market_segments

Market Segments

• Why is it important to think about them?
  • What is a ‘market’ in this context?
  • How do you think about the market size?
  • Look at segments, value proposition and market entry
• Segments: For your market or customer hypothesis, you need to understand the market(s) and segment(s) you are serving.
• Notice that ‘segments’ are not black and white, they can be continuums or multi-faceted.

Types of segments

• Various ways to classify segments.
• Intention is to sharpen your strategic thinking
• Types
  • Mass Market: Huge and undifferentiated. Horizontal, e.g. consumers age 12 to 18.
  • Niche: Highly specific: Vertical, e.g. Bicyclists
  • Segmented: your product serves more than one segment. Apple serves the consumer and education market segments
  • Diversified: your product serves very different markets: Amazon serves consumers and software developer
  • Two or multi-sided markets: brings two or more segments together: dating services, newspapers. [story of early NeXT computer and Improv]

There are others. You need to understand the market you are going for

People are in the same segment when:

• It is not about demographics or geographics
• A market segment is characterized as a group of people who:
  • “Speak the same language” (e.g. CIO vs. a hacker)
  • “Hang out” in the same “place” (e.g. College campus vs. Facebook)
  • They are similarly passionate or experience the pain at similar levels
  • They expect similar distribution (e.g. web vs. retail)
  • They expect similar levels of service (e.g. email vs. housecalls)