Target Market Segmentation

Most marketers get this wrong: they think they should have one target audience. They shouldn’t. Take Peloton. Who is their audience? "People who want to work out at home"? Too broad. "Fitness enthusiasts"? Not specific enough. Peloton doesn’t have one target audience. Because the best marketers think in 5 levels of audience, depending on the need. Here’s how each one works for Peloton: 1. 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐭𝐚𝐫𝐠𝐞𝐭 → 𝐓𝐡𝐞 𝐞𝐧𝐭𝐢𝐫𝐞 𝐦𝐚𝐫𝐤𝐞𝐭 𝐲𝐨𝐮 𝐰𝐚𝐧𝐭 𝐭𝐨 𝐜𝐚𝐩𝐭𝐮𝐫𝐞. This informs the direction of your long-term strategy, shaping product development, expansion plans, and brand positioning. For Peloton, for example, this is the entire at-home fitness market, which informs decisions such as expanding beyond bikes into treadmills, rowing machines, and even strength training. 2. 𝐏𝐫𝐨𝐝𝐮𝐜𝐭 𝐭𝐚𝐫𝐠𝐞𝐭 → 𝐓𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐠𝐫𝐨𝐮𝐩 𝐲𝐨𝐮𝐫 𝐩𝐫𝐨𝐝𝐮𝐜𝐭 𝐢𝐬 𝐛𝐮𝐢𝐥𝐭 𝐟𝐨𝐫. This defines your value proposition and the choices you make to deliver it. It influences features, pricing, and the overall experience. For Peloton, these are high-income professionals who value convenience and community, which leads to value prop components that include live and in-store classes, premium hardware, and a strong brand image. 3. 𝐌𝐞𝐬𝐬𝐚𝐠𝐢𝐧𝐠 𝐭𝐚𝐫𝐠𝐞𝐭 → 𝐓𝐡𝐞 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐩𝐚𝐢𝐧 𝐩𝐨𝐢𝐧𝐭𝐬 𝐚𝐧𝐝 𝐮𝐬𝐞 𝐜𝐚𝐬𝐞𝐬 𝐰𝐢𝐭𝐡𝐢𝐧 𝐲𝐨𝐮𝐫 𝐝𝐞𝐬𝐢𝐠𝐧 𝐭𝐚𝐫𝐠𝐞𝐭. This determines how you talk about your product. It tailors messaging to different customer needs and objections. For Peloton, this means crafting different messages for busy executives (workout efficiency), new parents (flexibility), and ex-gym-goers (competitive training), all within that high-income professional market. 4. 𝐌𝐞𝐝𝐢𝐚 𝐭𝐚𝐫𝐠𝐞𝐭 → 𝐓𝐡𝐞 𝐡𝐢𝐠𝐡-𝐯𝐚𝐥𝐮𝐞, 𝐡𝐢𝐠𝐡-𝐢𝐧𝐭𝐞𝐧𝐭 𝐚𝐮𝐝𝐢𝐞𝐧𝐜𝐞 𝐲𝐨𝐮 𝐟𝐨𝐜𝐮𝐬 𝐲𝐨𝐮𝐫 𝐚𝐝 𝐝𝐨𝐥𝐥𝐚𝐫𝐬 𝐨𝐧. This dictates where you invest in attention. It prioritizes channels, placements, and creative strategies. For Peloton, this is people actively searching for "best home exercise bike", rather than just general fitness enthusiasts. 5. 𝐉𝐨𝐮𝐫𝐧𝐞𝐲 𝐭𝐚𝐫𝐠𝐞𝐭𝐬 → 𝐓𝐡𝐞 𝐬𝐞𝐠𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐲𝐨𝐮𝐫 𝐦𝐞𝐝𝐢𝐚 𝐭𝐚𝐫𝐠𝐞𝐭 𝐛𝐚𝐬𝐞𝐝 𝐨𝐧 𝐛𝐮𝐲𝐢𝐧𝐠 𝐢𝐧𝐭𝐞𝐧𝐭. This decides when and how you engage. It helps match content to the right moment: brand-building for early-stage buyers, conversion-focused ads for those ready to purchase. For Peloton, this means running educational content for people researching and direct-response ads for those closer to buying. Most companies fail because they collapse these layers into one. The best brands don’t speak to just one audience. They layer these targets to control the narrative and own the market. If your marketing isn’t working, the problem might not be a message problem but a targeting problem.

