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Understanding Users and Markets

Market Segmentation and Targeting

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Market Segmentation

Market Segmentation and Targeting

What is Segmentation?

Market segmentation divides a market into distinct groups with similar needs, characteristics, or behaviors.

Segmentation Types

TypeVariablesExample
DemographicAge, income, educationMillennials earning $75K+
GeographicLocation, climate, regionUrban areas in Northeast US
PsychographicValues, lifestyle, personalityHealth-conscious professionals
BehavioralUsage, benefits soughtHeavy users seeking convenience
FirmographicCompany size, industry (B2B)SaaS companies, 50-200 employees

Targeting Strategies

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Evaluating Segment Attractiveness

  • Size: Is the segment large enough?
  • Growth: Is it growing?
  • Accessibility: Can you reach them?
  • Profitability: Will they pay enough?
  • Competition: Is it underserved?
  • Fit: Aligns with your capabilities?

Example: Slack Segmentation

SegmentNeedsProduct Tier
Small TeamsBasic collaborationFree
SMBsMore features, integrationsPro
EnterprisesSecurity, compliance, SSOEnterprise Grid