Market Segmentation 101: The What, the Why and the How

Ashutosh Wakankar Customer Insights

Market segmentation allows brands to trim away the excess and zero in on the ideal customer base with the precision of a surgeon.

Since the dawn of the industrial revolution and the mass production of goods, customers have desired customization while marketers have sought a homogenous market that could be captivated by a single offering. The marketer puts an alluring picture of a bowl of soup on the menu card while the customer sends the soup back to the chef for improvement.

At first glance, this puts the marketer at loggerheads with the customer. However, a deeper introspection helps us understand that the marketer-customer conflict is elegantly resolved by market segmentation.

Defining the Perfect Market Segment

The marketer needs to find a customer segment that is:

• Homogeneous (so that the offering is simple and consistent)
• Large enough to form a viable customer base (so that the offering is sustainable)
• Distinct from other segments in the market (so that the offering is unique)
• Intrinsically drawn towards the product or service (so that the offering is saleable)

Finding the right-fit market segment is crucial for sustainably marketing a product or a service. After all, great brands are not built on fickle customers. They are built on loyalty because they cater to a chosen few or the chosen many.

Market Segmentation and the Numbers Myth

Often the idea of segmentation is reduced to a quantitative notion of where the numbers are. The assumption being that if you play in a big pool, even a small share will translate into significant volumes and the probability of a hit will be higher. The aspect that gets missed in the process is one of finding a segment that strongly resonates with your offering. This resonance is a result of an identity fit between the customer and the offering.

Great brands tend to focus on smaller but intensely resonating segments. A fiercely loyal user tends to inspire many others through his behaviour and words.

This is the ART side of segmentation. It is about discovering identities that your offering would resonate with. Such segmentation inspires product design, not just messaging. When done this way, the product itself becomes the message.

Apple designs its product keeping in mind the needs of a small segment of highly creative users, or Nike focuses on the “serious” athlete, and not on the other 90% that wears Nike as a fashion accessory.

So how do we identify these chosen few or chosen many? How do we identify the segment that offers the best-fit relationship for our offering? The best way is to conduct first-hand research of the market and, with the precision of a surgeon, carve out our prospective segment.

Let’s understand this better by looking at a few case studies that illustrate how we helped our clients find their target segment(s).

3 Secrets to Real Estate Marketing: Segmentation, Segmentation, Segmentation

No Game of Dice: Why Market Segmentation Cannot Be Left to Chance

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