𝗧𝗵𝗲 𝗼𝗻𝗲 𝗮𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗜 𝗰𝗮𝗻’𝘁 𝗴𝗲𝘁 𝗲𝗻𝗼𝘂𝗴𝗵 𝗼𝗳? Customer segmentation by size, industry, and geography. Why? Because when you stop treating all customers the same, you start growing 𝗳𝗮𝘀𝘁𝗲𝗿, more 𝗽𝗿𝗼𝗳𝗶𝘁𝗮𝗯𝗹𝘆, and with fewer 𝘀𝘂𝗿𝗽𝗿𝗶𝘀𝗲𝘀. This analysis is the unlock for: 📈 Smarter growth strategies 💰 Healthier margins 🤝 Happier customers 𝗪𝗵𝘆 𝘀𝗲𝗴𝗺𝗲𝗻𝘁 𝗯𝘆 𝘀𝗶𝘇𝗲, 𝗶𝗻𝗱𝘂𝘀𝘁𝗿𝘆, 𝗮𝗻𝗱 𝗴𝗲𝗼𝗴𝗿𝗮𝗽𝗵𝘆? ✅ 1. Sales & service effectiveness • A $250M CPG distributor in the Midwest doesn’t need or want the same approach as a $7bn manufacturer in Germany. • Segmentation helps you sell and support the right way - for the right customer. ✅ 2. Better strategic & operational decisions • Want to know which customers are high-effort but low-margin? Which industries are expanding the fastest? Which region has the stickiest customers? • Segmentation brings that clarity. ✅ 3. Improved customer experience • Customers don’t expect to be treated equally - they expect to be treated relevantly. • When all your teams understand the nuances of the customer they're serving, retention and satisfaction go up. 𝗛𝗼𝘄 𝘁𝗼 𝗱𝗼 𝗶𝘁 𝘄𝗲𝗹𝗹: 1️⃣ Group customers by: • Size (revenue or headcount) - a useful proxy for complexity • Industry (manufacturing & industrials, tech, services, life sciences & healthcare, CPG, etc.) • Geography (region, market, country) 2️⃣ For each segment, analyze: • Profitability • Support/service effort • Sales cycle and retention • Volumes, expansion or upsell potential 3️⃣ Find your high-leverage segments 4️⃣ Align GTM, finance, ops, and support around them 5️⃣ Refresh regularly - your base will evolve 𝗧𝗵𝗲 𝗕𝗼𝘁𝘁𝗼𝗺 𝗟𝗶𝗻𝗲 • Customer segmentation isn’t just a data exercise. It’s a strategic advantage hiding in plain sight. • When you know who your best customers really are - you build better, sell smarter, and scale faster. #CustomerStrategy #Operations #Finance #Growth #Segmentation #BusinessStrategy #fpanda

Stop lumping your customers into broad categories like age and income. You're missing out on the secret sauce—occasion-based segmentation. Your thrifty weekday customer is the same guy ordering an extravagant pizza and Cola combo on Saturday night. People don't change; the occasion does. Tailor your marketing strategy to occasions, not stereotypes. Imagine a restaurant pushing cheap rice bowls Monday to Friday and going full-throttle with pricey pizza ads on weekends. We did this with Swiggy - two of the brands in my portfolio were Homely (an affordable homestyle meal brand) and The Bowl Company (a premium meal brand). We realised our consumers were pretty much the same people - young professionals who ordered Homely during the weekdays to eat home-style food that was ‘safe’ for the stomach,  and The Bowl Company on weekends for splurging and partying. Switch to occasion-based segmentation, and you won't just see higher sales—you'll understand the fluidity of consumer behaviour like never before. It's not just smart marketing; it's respecting the complexity of your customer. #marketing #marketresearch #business

We keep seeing this on founder pitch decks and outbound campaigns. "We sell to B2B SaaS companies." That's not a target market. That's about 200,000 companies. Here's what a real ideal customer profile looks like. Series A or B, 30-150 employees, product-led or sales-assisted motion, minimum $50K average contract value, less than 12 months of sales-led go-to-market experience, a founder who is still in most late-stage deals. That last part matters most. Because if the founder is still in most late-stage deals, they have the exact problem we help solve. The difference between those two descriptions is not a semantic exercise. It changes your outbound copy, your LinkedIn targeting, your event strategy, your referral asks, and most importantly... your conversion rate. Generic is comfortable. Specific feels risky. But specific is what gets replies. And replies are what become revenue. The narrower you go, the bigger your pipeline gets. Every time.

