How to Write Up & Develop a Market Segmentation Plan | Your Business

 

market segmentation business plan

Segmenting a market refers to targeting a product to a specific target customer or industry, such as selling footwear to women or accounting software to hospitals. Market segmentation helps new companies develop a niche, or existing companies expand or diversify. Any marketing segmentation plan begins with detailed. Market segmentation is the categorization of potential buyers into groups based on common characteristics such as age, gender, income, and geography or other attributes relating to purchase or consumption behavior. To learn more, check out How to Do Author: Bplans Glossary. Segmentation can make a huge difference in understanding your market. For example, when a local computer store business defines its customer segments as "high-end home office" and "high-technology Author: Tim Berry OLD.



A key part of any business plan is the market analysis. This section needs to demonstrate both your expertise in your particular market and the attractiveness of the market from a financial standpoint. This article first look at what we mean exactly by market analysis before looking at how to make a good one for your business plan.

A market analysis is a quantitative and qualitative assessment of a market. It looks into the size of the market both in volume and in value, the various customer segments and buying patterns, the competition, market segmentation business plan, and the economic environment in terms of barriers to entry and regulation. The objectives of the market analysis section of a business plan are to show to investors that:. When assessing the size of the market, market segmentation business plan, your approach will depend on the type of business you are selling to investors.

If your business plan is for a small shop or a restaurant then you need to take a local approach and try to assess the market around your shop. If you are writing a business plan for a restaurant chain then you need to assess the market a national level. Depending on your market you might also want to slice it into different segments.

This is especially relevant if you or your competitors focus only on certain segments. There are two factors you need to look at when assessing the size of a market: the number of potential customers and the value of the market. It is very important to look at both numbers separately, let's take an example to understand why. Imagine market segmentation business plan you have the opportunity to open a shop either in Town A or in Town B:. Although Town B looks more competitive 10 competitors vs, market segmentation business plan.

The definition of a potential customer will depend on your type of business. For example if you are opening a small shop selling market segmentation business plan furniture then your market will be all the companies within your delivery range. As in the example above it is likely that most companies would have only one person in charge of purchasing furniture hence you wouldn't take the size of these businesses in consideration when assessing the number of potential customers, market segmentation business plan.

You would however factor it when assessing the value of the market. Estimating the market value is often more difficult than assessing the number of potential customers. The first thing to do is to see if the figure is publicly available as either published by a consultancy firm or by a state body. It is very likely that you will find at least a number on a national level. There are 2 methods that can be used to build estimates: the bottom up approach or the top down approach, market segmentation business plan.

The bottom up approach consist in building a global number starting with unitary values. In our case the number of potential clients market segmentation business plan by an average transaction value, market segmentation business plan. Let's keep our office furniture example and try to estimate the value of the 'desk' segment. We would first factor in the size of the businesses in our delivery range in order to come up with the size of the desks park. Then we would try to estimate the renewal rate of the park to get the volume of annual transactions.

Finally, we would apply an average price to the annual volume of transactions to get to the estimated market value. You should be able to find most of the information for free in this example.

You can get the number and size of businesses in your delivery area from the national statistics. Your accountant should be able to give you the useful life of a desk but you should know it since it is your market! You can compare the desk prices of other furniture stores in your area.

As a side note here: it is always a good idea to ask your competitors for market data just don't say you are going to compete with them, market segmentation business plan. The top down approach consist in starting with a global number and reducing it pro-rata. Once again the number of employees would only be a rough proxy given all business don't have the same furniture requirements.

Market segmentation business plan coming up with an estimate yourself it is always a good practice to test both the bottom up and top down approaches and to compare the results. If the numbers are too far away then you probably missed something or used the wrong proxy, market segmentation business plan.

Once you have estimated the market size you need to explain to your reader which segment s of the market you view as your target market. The target market is the type of customers you target within the market. For example if you are selling jewellery you can either be a generalist or decide to focus on the high end or the lower end of the market.

This section is relevant when your market has clear segments with different drivers of demand. In my example of jewels, value for money would be one of the drivers of the lower end market whereas exclusivity and prestige would drive the high end.

Now it is time to focus on the more qualitative side of the market analysis by looking at what drives the demand. This section is very important as it is where you show your potential investor that you have an intimate knowledge of your market. You know why they buy! Here you need to get into the details of the drivers of demand for your product or services.

One way to look at what a driver is, is to look at takeaway coffee. One of the drivers for coffee is consistency. The coffee one buys in a chain is not necessarily better than the one from the independent coffee shop next door. But if you are not from the area then you don't know what the independent coffee shop's coffee is worth. Whereas you know that the coffee from the chain will market segmentation business plan just like in every other shop of this chain.

Hence most people on the move buy coffee from chains rather than independent coffee shops. From a market segmentation business plan point of view, this section is also where you need to place your competitive edge without mentioning it explicitly.

In the following sections of your business plan you are going to talk about your competition and their strengths, weaknesses and market positioning before reaching the Strategy section in which you'll explain your own market positioning.

What you want to do is prepare the reader to embrace your positioning and invest in your company. To do so you need to highlight in this section some of the drivers that your competition has not been focussing on. A quick example for an independent coffee shop surrounded by coffee chains would be to market segmentation business plan that on top of consistency, which is relevant for people on the move, another driver for coffee shop demand is the place itself as what coffee shops sell before most is a place for people to meet.

You would then present your competition, market segmentation business plan. And in the Strategy section explain market segmentation business plan you will focus on locals looking for a place to meet rather than takeaway coffee and that your differentiating factor will be the authenticity and atmosphere of your local shop. The aim of this section is to give a fair view of who you are competing against. You need to explain your competitors' positioning and describe their strengths market segmentation business plan weaknesses, market segmentation business plan.

You should write this part in parallel with the Competitive Edge part of the Strategy section. The idea here is to analyse your competitors angle to the market in order to find a weakness that your company will be able to use in its own market positioning. One way to carry the analysis is to benchmark your competitor against each of the key drivers of demand for your market price, market segmentation business plan, quality, add-on services, etc.

Below is an example for a furniture shop in France. As you can see from the table all the actors on the market are currently focused on the low medium range of the market leaving the space free for a high end focused new player. As you would have guess barriers to entry are great. Investors love them and there is one reason for this: it protects your business from new competition!

The answer to the questions above will be highly dependent on your type of business, your management team and any relations it might have. Therefore it is hard for me to give any general tips about it. If regulation is a barrier at entry in your sector then I would advise you to merge this section with the previous one.

Otherwise this section should be just a tick the box exercise where you explain the main regulations applicable to your business and which steps you are going to take to market segmentation business plan compliant. Now you know how to do a market analysis for a business plan! I hope you found this article useful. If so please share it, and if not let us know what we need to improve. Make sure that your business idea is profitable and create a convincing business plan to pitch investors, market segmentation business plan.

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market segmentation business plan

 

Todd, West, and Associates computer engineering business plan market segmentation. Todd, West, and Associates is a network engineering contractor providing inventory and . Market segmentation is the categorization of potential buyers into groups based on common characteristics such as age, gender, income, and geography or other attributes relating to purchase or consumption behavior. To learn more, check out How to Do Author: Bplans Glossary. Segmenting a market refers to targeting a product to a specific target customer or industry, such as selling footwear to women or accounting software to hospitals. Market segmentation helps new companies develop a niche, or existing companies expand or diversify. Any marketing segmentation plan begins with detailed.