How can I leverage segmentation?

Once you know which segment of the marketplace is interested in your products, how will you make the most of their interest in buying from you? Will you offer supplementary services or products? If you own a training business and teach people how to use computers, can you also offer them soft skills training?

In considering market segments, you need to evaluate the following:

  • Measure: Can you gauge the size of your segment?
  • Access: Can you reach the segment through advertising and then distribution?
  • Growth: Is the group growing, shrinking, or maturing? Are they sizeable enough to bother with?
  • Profit: Is the profit potential enough to make it worth going after?
  • Retention: Are you capable of servicing and retaining these customers?
  • Defend: Can you defend yourself and stand out from the competition?

The segment of the market that wants your product can be identified through research, so that you know exactly who you are targeting. For example, if you are selling a new organic dog food, your sample demographic could look like this:

  • 35 to 60 years old
  • College educated
  • Full-time employment
  • Childless households
  • Household income is more than $65,000 per year

There are plenty of dog food companies out there, so you’ve got to make sure that there enough people in the demographic to support your company and to meet your goals for profit and growth. You will have to review the idea of your market segment several times to determine the number of people within the group who have dogs, who prefer to purchase organic foods for themselves, and for those who have the disposable income to apply to your products.