Accounts that fit your ICP ≠ buying intent. Instead of broad targeting and outreach, segment all accounts into 3 lists and adjust your playbooks: 1. CLUSTER ICP. These accounts fit your ICP but are not vendor aware, and there is no clear evidence they have a challenge your product solves. Instead of pitching to them and targeting with ads, your goal is to make them vendor aware first. Opportunity likelihood: <5%. 2. FUTURE PIPELINE. These accounts are vendor aware (there was some engagement, but no buying intent), but you have no idea if they have a challenge your product solves. Nurture these accounts with a segment content while connecting, engaging and profiling the buying committee. Your goal is to validate if an account has an actual challenge, and if they prioritized it. Current opportunity likelihood is <30%. 3. ACTIVE FOCUS. These accounts demonstrate a strong engagement, there is a relationship with the buying committee members and a strong product need evidence. These are the accounts your marketing and sales team should focus on opportunity development. ---- The benefits of this framework are: - Increase ROI of the GTM team - Increase marketing-sourced revenue - Create a future pipeline while generating short-term pipeline results

“If you’re not thinking segments, you’re not thinking.” - Theodore Levitt Here’s a brief history of market segmentation: 1950s: Segmentation started with basic demographics—age, location, gender—because that was the easiest data to collect and analyze. 1960s: Marketers began adding psychographics, gathering insights into customer attitudes and traits to create more specific profiles. 1970s: The rise of large transaction databases enabled real-time point-of-purchase data collection, leading to segments based on purchase behavior. 1980s: Needs-based segmentation emerged, driven by powerful computers and advanced clustering techniques. This allowed researchers to group customers based on desired product features and benefits. While needs-based segmentation was a step forward, it often missed the mark because customers aren’t product engineers. They struggle to articulate what specific products or features they need. But here’s the thing: Customers excel at describing the outcomes they want to achieve when using a product to get a "job" done. When discussing their desired outcomes, they can identify 100 to 150 different metrics to describe success at a granular level. Today's most effective market segmentation? It focuses on understanding how customers rate the importance and satisfaction of each outcome. This insight allows marketers to craft targeted messages and develop products that resonate deeply with each segment. Here’s 3 examples of Outcome-Based Segmentation in action: 1. J.R. Simplot Company identified a segment of restauranteurs who needed a French fry that stays appealing longer in holding, leading to a tailored product solution. 2. Dentsply found a segment of dentists who believed that the quality of a tooth restoration depended on consistently achieving solid bonds, allowing them to tailor their products to this need. 3. Bosch discovered a segment of drill–driver users who primarily wanted a tool optimized for driving, rarely using it as a drill. This insight helped Bosch create targeted and effective marketing strategies. Outcome-based segmentation represents a significant leap forward. It focuses on real opportunities... ...and measurable activities that are underserved by the competition. Outcome-based segments provide a clear path to innovation and market success.

Half our marketing budget targeted women 25-34. Our highest converting audience? Men 45-65 buying gifts. Discovered this by accident when analyzing order patterns from last Diwali season. These gift-buying men were completely invisible in our targeting strategy. Weird pattern we noticed: ⤵︎ They never used discount codes ⤵︎ Always chose express shipping ⤵︎ Bought our highest-priced items ⤵︎ Had near-zero return rates Our acquisition cost for this segment was 4X lower while average order value was 3.2X higher. Instead of ignoring this insight, we rebuilt our entire holiday strategy around it: ↗︎ Created "gift concierge" landing pages with curated selections ↗︎ Added gift wrapping and personalized message options ↗︎ Developed email sequences specifically for gift occasions ↗︎ Built lookalike audiences based on this high-value segment These changes increased our holiday revenue by 142% year-over-year while reducing marketing spend by 17%. The most profitable audience segments rarely match your brand's imagined customer avatar. Data reveals who's actually buying, not who you think should be buying. What hidden audience segments are you overlooking?

