Market segmentation defines logical groups of potential buyers who exhibit similar buying behavior because they share common needs, problems, business strategies, etc. Segmenting the market helps you see behavior patterns that you can use to find and develop accounts in your territory.
High potential market segments are the ones where the combination of market drivers is creating enough tension to convince people to try out new solutions. It is usually the combination of an increasing desire for enablement –the need to connect to the Internet -with an increasing frustration with legacy constraints – historic buildings that are expensive to wire – that creates enough pain to motivate people to change.
There are many ways to segment a market. Market analysts prefer traditional market segmentation, such as company size, industry segments, geographic regions, etc. However, in early markets you may find that it is easier to find prospects when you segment the market using less traditional factors, such as changing consumer behavior, emerging distribution channels, or technology adoption profiles.
Defining emerging market segments helps you make sense out of what is happening in your territory, so you can find opportunities. There are many sources for insightful information about market trends and emerging customer needs – business and trade magazines, newspapers, and market research reports, etc. Look for patterns in the information to figure out how the energy of the market drivers is causing segments to emerge.
Why would someone want to buy your technology solution?
As companies try to capture the opportunities created by market change they implement new business strategies. Since your technology promises to help them implement these strategies faster, better or cheaper, they consider buying it. This is the primary motivation for technology adoption.
Refine your understanding of why people will adopt your technology by considering the strategic, economic, operational and technological reasons they need the new solution.
First, consider the strategic motivations for adopting a new technology solution. How can the new technology enable new business strategies, create competitive advantage or dramatically improve performance?
Next consider the economic motivations of adoption. What are the financial benefits of implementing the solution? Consider the ‘above the line’ benefits – incremental revenues and increasing market share – companies can reap from applying the new capabilities to emerging customer needs. Also, think about the ‘below the line’ cost savings that happen when new technologies enable you to improve operational efficiency or increase the productivity of other resources.
What are the operational motivations for adoption? How could the new technology improve manufacturing processes, increase capacity without incremental capital investment, lower inventory carrying costs, etc? Think about the many operational problems the new technology can solve.
Finally, consider the technological advantages of adopting the new solution. Many times your very first buyers will be other technologists who are motivated by the technological brilliance of your new, more elegant solution. What are the key technology problems that your new solution solves? The answer to this question also helps you identify the legacy constraints that are creating tension in the marketplace.
Evaluate each potential prospect in your territory and identify what might motivate an account to consider your solution. Align what you know about their business strategies and technology needs with the key motivations of an increasing desire for enablement and an increasing frustration with legacy constraints. This activity tells you why they will buy your solution and help you define market segments to explore for sales opportunities.