Step #2: Identifying and Evaluating Market Segments

Once Acme has defined its offering and competitive space, it must segment the general market and group like segments to arrive at solution areas. To illustrate, lets continue with our example. We said we would focus on Acme’s online brokerage as the unique solution for our example. This solution can serve multiple customer segments. At the highest level, two broad customer segments may be businesses and end-consumers. If desired, these two segments could be further broken out in an effort to arrive at more detailed clusters. For our example, however, we will only concern ourselves with the high level business and consumer segments. Both segments, labeled A and B, form the solution area under the brokerage offering. Figure 5.4 illustrates this solution area in the first column of the left table. The second and third columns show two other solution areas, solution areas #2 and #3. The former consists of geographic market segments, possibly for Acme’s banking offering, whereas the latter entails demographic segments, perhaps for Acme’s insurance products. Note that these two solution areas are included for illustrative purposes only—we will not refer to them going forward.

Having identified our targeted market segments, we now map them in a screening matrix. The screening matrix plots the potential value of a segment against the ease of market entry. Potential segment value is
defined by the segment’s size, growth, and profitability. Ease of market entry reflects Michael Porter’s forces of industry competition, including competitiveness from incumbents and substitutes, capital requirements,
access to distribution channels, supplier and buyer bargaining power. Figure 5.4 shows how the segments within the first solution area map using the screening matrix. According to this analysis, the Consumer segment (B) ranks higher on both potential value and ease of market entry, and thus should be the segment that Acme pursues first.

Defining Acme’s unique solution and evaluating targeted market segments within solution areas will serve as the backdrop for the next step; identifying customer needs along the entire customer experience life cycle.

Taken From : Enterprise Guide to Gaining Business Value from Mobile Technologies

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