Defining Your Customer Segments


There are a couple of different customer segments and different ways you can segment in your markets.

In most cases, we design a product that we believe is for the mass markets. However, if you divide your market up into different customer segments you will be able to better design your products to meet their needs.

You can divide your market in different ways:

  • a diversified market,

  • a multi-sided market,

  • a niche market or

  • the mass market.


For startups, the best possible way to enter a market is through a niche market segmentation. This is the segment that your customer tends to be a part of. Once you have identified your segment, you can create a persona that represents your target segment.

To give you an example of each one, let's have a look at these case studies.


1. Diversified market

For a diversified market, let's look at Amazon. Rather than just focusing on books, which they originally started from, they now diversified out into many different customer segments. This is book-lovers, cd-lovers, purchasers of other products, such as watches, sneakers, and clothes. They've really diversified the customer segments.


2. Multi-sided market

For the multi-sided example, we can use Trade Me. If we have a look at Trade Me, they're really a middle man between two markets. The two markets of one being the buyer and the other being the seller.


3. Niche market 

Lastly, let's have a look at the niche market. So this, as a startup, will be your preferred market. The reason for that is because it's easier to target your customers, and you're often going after an underserved market.

Let’s look at the food industry as an example. Specifically, in New Zealand, we have many supermarkets, all offering similar products for a similar price.

Over the last couple of years, we've seen the emergence of fresh food stores. Farro Fresh and in the recent year, New World opening up its new superstore. These are fresh food stores really entering the high-value consumers or high-end market. Higher-priced products, fresher products, and organic products. 


4. Mass market

For mass-market let's have a look at Apple. Apple is a consumer product, with many different products such as laptops, cellphones, headphones. Apple really builds a product for most consumers, whether they're young, whether they are old, whether they live in one country or the other.