Developing Needs-Based Market Segmentation

Organizations often seek to grow revenue for a current offering by identifying new market segments. Additionally, when sizing a market for a new offering, product managers typically identify a range of potential segments with a need for the offering. However, focusing on common segmentation dimensions, such as business size or industry, that are not directly predictive of a need for an offering may result in resources being directed at the wrong segments while more lucrative market opportunities are missed. In this report, we describe a three-step process to develop and act on segmentation based on customer and buyer need.