The Importance of Market Segments
The Importance of Market Segments
The Importance of Market Segments
by John McMillan
© 2007 All rights reserved
The Importance of Market Segments
The Importance of Market Segments
Successful companies almost all have a significant market share; it is rare for more than three or four companies to be truly successful in any segment of the mar ket. It is not unusual for one company to dominate with every other company trying to catch up.
Consider some examples.
There are around three really successful supermarkets in the UK, with Tesco dominating Software is dominated by Microsoft and Google.
BMW, Mercedes and Audi dominate the market for executive cars
For many years. the US car market was dominated by just Ford and General Motors with American Motors trailing
There are a number of reasons for this:
A dominant supplier controls the market and sets expectations of price and quality
He develops a reputation and brand, he is highly visible
There is a “comfort factor” in buying from a market leader
Customers come to him first
Marketing becomes very much easier if you are a big player in your mark et place. It you are not, you will always struggle to be seen.
This is all very well for very large companies. But unless you are a Microsoft or Ford, you won’t be able to dominate sales to the whole world, you can only ever end up with an insignificant market share.
Specialise
It is often said that it is better to be a relatively big fish in a small pond than a small fish in a big pond and the way to achieve this is to shrink your target market. You should specialise on a particular sort of customer. This is called segmenting the market.
When you do this, it is much easier to become known and develop a reputation. You can concentrate your marketing activities. Referrals are both easier and more effective.
You learn the special needs or desires of your customers.
So, how do you select your segment?
To be useful, a segment must be:
The Importance of Market Segments
by John McMillan
© 2007 All rights reserved
The Importance of Market Segments
The Importance of Market Segments
Successful companies almost all have a significant market share; it is rare for more than three or four companies to be truly successful in any segment of the mar ket. It is not unusual for one company to dominate with every other company trying to catch up.
Consider some examples.
There are around three really successful supermarkets in the UK, with Tesco dominating Software is dominated by Microsoft and Google.
BMW, Mercedes and Audi dominate the market for executive cars
For many years. the US car market was dominated by just Ford and General Motors with American Motors trailing
There are a number of reasons for this:
A dominant supplier controls the market and sets expectations of price and quality
He develops a reputation and brand, he is highly visible
There is a “comfort factor” in buying from a market leader
Customers come to him first
Marketing becomes very much easier if you are a big player in your mark et place. It you are not, you will always struggle to be seen.
This is all very well for very large companies. But unless you are a Microsoft or Ford, you won’t be able to dominate sales to the whole world, you can only ever end up with an insignificant market share.
Specialise
It is often said that it is better to be a relatively big fish in a small pond than a small fish in a big pond and the way to achieve this is to shrink your target market. You should specialise on a particular sort of customer. This is called segmenting the market.
When you do this, it is much easier to become known and develop a reputation. You can concentrate your marketing activities. Referrals are both easier and more effective.
You learn the special needs or desires of your customers.
So, how do you select your segment?
To be useful, a segment must be: