How do you know what product or service to launch?
Step 1: Identify your market segments
The first step towards achieving this goal is a process called “needs-based segmentation.” Needs-based segmentation is a fancy phrase for dividing a broad market into groups of customers with similar needs. We conduct this process to evaluate, compare, and select market segments to enter.
For example, a small clothing store that sells 100% sustainable cotton clothing is trying to grow its business by breaking into a new segment. They have noticed an uptick in the people coming into their store who are sustainability-minded and wonder if there is an opportunity here to expand their business with other product lines.
Step 2: Profile these market segments
The next step is profiling this market segment (in this case– sustainably minded shoppers). To successfully profile a segment, you should be able to answer the following questions:
- What are the characteristics of the segment?
- What are the segment’s needs, motivations, and issues to solve?
- How are they meeting their needs today?
- Is this segment specific to any location/geography?
- What’s an example of a customer in the segment?
- What are the key trends in this segment?
- What is the buying force of this segment?
Once we have successfully profiled a market segment, (a) target specific customers to invest in products to specifically meet their needs, and (b) focus marketing and sales efforts in the most effective way possible!