FOCUSED MARKET SEGMENTATION, EXPLAINED – WHY EVERYONE CANNOT BE YOUR CLIENT

By: Dafne orbach

Summer 2018 Issue


I expect that we agree on this basic marketing principle that a market includes a number of segments: not everyone is a good client for buying a new car, not everyone is a good fit for a business that sells crafts, and not everyone is the right prospect for a firm that provides consulting services. Assuming that we agree, the question is: how do we sell to a particular market segment? Is everyone a good fit for your business? This question has a right answer – no.
 

Not every person, nor every business, can benefit from your solution. Milk is not for everyone, whiskey is not for everyone, nor are credit cards. Even when your product or solution benefits a wide audience and a number of market segments (a retail product, for example), you need to understand distinctive characteristics of the various groups you are trying to reach. Resources and time are limited. If you want to make the most of your promotional efforts, a focused market segmentation is your answer.

As you set a goal to engage with a specific group, your value proposition, marketing messages, and channels need to be adjusted according to the market segment you target.

Whether you sell solutions to the enterprise, or school supplies, this basic rule always applies. It doesn’t matter whether you are in the B2C or B2B arena; if you want to connect with your clients and succeed at selling, start with identifying and gaining a deep understanding of your clients.

Focused market segmentation in B2B markets
In B2B transactions, success starts with a clear understanding of the client, and how you can solve their problem in a unique, or more effective and/or faster way (note that cheaper was not mentioned).

Most companies are well versed on the benefits of segmenting their markets; segmentation is considered a basic marketing principle. But how do companies apply segmentation? With different levels of success, most companies segment their clients based on some combination of: industry, location, size of the company (in term of number of employees or sales), roles.

But there are more effective ways to approach market segmentation.

While you (or your client, if you are a consultant) may manufacture and sell the same instrumentation equipment to clients in the oil and gas and mining industries, the question is: are the problems these companies face exactly the same? Would they use your solution for the same application? How can you convince them that your solution is the best one to solve their problems?

Companies must start the conversation using a value proposition and messages that are absolutely relevant to the specific audience they target. In the beginning, it’s not about the product or service you sell. More than ever, clients will agree to a conversation only when they know the vendor understands the challenges they face, is knowledgeable about their specific market, and speaks their language.

Do you solve a real problem? Are you communicating to the relevant target market about the specific problems they are dealing with?

Jack-of all-trades… or the best in breed?
To get your audience’s attention, you need to be relevant. You must offer value.

As businesses compete for clients’ attention, studies show that more clients prefer to deal with specialists than generalists. For example, a recent survey in the UK suggested that specialist skills in a workforce have greater impact over a business' ability to innovate, than generalists. Almost half the respondents (46%) stated that specialist skills do increase levels of innovation, and 52% of respondents felt that specialist skills are inherent to problem solving. Clients expect to deal with experts who don’t use them as guinea pigs; they want vendors who are both effective and efficient at solving a problem.

When presenting your business as a specialist, previous clients can provide validation. The more niche your company or product, the more specialist you become at solving the problem of this narrow market segment, and the more conversations you can start. Your prospects will pay attention.

When a company focuses its marketing efforts on a small, profitable market segment, there is an opportunity to become the expert – particularly relevant when targeting a niche market segment. In a small, specialized market, current and potential customers will know the experts and will request your expertise in order to solve their real-world business challenges and, over time, your company will eventually become a main reference for this market.

Companies that use this approach keep their focus and marketing efforts on the targeted segment – rather than wasting resources trying to reach everyone. The business value proposition and differentiation (the special features and capabilities available in your product or service and nowhere else) make your business relevant to the selected target market, presenting why your product is especially good and why you offer the best solution to the market.

Identify your niche
By focusing your efforts on a specific market segment, you automatically counter the risk and costs of expanding across the entire market. More importantly, when you specifically cater to the needs of one market segment, the clients are very likely to notice you.

Does a focused market segmentation approach mean that your business must change its strategy and direction? Not at all! This targeted approach based on market segmentation must always remain aligned with your business goals. Your business can benefit from the better use of time and team efforts, besides an elevated customer experience and an increase in profitability. And remember, the decision whether to focus on one market segment or another must always be based on data.

Companies that focus their efforts in niche market segments can experience the following advantages:

1. They can dominate a market that is overlooked by other competitors (too small, they say!);
2. They have better chances to become the go-to expert; and
3. Niche markets are less sensitive to pricing.

The key? Check and identify the market segments where you have proven success. Focus your attention and efforts there.  It may be a niche – but it's a niche you can own.


Dafne Orbach is a Certified Management Consultant (CMC) with 20+ years of experience developing new markets for niche solutions in the areas of information and communication technologies (ICT), cleantech, bioscience and industrial manufacturing. Dafne is a specialist in need-based market segmentation, micro segmentation, market intelligence, definition of marketing strategies, implementation of integrated campaigns, lead generation, and content marketing in niche B2B markets.

Dafne’s proprietary process allows clients to successfully identify and connect with their high-quality leads in narrow target audiences. Check here for what some of them say. To learn more about Dafne visit her business website and subscribe to her periodic e-newsletter. You can connect with her on LinkedIn and Twitter.