Market segmentation is critical to any business due to its fundamental relationship with the business’ strategy. The two go hand-in-hand, driving each other, and ultimately your business, to achieve its underlying vision and purpose. An organisation often has thousands, if not millions of customers, but only a single overarching strategy.  A market segmentation model allows your business to accurately and appropriately view its target market to inform, set, drive and monitor this strategy against its vision and purpose. With competitors restructuring to better serve their customers and new customer-focused businesses being built, customer centricity has become critical to success in increasingly competitive environments. Customers’ views drive these business models and operating structures, highlighting the importance of correct market segmentation.

How market segmentation can help your business

While there are endless considerations as to how a market segmentation model can assist a business, here are a few key ways to assess if you are getting the most out of your market segmentation model across the critical areas of strategy and strategy execution. Understanding that strategy speaks to the overall goal and plan where execution speaks directly to the tactical implementation of the said strategy.

Understanding your market

It is necessary to understand essential market drivers and criteria when looking at your business’ specific market, as these vary substantially across business models and sectors. The correct weighting needs to be placed on the criteria most appropriate to your business. You must also consider the proper balance across internal and external market data points to ensure a holistic view of the market. Key pointers may include size, demographics, needs, priorities, interests, spending behaviours, and other psychographic or behavioural criteria used to understand the target audience better. The level of granularity needed on these criteria is unique to each business and its overall objective.

Setting your strategy and strategic initiatives

With an understanding of your segmented customer base within the market, the business can confidentially set its strategies and strategic initiatives. This detailed view allows your business to allocate resources to target the quality opportunities and address potential weaknesses or threats identified in the market.

Monitoring your execution

By tracking your market segmentation against critical metrics, you can more effectively monitor the progress of its strategic initiatives. With enhancements in data analytics and business insights, you can gain real-time views of your business that allows you to constantly track and inform decisions within the business.

Adapting to change

The ability to inform the business on how to adapt and iterate on its current strategy and offering is one of the most vital aspects of market segmentation. With the exponential rate of change in the modern world, businesses need to evolve to stay relevant, let alone succeed. The business’s market segmentation and the key criteria used to define and track it can inform decision-makers on changes in consumer behaviour, creating new market opportunities, and competition, ultimately guiding your business to adapt its approach or offering in the market.

As growth strategy specialists, Step Advisory has the knowledge and experience of the critical relationship between strategy and market segmentation to conduct the Research and Analytics needed to find the suitable market segmentation model required for your business. We understand that there are strengths and weaknesses to all segmentation models and that there is never a one-size-fits-all solution. Our dynamic approach means we will take the time to understand the uniqueness of your businesses and how to best view your market, whether you require a new review or an independent review of your existing segmentation model.  Through the broader Step Group, we have access to propriety data sets that can enhance and link to your internal market view to bolster your overall market segmentation. With the right model, you will see your business in a new light.

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