Market Segmentation is HARD — How to Make It Work

In a recent series of posts on the OpenView Blog site, Senior Research Associate Tien Anh Nguyen highlights the four main areas of a comprehensive market segmentation project.

While developing your target segments is critical for early and expansion stage businesses, the challenges of doing so can trip more than a few young companies up.

“Challenges occur because when a startup tries to execute such a strategy, there is a growing tension between the needs for a disciplined, process-driven organization and that of a rapidly growing, wildly innovative and creative core that formed the nucleus in the early days of the startup,” he explains. The result, he writes, is a forced collaboration between sales, marketing, customer service and product development teams that are used to doing things a certain way — and it’s not always a smooth transition.

To help, Tien Anh takes a look at the four ways companies can effectively anticipate and address these operational challenges before any real problems show their heads:

1. Corporate Strategic Goals: “The segmentation focus is a company-wide initiative backed by the corporate team, and all departments are aligned to the same set of the goals.”

2. Resource Allocation and Alignment: “An expansion stage company obviously does not have the resources to move around the organization…  resources allocation and alignment have to be considered while setting corporate, strategic goals at the previous step.”

3. Information Capital: This includes both market clarity and execution support.

4. Process and Methodologies: This area is made up of the company’s sales methodology,  marketing tactics and tools, professional services organization, and any technologies to support these strategies.

In “Make Market Segmentation Work: Now the Hard Work Begins…“, he takes a much more in-depth look at the latter two areas specifically, with special attention paid to the key operational initiatives that set everything in motion.

“Because the scope of the potential activities is so large, it’s more useful for resource-strapped startups to focus on the most important activities [first],” Tien Anh explains, adding that they should limit their efforts to produce the most essential outputs that ensure success in the target segments.

For more details on how to make your market segmentation project work, check out the initial post on planning your go-to-market strategy and follow-up with part two on information capital, process, and methodologies.

Photo by: Colum O’Dwyer