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Market Segmentation Tool

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Use this tool to analyze market sizing, market segments and customer profiles.

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									                                                                                                               Market Segmentation & Analysis Tool


1. Use the "Segmenters" tab to generate ideas and help you narrow down the 2 major segmentation criteria that will be used for the remainder of this exercise.

2. View the examples in the "Sizing (Example)" and "Segments (Example)" tabs below to see a real-world sample of how this process works. Delete these tabs when you finish
this analysis.

3. In the "Sizes (Actual)" tab, enter the major segmentation criteria into the matrix (green area). Further refine those segments with minor segmentation criteria (beige area).

4. Enter the market research data you have collected into the matrix to generate micro-segment sizes and calculate the Total Addressable Market for your product.

5. In the "Segments (Actual)" tab, define your key market segments by merging the cells. Total up the market segment size and add a description like in the example.

6. Once you have selected the key market segments to target, prioritize them using the exercise in the "Weightings", "Segment Analysis", "Rankings" and "Segment Map" tabs.

7. In the "Weightings" tab, weight the importance for each prioritization criteria. Be sure that your total weight equals no more or less than 100%.

8. We have set up the evaluation criteria based on Competitiveness, Market Opportunity, and Attractiveness perspectives. Feel free to customize as you see fit.

9. In the "Segment Analysis" tab, rank each market segment (Green, Amber, Red cells) on a scale of 1-10 based on the criteria.

10. In the "Rankings" tab, sort the results to identify the segments that are most attractive to your business presently.

11. View the automatically generated "Segment Map" and "Chart" tabs which provide visual representations of the data from the segment analysis.

12. Identify which segments to target and which to ignore and communicate your findings internally with key stakeholders.
                                                                                                                Market Segmentation & Analysis Tool

  Demographic (who they are)                Psychographic (how they think)                   Behavioural (what they do)              Environment (where they are)

     B2B                    B2C                  B2B                    B2C                    B2B                   B2C                 B2B                  B2C
Annual Revenue        Age                   Resistance to Change   Brand Preferences      Website Visits        Purchase History    Technology           Country of Residence

# Employees           Income                Market Focused         Price Sensitivity      Response to Marketing Where they shop     Purchasing Power     Political Climate

Industry              Marital Status        Open-Minded/Rigid      Conservative/Liberal   Purchasing Methods    Store preferences   Management Style     Currency

# Locations           Education             Decision Process       Enviro-Friendly        Memberships           Memberships         Purchasing Process   Payment Methods

Years in Business     Family Size           Early Adopter          Hobbies                Internet Usage        Internet Usage      Purchasing Power     Shipping & Receiving

Markets Served        Gender                Growth vs. Static      Lifestyle              Collateral Consumed   Impulsiveness       Business Culture     Languages Spoken

Products/Service      Geographic Location   Tech Sophistication    Information Sources

Job Title             Social Circles        Professionalism        Service Preference

Level of Experience   Occupation            Require Referrals      Buy based on trends

                                            Awareness of options   Spontaneous

                                            Risk Aversion          Influenced by peers

                                            Loyalty                Relationships
                                                    Company Size (Revenue)
                                                                                                      Total Addressable Market (TAM)
                        Canada          100M+ Revenue   5-100M Revenue       0-5M Revenue

                                           2,496           184,953             73,895

International Markets
                        United States

                                          29,054          1,204,493           784,960

                                                                                            For this example, we have selected a fictional company that sells helpdesk

                                                                                            software and is looking to target organizations in English-speaking countries
                                           1,495           78,395              69,392       (USA, Canada and Australia) and do further segmentation based on the size
                                                                                            of company (annual revenue). This is designed to give you a sample of how
                                                                                            you might want to consider setting up your market sizing and segmentation.
                                                    Company Size (Revenue)
                                                                                              Segment             Market Segment Sizes
                                        100M+ Revenue   5-100M Revenue       0-5M Revenue

                                                                                                             928,247 small businesses in

                                                                                            Small Business
                                                                                                             USA, Canada & Australia

                                          North America Corporate
International Markets
                        United States

                                                                         Small Business
                                                                                            North America    1,420,996 mid-sized and large
                                                                                             Corporate       corporations in USA & Canada

                                             Australia Corporate
                                                                                              Australia      79,890 mid-sized and large
                                                                                              Corporate      corporations in Australia
                                                               Major Segmentation Criteria 1
                                                                                                                       Total Addressable Market (TAM)
                                Minor Criteria 3   Minor Criteria 1    Minor Criteria 2   Minor Criteria 3

