Wednesday, November 18, 2009

Choosing Segments to Target: Q&A with Erika Bruhn

This is the last in a series of Q&As with Erika Bruhn, a partner with Sawtooth Technologies Consulting Group. Today's topic is how to evaluate and select segments for targeting. Thank you, Erika, for sharing your expertise!

Question #3 for Erika Bruhn:

What kinds of criteria do you use when recommending which segments a marketer should target, and why?

Erika's answer:
Typical criteria include segment size, market share (volume and dollars), alignment with your current products, and alignment with your distribution channels. However, there is not a "one size fits all" approach to choosing targets. Segment size should always be considered, but targeting a niche segment that the broader market doesn't serve can be a winning strategy, especially for a new entrant in a market.
There is typically an alignment between attitudinal segments and the brands in the market, meaning that certain segments skew strongly toward particular brand usage. This is a good place to start when choosing target segments. Where does your brand "live" today? These segments are a natural target. Where do competitive brands live? These segments may be more difficult to penetrate.
Which segments' values are a good fit with your brand and company? What investment would be required to target a segment of interest? (For example, do you have the capital resources to target an Innovation segment which expects a constant stream of new and updated products?) Is there a segment that is underserved by the current brands? These questions will help direct you to the most appropriate target segments.

Question #4 for Erika Bruhn:

Once target segments are identified, what comes next? How is the segmentation used?

Erika's answer:
In an ideal world, all of your products and all of your communications will be focused on your target segments. The products you develop will be aligned with your segments' values, and in fact, future market research can and should be done with consumers who fit your target segments. Brand messaging and positioning should be based on your segments' values, as well.

It may require a radical shift in thinking from seeing every customer as a target to focusing on those in target segments. But aligning your brand and products with a small number of segments, and "owning" those segments, is the ultimate payoff.

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