If you’re a small business owner without a background or knowledge about marketing, we’re sure you can relate that the learning curve is steep. But you’re bound to have to dabble in marketing on your journey as an entrepreneur if you want your business to thrive.
Market segmentation will form a significant first step in those efforts. It refers to identifying specific, relevant groups in your market in order to strategically and efficiently communicate, sell, and further attract customers.
Pinpointing those profitable segments takes work, but it will put your business’s marketing efforts on the best footing. It’s a worthy investment of your time and effort. Below we share a 5-step best practice approach to identifying profitable market segments.
Step 1: Name the broad product market
Begin by establishing what broad product market your business is in. You may already know what this is, especially if your product or service caters to a specific need. It’s important here to consider your strengths and weaknesses and the resources available to your business.
Step 2: List potential customers’ needs
Gather your team (even if that means friends and family for now) and start brainstorming. Think of all the needs your potential customers could possibly have, alongside why certain offerings in the market appeal to them. The point is to get an idea of what your business could offer that cuts through the clutter.
Step 3: Narrow down to sub-markets
Through the exercise of identifying peoples’ needs, you will find that differing needs exist, which lays the ground for more specific sub-markets. Now hone in on those needs against the customer characteristics, including demographics, and keep in mind that your marketing messages will need to be tailored to these sub-markets in different ways. If you end up with a couple of sub-segments, name each of them with thorough details regarding their need dimensions and characteristics.
Step 4: Evaluate behaviour patterns and why they exist
This will be rather subjective and, again, may require a team to bounce thoughts around with, but consider anything else you’re able to determine about your segments. By this we mean anything that will give you an idea of why those markets behave the way they do. This will help you to identify pressure points or windows of opportunity for your business.
Step 5: Estimate the size of each product segment
The point of this exercise is to increase the chances of profitability. So, you now need to tie your product markets with demographic data (and whatever other data is available to you) to help you determine the potential size of the segment you’ve identified. This will guide you in deciding whether or not it is, in fact, a profitable segment to pursue. Some segments may have no market potential, potentially making all your marketing efforts targeted to that segment futile.
We appreciate that doing a market segmentation on your own can be cumbersome and will require chunks of your time otherwise spent on growing your business in other, more tangible ways. That’s why we suggest bringing a virtual marketing assistant on board to lighten the load while getting it done efficiently and professionally.
AVirtual offers leading virtual marketing assistants on packages available tailored to your business’s needs. They’re affordably priced in a way that makes sense for small businesses. Give it a shot and see how it works with a free trial.