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In a webinar presented by Marty Gilbert, president, Growth Initiatives LLC, and Bob Sherlock, president, Marketwerks, hear about one of the most effective paths to accelerating a company’s revenue growth. Target your sales and marketing efforts to very specific audiences. Insightfully segmenting of the potential market can provide the launching pad for a successful sales plan.
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Webinar: Segmenting the Market to Find Areas of
Opportunity
August 21, 2013
Today’s Speakers
Marty GilbertPresident
Growth Initiatives LLC
www.growthinit.com 847.732.7400
Bob SherlockPresident
Marketwerks Inc. www.marketwerks.com
847.382.6210
Agenda• Segmenting your market ‒ Why
• Segmenting your market ‒ How– How do you determine the size of a market segment?– How do you prioritize one segment opportunity over another?– How is market segmentation a feeding ground for sales, marketing and
product development?
• What do you do after the segmentation process is completed?
• What results can you expect?
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What is Market Segmentation?Aggregating prospects into groups that share common needs
and behaviors.
Segmenting enables companies to target different categories of consumers or businesses who perceive the value of certain
products and services differently from one another.
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Why Segment Your Markets?
• Pick winnable battles
• Your messaging will resonate better
• Focus sales effort on customers that are a better fit with you and what you offer
• Pick right channel partners
Enables you to tailor solutions and communications
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Different Ways to Segment the Market
• Demographics– B2B – B2C
• Needs / preferences
• Purchase process / buying behavior
• Price sensitivity
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Looking for Insights
• Beyond “who” and “what,” look into “WHY”
• Value drivers
• Use cases
• Adoption patterns
• Price sensitivity
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The Market Segmentation Process
Total Market Size
Market Segmentation Size
Customer Pain Point by Segment
Product Value Proposition
Market Segment Prioritization
-- Market size -- Ease of entry-- Unmet needs -- Competitive positioning
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Ways to Determine Market Size
• Published information is often limited
• You’ll have to estimate, using assumptions and/or correlations.
• Let’s go through two examples:– Enterprise software licenses for sales teams in firms with > 100
employees– Software application for hospital physicians
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How to Determine Market Segment SizeExample #1
Market Size Estimate: Enterprise software licenses for salespeople in firms with greater than 100 employees.
Avg # of # of % # ofUS Market Criteria Employees Employees Salespeople SalespeopleNumber of employer firms 5,930,000Firms with 100-499 employees 90,300 250 22,575,000 30% 6,772,500Firms with 500+ employees 1,850 2,000 3,700,000 20% 740,000Total firms with >100 employees 92,150 26,275,000 7,512,500Avg sell price (ASP)/unit $150 TOTAL MARKET $ $1,126,875,000 TOTAL MARKET UNITS 7,512,500
Denotes a variable assumption
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How to Determine Market Segment SizeExample #1
Market Size Estimate: Mobility software application for hospital physicians
Number of physicians 850,000
% of physicians with smartphones 90%
# of physicians with smartphones 765,000
% of physicians with tablets 40%
# of physicians with tablets 340,000
TOTAL MARKET UNITS 1,105,000
Avg sell price (ASP)/unit $200
TOTAL MARKET $ $221,000,000
Denotes a variable assumption
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Vertical and Horizontal Segments
Operations
Sales
Marketing
Finance
CEO/COO/Pres
Healthcare Manuf Education Telecom Financial Svs Transport
Product solutions may need to resonate with specific industries and specific individuals within each company.
= Decision-maker M A R K E T S
R E
S P
O N
S I
B I L
I T
I E S
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Vertical Market Pain Points• Excessive operational costs that are reducing profitability• Failure to differentiate the value proposition• Lack of process - inefficient operations• Inability to launch new products in a timely manner• Price erosion due to product commoditization• Difficulty in determining investment priorities• Unmotivated channel partners• Stagnant revenue growth• Poor quality
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Horizontal Market Pain Points• CEO
– Growth opportunities in 2-3 years– Key alliances that extend the product into new markets
• COO– Cost containment and reductions over time– Quality improvements
• CFO– Greater negotiating leverage with vendors– Risk management
• Sales– Increasing the funnel by broadening the product line– Getting bigger deals and shortening the sales cycle
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Product Value Proposition• A value proposition must solve a problem
– The more urgent the problem, the valuable the solution
• A strong value proposition statement must contain: – Capability, impact, proof and cost
• Value = Benefits – Cost• Demonstrate value / ROI
Q1 Q2 Q3 Q4 Q1 Q2 Q3
CumulativeCost
$
IncrementalBenefit
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Market Segment Prioritization• Size of market opportunity• Market dynamics… fast-changing? Short product shelf life?• Ease of entry• Value of the your selling proposition• Product differentiation & competitive positioning• Sales cycle length• One-time sales vs. recurring revenue• Customer lifecycle value• Number of influencers & length of the decision-making
process• Average order sizes… large vs. many small orders (COGS)
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Segment Prioritization Example
Wtd Wtd Wtd Wtd Criteria Score Wtg Score Score Wtg Score Score Wtg Score Score Wtg Score
Product differentiation 5 10 50 9 10 90 4 10 40 8 10 80Product value proposition 4 9 36 8 9 72 2 9 18 4 9 36Low barriers to entry 8 8 64 1 8 8 7 8 56 2 8 16Market need urgency 2 7 14 3 7 21 3 7 21 6 7 42Little competition 9 6 54 5 6 30 8 6 48 1 6 6Price insensitivity 7 5 35 10 5 50 1 5 5 10 5 50Adoption leader 1 4 4 6 4 24 9 4 36 7 4 28Market size 10 3 30 7 3 21 10 3 30 9 3 27Existing channel to mkt 6 2 12 2 2 4 5 2 10 3 2 6Growth rate 3 1 3 4 1 4 6 1 6 5 1 5
302 324 270 296
HEALTHCARE FINANCIAL SVS MANUF EDUCATION
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How Segmentation is a Feeding Ground
MARKETSEGMENTATION
Product Development• Drives feature set• Reduced over-design• Common platform w/ modular add-ons
Marketing• Communicate value prop• Competitive positioning• Branding• Lead generation programs
Sales• ROI models• Case studies• Customer testimonials
Narrowing the field through segmentation sharpens the focus.
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What Comes After Segmentation?
Business case justification
Product development Sales tool kit development
Product launch
Customize the messaging
Develop segmented database
Vertical market nurture campaigns
Track customer engagement, analytics & leads
Modify marketing messages as needed
Collateral, case studies, ROI models, events sales training, vertical mkts, webinars, PR
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What Can You Expect?Market segmentation:• Provides greater focus on your product, sales and marketing
efforts.• Creates strong entry into a select group of markets which
increases the odds for business success.• Allows for customized messaging.• Establishes you as a problem-solver.• Enables you to prioritize what efforts to pursue.
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Thank You!
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Marty Gilbert Growth Initiatives LLC www.growthinit.com • 847.732.7400 • [email protected]
Bob Sherlock Marketwerks Inc. www.marketwerks.com • 847.382.6210 • [email protected]
Please type questions into the Q&A panel in the bottom right hand corner of your screen
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Segmenting the Market to Find Areas of Opportunity
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