The tell-tale signs of a ripe consumer segment
To see effective consumer segmentation in action, take a look at the messaging surrounding Samsung’s mobile devices.
There’s the Galaxy ‘A’ range (“Awesome is for Everyone”), with its special emphasis on those Gen-Z creators, for whom video is all-important. The latest ‘S’ models (“Epic in Every Way”), are aimed squarely at those consumers looking for boundary-pushing levels of performance. Meanwhile, for the Note range, professional, power users are firmly in focus: (“As we face a new normal, life demands a new kind of device…”).
A 16-year-old Tik-Tok fan has very different needs, expectations and budget to a newly-home based 40-year-old professional. Effective brands recognise this. Hence, market segmentation: the process of dividing a target market into groups (segments) based on common characteristics.
But how do you know when a particular segment is suitable for targeting? Here are some key factors to focus on…
The segment differs from others in a meaningful way
The whole point of market segmentation is to divide your potential target market into smaller, more manageable groups, in a way that means your proposition can be better targeted towards their needs. Each market segment has its own unique set of characteristics, which could be based on their needs, geography, demographics, and a whole host of other attributes such as lifestyle, values and personality traits.
But take the example of a fitness products brand. Initial market research suggests that the company’s latest offering might have special appeal for joggers, cyclists and yoga enthusiasts. So, should each of these groups be treated as a distinct segment?
Not necessarily. Only if each of those groups has distinct needs and preferences. If further research tells you that in fact, the need states of each of these groups is distinct, then yes, they may be treated as separate segments. If not, the groupings should be collapsed into existing segments. Otherwise, you could be wasting resources by targeting or developing strategies around particular groups based on insignificant differences.
It is big enough to focus on
You have identified a distinct segment. Now, you need to establish whether the segment is significant enough in size to warrant targeting it. For this, you should use a combination of top-down research (e.g. sector-specific industry research and reports), as well as bottom-up analysis (e.g. using data from your existing early selling efforts).
Competition is less fierce
You now have a distinct segment in mind, and you’re satisfied that it is large enough to exploit. Next, you need qualitative research to assess the strength of the competition.
It may be, for instance, that although the competition’s presence seems strong at first, existing players are failing to target the particular segment you have in mind: a potentially ripe opportunity for exploitation. Alternatively, the competition could have left gaps in their approach or their proposition has weaknesses that could be capitalised on.
We can reach the segment without a big spend
The segment seems ripe for targeting. But will it be financially and practically viable to target?
For instance, if your segment consists mainly of 16-18 year-olds, there may be regulatory barriers to effective marketing. If it’s in a different geographic location with distinct cultural characteristics, the cost of producing entirely new marketing collateral may be prohibitive. Or it may be that the need states of this segment are such that they cannot be effectively met without significant alterations to your product.
Resource-wise, the ideal scenario is a large segment that can be reached effectively, based on minimal but carefully implemented variations to your existing marketing material, and little or no variation to your core offering. However, that’s not always the case and it’s important to gain a solid understanding of where the true opportunity is and how to access it.
Need help in identifying your next big opportunity? Speak to White Space Strategy today.