                                                          -                   -                  -
Major Segmentation Criteria 2

                                Minor Criteria 2

                                                          -                   -                  -

                                                                                                             Determine the major and minor segmentation criteria you will be using and
                                                                                                             plug them into the green and beige cells on the matrix on the left side of this
                                Minor Criteria 1

                                                                                                             worksheet. Conduct market research to identify how many target
                                                                                                             organizations (B2B) or consumers (B2C) fit your segmentation criteria. Plug
                                                          -                   -                  -           the numbers from your research into the matrix. This will calculate an overall
                                                                                                             number for the "Total Addressable Market" for your product. You might want
                                                                                                             to use information resources such as Hoovers, Dun & Bradstreet, Jigsaw, or
                                                                                                             ZoomInfo to gather data.
                                                               Major Segmentation Criteria 1
                                                                                                             Segment     Market Segment Sizes
                                Minor Criteria 3   Minor Criteria 1    Minor Criteria 2   Minor Criteria 3

                                                          -                   -                  -           Segment 1
Major Segmentation Criteria 2
                                Minor Criteria 2

                                                          -                   -                  -           Segment 2
                                Minor Criteria 1

                                                          -                   -                  -           Segment 3
                                                                                                     Market Segmentation & Analysis Tool

  Weighting Scale

            Competitiveness                                 Market Opportunity                                         Attractiveness
  Ability to    Competitive        Barriers to                                                          Strategic &                     Maturity &
                                                  Market Size      Growth Rate       Profitability                       Capabilities
Differentiate    Intensity           Entry                                                             Technical Fit                     Timing

   15%              15%              20%             10%               15%               5%               10%               5%            5%         100%

 Ranking Criteria & Definitions:

 Ability to Differentiate - is there a specific competitive advantage that you can provide to this market?

 Competitive Intensity - are there few competitors actively engaged in this market segment? Are they weak?

 Barriers to Entry - are there any major barriers to entry (technology, patents, distribution, etc)?

 Market Size - how large is the total addressable market?

 Growth Rate - what is the anticipated growth rate for this segment?

 Profitability - are profit margins attractive?

 Strategic & Technical Fit - how aligned is this market opportunity with our strategic direction?

 Capabilities - do you have the technical capabilities to effectively compete in this market?

 Maturity & Timing - how mature is this market? Is now the right time to enter?
                                                                                   Market Segmentation & Analysis Tool

                                    Competitiveness                           Market Opportunity                           Attractiveness

                           Ability to     Competitive   Barriers to                                              Strategic &                 Maturity &
Market Segments           Differentiate    Intensity      Entry
                                                                      Market Size Growth Rate   Profitability
                                                                                                                Technical Fit

Weighting                     15%             15%          20%           10%          15%            5%             10%            5%           5%

Australia Corporate            8              8             7             8           9              7               5             4             7

North America Corporate        4              5             8            10           6              8               7             8             6

Small Business                 9              6             6             9           8              6               3             5             2

Sample Segment                 3              1             4             4           7              5               6             3             8

Undesirable Segment            2              2             2             3           3              3               2             2             3
                                                                                                              Market Segmentation & Analysis Tool

Note: Sort by selecting all cells then click "Data"in the navigation menu and "Sort". You can sort by Segment Score (Largest to Smallest).

   Market Segments                                                                  Segment Score            Competitiveness         Market Opportunity   Attractiveness

   Australia Corporate                                                                     7.4                       3.8                     2.5               1.1

   North America Corporate                                                                 6.7                       3.0                     2.3               1.4

   Small Business                                                                          6.5                       3.5                     2.4               0.7

   Sample Segment                                                                          4.3                       1.4                     1.7               1.2

   Undesirable Segment                                                                     2.4                       1.0                     0.9               0.5
                 Highly Competitive                                                                                        Top Priority
                                                                                                     North America Corporate

                                                                  Sample Segment

                                                                                                                                   Australia Corporate

                 Bubble Size = Market Opportunity

                                                                                                                        Small Business

                                                    Undesirable Segment


                 Segments to Ignore                                                                                            Low Competition

                  Low                                                              Competitiveness                                       High
                                               Ability to Differentiate

                                                       9                                                             Market Segment Rankings Chart
               Maturity & Timing                       8                            Competitive Intensity

                                                                                                                          Australia Corporate


                                                       4                                                                  North America Corporate
        Capabilities                                                                             Barriers to Entry

                                                       1                                                                  Small Business

                                                                                                                          Sample Segment

Strategic & Technical Fit                                                                   Market Size
                                                                                                                          Undesirable Segment

                               Profitability                              Growth Rate
                                                                                                                                    • Enter criteria here

                                                                                                                                                 • Enter criteria here

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