Introduction to Market Segmentation

Print Friendly, PDF & Email

Your market strategy defines the target for your product strategy. If you don’t have a target, then you don’t know where to aim. If you don’t know where to aim, you can expect a lot of misses. Misses like

  • Losing to a more focused competitor,
  • Failure to achieve growth objectives,
  • Costly, over-configured products,
  • Low prices,
  • Ineffective, high-cost marketing, or
  • Frequent point-of-sale customization requests

The bottom line is that without a clear market strategy, your product will sell less and cost more.

Market strategy and product strategy are two sides of the same coin. Market strategy defines the customers that will buy your product. On the flipside, product strategy defines the product that your customers will buy.  Market strategy is a proactive, deliberate decision to serve a group of customers

  • With similar buying needs,
  • That is large enough to fulfill your financial objectives,
  • Whom you will understand as well as you do your own company and products, and
  • For whom you will create unique value.

Market strategy is a proactive, deliberate, decision to serve a group of customers to the exclusion of all other groups of customers.

Market strategy is the foundation upon which you will build your product strategy. You must segment your overall market, select the most attractive segments, and clearly define your target buyers. The balance of this article will show you how. Please note that the market strategy process that follows is specific to a product-strategy context. It does not address market strategy in the context of a broader corporate portfolio strategy.

Market segmentation is the process of defining and subdividing a large market into clearly identifiable segments with similar buying behaviors. The objective is to define potential targets for your product strategy clearly.

A market segment is a group of potential customers that have common buying behaviors that are different from all other potential customers