Finding the Right Job for your Product

The way that companies choose to define market segments influences which products they develop, drives the features incorporated in those products, and shapes how they take them to market. Segmentation schemes define who is framed as competitors; and how large specific market opportunities are believed to be. Most marketers segment their markets along lines defined by the characteristics of their products or customers. Indeed that is what the market looks like when you’re inside the company, looking out on the market. Many for example, segment their markets by product category or price point. Is this the best way to frame the market’s structure? Or is it better to profile markets by demographic attributes like age, gender, marital status and income level? Should business-to-business (B2B) firms use corporate demographics like industry vertical to slice their markets, or is segmentation by small, medium and large businesses better? Will any of these segmentation schemes provide better guidance than others to those who must innovate successfully? Or will they misguide? The market segmentation scheme that companies adopt is a decision of vast consequence. Yet many managers give little thought to whether their segments-in-use are leading their marketing efforts in the right direction or the wrong.