Stone Walls and Segmentation

I came across a marvelous stone wall in the woods the other day – four feet wide, three high and straight as an arrow as it made its way across the land.  I am always amazed at the amount of effort that went into building these things.  Built of necessity; they divided the countryside into neat, distinct patches of earth where each had its own purpose.  It similarly would be quite handy to have the marketplace divided up into neat sections, reducing the strategic question to selecting the patch with the best chance for success.

It is rarely a simple task to look at a potential market opportunity and readily see where the stone walls are separating the segments, and how one field is different from the other.  Some of the more common approaches are to look at the technology utilized (people doing HPLC), the type of organization (small biotech) or the title of the customer (research director).

These simplistic approaches offer false comfort as the basis for a strategic plan, even though wonderful 2×2 plots and charts can be crafted.  The more important dimension to measure is the value.  In this approach to defining the various market/customer/application segments, you uncover the value the customer places on the product or service.  Talking with customers about whether the offering saves time, provides new insights, improves productivity or has a really good color is the key to defining the customers who will benefit the most from your offering.

Grouping these folks together will then allow you to craft the profile of the potential target segments, leading to the success that clearly defined segments will provide.

• Resources can be aligned to the value being provided, increasing efficiency

• Customers will be nodding in agreement when they hear the value proposition

• Sales people will be talking to well-qualified leads

So, like the stone walls dividing the land, partition your customers based on the value they receive and not on their address.  Then you will be able to clear your fields and build some enduring boundaries that will serve you well.