will not beat a path to you doorstep, even if you have invented the best mousetrap. Real success lies in finding the right customers for your ‘better mousetrap’ and attracting them to your door, repeatedly for purchasing.
Market segmentation is about identifying groups of customers who have a propensity to buy your product and understanding how you can best reach and communicate with them to do so.
For the entrepreneur, finding the right customers starts with adopting either a mass-market strategy or a market-segmentation strategy. There is no in-between. For most, if not all, it’s going to be the market-segmentation strategy and this means targeting the right customers with the right product, with the right message, at the right time and in the right way.
This in turn can only be done based on a sound understanding of why and how customers buy products and services in a particular category.
START UP & EMERGING STAGE
In the early, emerging stages entrepreneurs use ‘identification bases’ to segment their initial market – using, for example, geographical location, industry classification and demographics to profile and group potential consumer and industrial buyers.
‘Identification Bases’ used in consumer and industrial market segmentation, include:
- Geographical market locations, ( for example, grouping numbers of potential buyers in a city area)
- Recognised industry classifications (for business markets)
- Existing/observed customer purchase and usage behaviours of the product ( for example , use of re-sellers , percentage of a product bought through large multiple chains versus local convenience shops)
- Basic demographics ( such as age, gender, nationality)
- Socio-economics ( such as occupation, incomes, marital status, family status)