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STEP 4: Segmentation Targeting Positioning- Select Your 1st
Market Segment 

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Next, you will need to select a market segment to enter. Why should you choose a specific Market Segment?

 

Focused Marketing and Sales Efforts:

 

Targeting a specific segment prevents you from spreading your resources thin across various groups. It allows for targeted campaigns that resonate with a particular audience, thus potentially increasing conversion rates.

 

Optimized Product/Service Offering:

 

Understanding a segment deeply can guide product development to ensure that features, benefits, and user experience specifically cater to that segment's needs and wants.

 

Budget Efficiency:

 

Instead of a broad approach that can be costly and less effective, focusing on a segment can help allocate budgets efficiently to channels and strategies that matter most to that group.

Now, make sure to spend some time considering this because it is critical to the success of your business. By specializing in a niche or segment, businesses can build a more substantial brand reputation and may face less direct competition.

 

Here's how to choose the right market segment:

 

Imagine you want to sell a new type of sneaker specifically for high school basketball players. To be successful, you'd need to know how many high school basketball players are interested in buying your sneakers. That determines the size of a market segment. Here's a simple step-by-step way to do that:

 

Define Your Segment:

First, clearly describe who you're trying to sell to. In our example, it's high school basketball players.

 

Start with Broad Data:

Begin by finding out the total number of high school students. Maybe your nearest high school has 1,000 students.

 

Narrow Down:

You'd then try to figure out how many of these students play basketball. Maybe 10% of them, which means 100 basketball players in that school.

 

Expand Your Scope:

You'd need to multiply your findings if you're thinking bigger, like selling to multiple schools or even nationally. If there are 100 schools with similar numbers, that's 10,000 potential customers!

 

Research Online:

Use search engines to find statistics. Websites like Statista or government education sites might have valuable data. For instance, you might find national statistics on high school sports participation.

 

Surveys and Questionnaires:

Ask around! Create a quick survey and share it with students. Their responses can give you a better idea of interest levels and how many might buy your sneakers.

 

Check Existing Solutions:

Look at companies selling similar products. How many sneakers are they selling? Their sales figures can give you some insights.

 

Remember, while these steps can give you a reasonable estimate, it can be challenging to get an exact number. But by combining several methods, you can get a clear picture of the size of your market segment. Think of it like trying to guess the number of candies in a jar; the more methods you use, the closer your guess will be!

 

 

Research and Analyze the following data points:

 

Market Size: Understand the size of the segment. While a bigger segment might seem attractive, a smaller but more niche segment might be less competitive and more profitable.

 

Growth Potential: Assess the growth rate of the segment. Even if it's small now, if it's growing rapidly, it could offer excellent opportunities in the future.

 

Profit Potential: Consider not just the number of potential customers but their willingness and ability to pay.

 

Alignment with Business Strengths: Consider if your strengths, whether in product development, marketing, or another area, align with the segment's needs.

 

Competitive Analysis: Identify key competitors in the segment. Analyze their strengths and weaknesses to spot opportunities.

 

Evaluate Accessibility: Determine how easy it is to reach the segment. Consider factors like geographic location, online behaviors, and preferred shopping channels.

 

Most Effective Ways to Select a Market Segment:

 

Surveys and Questionnaires: Engage directly with potential customers. Gather insights into their needs, preferences, and pain points.

 

Leverage Data Analytics: Use data analytics tools to study market trends, customer behaviors, and purchasing patterns.

 

Test Marketing: Before fully committing, test your product or service in a smaller segment. Measure results and gather feedback.

 

Engage with Stakeholders: This includes customers, suppliers, distributors, or anyone else with a vested interest in your market.

 

Monitor Social and Cultural Trends: Social and cultural trends can significantly influence market segments in today's dynamic world. Stay updated.

 

 

HELPFUL TOOLS TO COMPLETE STEP 4:

 

For a good video explanation of how to do complete STP one can be found here

 

 

 

For a good book explanation of how to complete STP and various other high-level marketing strategies, one can be found here

 

A good tutorial on how to get STP right can be found here

 

For examples of other well-known companies current segmentation, SWOT and 5 Forces one can be found here

 

If you want to outsource to our professional team to find and interview potential customers and use the data collected to complete STP, send us an email here  or book a free consultation here

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