Segment the Market

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Market segmentation divides your target market into logical groups based on needs, location, or other factors.

The purpose of market segmentation is to identify the most profitable customer segment to pursue.

This becomes your ideal customer profile.

Segmentation also lets you customize your product for the customer based on their needs.

Market segmentation can be based on psychographic factors such as activities, interests, beliefs, and opinions.

Luxury brands use these factors to find customers who aspire to a higher lifestyle.

Demographic factors can be used.

Banks target customers based on their income, education, and marital status.

Behavioral factors can be used.

Online consumer sites look for buying patterns, brand loyalty, and location of purchase.

Finally, geographical factors can be used.

Those selling outdoor lawn equipment will segment based on geography, climate, and size of city.

Consider these factors in segmenting your market to find the ideal customer profile.

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