It is often difficult for small companies to construct a good segmentation and targeting strategy for their marketplace. This is because many of these companies don’t have a method for breaking down markets into digestible data. In this article we will cover Steve Jobs’ method of analyzing a marketplace. A process that enables him to focus and develop fantastically successful products.
You can’t depend on your judgment when your imagination is out of focus — Mark Twain
Keep it simple
If you were to do some homework on creating a strong segmentation and target strategy, you will probably find many resources that either
1) provide you general guidelines or
2) a comprehensive list of tasks that makes target strategy seem like quantum physics.
In my research I have found that Steve Jobs of Apple, has come up with a fantastic way of analyzing a market and identifying opportunity. It can be seen in this video:
Even though the way Steve presents this analysis is simple, it is not easy. You will need to have as much information as you can gather about your primary competitors and your potential customers. As a summary here are the basic steps.
Step 1: Product & Markets
The first step in segmentation and targeting is to identify the product classes in your marketplace, meaning solutions that solve similar problems for your potential customer. For example, in the vacuum market you might have: standard home vacuum cleaners, shop vacuums, portable vacuums… you get the idea.
Step 2: Competition
Create a diagram with the product segments of your target market listed on the header. Now visualize the top two competitors in each product segment. Steve did this as a bubble roughly relating their size to their percentage market cap in that market. This helps you recognize the competitive pressure within a given customer segment.
Step 3: The Emerging Market
The best way to approach a market is to target the emerging opportunity within a sector. Think about where the market is going to be in a 5 year time frame. Where your market will be five years from now is typically where the emerging market is today. Create your products accordingly.