Segmentation – What’s Your Beachhead?

Target the Point of Attack

Most educated people find it difficult to decide, because the decision is a high-risk, low-data decision.

Most segmentation case studies are done on EXISTING MARKETS 

The market we will enter will not have experienced our type of product before.

 

The biggest mistake one can make here is to turn to numeric info.

In the situation of targeting the point of attack, you must understand that informed intuition, rather than analytical reason, is the most trustworthy decision-making tool.

In crossing the chasm, there is not enough time to turn a low-data situation into a high-data situation.

 

Informed Intuition

 

Focus on a target CUSTOMER, rather than a target market or target segment.

Follow the target customer characterisation process to identify the images and scenarios of who we are going to use as our beachhead.

 

We want as many customer characterisations as possible (20-50), one for each type of customer and product application.  These then amalgamate to around 8-10. This becomes our library of possible customer profiles that will then require prioritisation and final selection.

 

Scenario profile:

1. Header info

End user

industry

geography

department

job title

 

age

gender

economic status

social group

 

Economic buyer

industry

geography

department

job title

 

age

gender

economic status

social group

 

Technical buyer

industry

geography

department

job title

 

age

gender

economic status

social group

 

2. A day in the life (before)

scene or situation

desired outcome

attempted approach

interfering factors

economic consequences

 

3. A day in the life (after)

scene or situation

desired outcome

new approach

enabling factors

economic rewards

 

Processing the scenarios: The Market Development Strategy Checklist

Potential showstopper issues: (score each 1-5, with 5 being the best. Caveat – a very low score, relative to the others, in any of these 4 factors is usually a showstopper)

Target customer

Compelling reason to buy

Whole product

Competition

 

Second round:

Partners and allies

Distribution

Pricing

Positioning

Next target customer

 

Pass the first round, then score the second round. Then rank order the scenarios based on score.

NOW it is time to make the high-risk, low-data decision and get on with it.

 

Committing to the Point of Attack

 

After conducting the work, make niche decision quickly and get going.

You do not have to pick optimal beachhead to be successful. What you must do is win the beachhead you have picked.

If it is a hard problem and a small segment, there probably won’t be competition to distract us.

 

Guard against false assumptions on choice of scenario that is driving the effort by commissioning early market research. Do not wait until that is complete before moving forwards.

 

The enemy in the chasm is always time. You must force the pace at all times.

 

And Yes, Size Matters

 

Big enough to matter, small enough to lead, good fit with your crown jewels.

Bigger is not better when choosing a beachhead.

We need a market segment that commits to making us a de facto standard for enabling a critical business process.

We need to win at least 50% of the market segment we choose for a specific function in order to be taken seriously.

If we want to be a £5m company this next year – by Sept 2015, we need a segment that is NO bigger than £2.5m (play with these numbers).

 

If the target segment is too big, then sub-segment it. But must respect word-of-mouth boundaries here.

Goal here is to become a big fish in a small pond. To sub-segment, look for special interest groups, tightly networked, with special problems to solve.

Absence of this – then geography can be a safe sub-segmentation variable.