I've been wrong about target markets more times than I'd like to admit. Early in my investing journey - founders building for US / India in their pitch slides said things like: "We target SMBs in Tier 1 cities." "Our product is for millennial professionals, 25–35." "We focus on mid-market fintech in the US." And I'd nod along. It sounded rigorous. It sounded like they'd done the work. They hadn't. And neither had I for believing it. Great Founders have tried to teach me better Demographics are a lazy proxy for the real answer. Company size doesn't matter. Geography often doesn't matter. Age bracket almost never matters. What matters is: why does this specific person, in this specific situation, desperately need what you've built? The best founders never said "we sell to SMBs." They said "we sell to ops teams drowning in manual reconciliation who've already tried Excel and failed." That's a target market. It exists in Delhi. It exists in Austin. It doesn't care about your firmographic slide. Neither do the best founders say "we target mid-market SaaS companies." They said "we sell to revenue leaders who are held accountable to a number but don't control the inputs." That person is everywhere. I'm still very much a student of this process, but I thought these insights might be helpful You can get a gist of this from a book, but never understand its true meaning until you know the pain point of the individual - the on ground reality. I figured it out by watching great founders obsess over why their best customers stayed not who they were on paper. If your target market can be described in a demographic, you probably haven't found it yet.

Market segmentation is often more about you than the market. Traditionally... we choose to cluster groups of people or companies based on some combination of their demographics (age, gender), psychographics (values, opinions, interests, behaviours) or firmographics (industry, company size, org structure). Personas and ICPs (ideal customer profiles) are often the output of these exercises. For example, on the B2C side your target persona might look like: Thrifty Tiffany the 34 year old mom with two kids, a cat, drives a 2014 jeep Cherokee who lives in the Northwest. On the B2B side your ICP might look more like: CFO Sam the 45 year old executive with a mid-market ($10M - $1B) aerospace company based in Virginia. While these personas might accurately represent specific niche audiences within the market, it's very likely that you'll end up lowballing the size of your potential customer base with them. Here's a better alternative. First: segment the market first by their needs. Tony Ulwick has published a lot of great content on this. By first understanding the jobs customers are trying to get done and how well their needs are being met, we can more accurately estimate the size of our market. The benefit to the business is that we then maximize the number of potential customers we have to serve. In a recent interview with Mimi Turner and Jann Martin Schwarz, Vassilis and I got to hear a related idea being born. In B2B, these needs, or jobs to be done (JTBD), are very often emotional. In B2B buying, Jann & Mimi discovered the top 5 emotional (JTBD) are 1. I felt I would be able to defend the decision, even if it went wrong. 2. I feel confident that the thing we are buying will do the job 3. I knew there would be downsides but I felt they could be managed 4. The Buyer Group were more or less aligned 5. The buying process was easy-ish No matter the product or service, using the emotional JBTD is a legitimate way to first understand and segment the market. This has massive downstream application as well when it comes to execution through the 4Ps and especially in the promotional creative & messaging. Think about CFO Sam - traditionally, we'd use his profile to mirror the creative so that it looks familiar to his workplace. We might use a picture of a guy with an airplane engine in the background and talk about the features of the product. But if we knew that creating confidence in the buying group of 15 people was the main job to be done, than the creative could appeal to all buyers in the decision making process rather than just targeting CFO Sam with the feature / benefits of the widgets. For more on this, check out our new episode on the complexities of B2B buying, our post-pod discussion or the interview on JTBD with Tony - links in the comments below.

You don’t need $100K to define your ICP—here’s how to do it smarter At OneLogin, we spent $100K on ICP research—quantitative data analysis, stakeholder, customer, and competitor interviews. The result? A 100-page report that largely confirmed what we already knew: ✅ Mid-market segment ✅ Technology-first industries (FinTech, EduTech, Telcos) + manufacturing The real insight? Buyers wanted more value at a competitive price. Competing with Okta and Microsoft in IAM meant we had to be strategic—positioning OneLogin as the #1 Value Leader was the right move. Good news: You don’t need $100K to do this today. AI can help. 🚀 AI-powered market analysis, TAM, TRM, industry and persona research Google Gemini Pro + Deep Research → Industry analysis in minutes (I use it every time when onboarding a new client). Perplexity, ChatGPT → Persona development, interview guides, messaging validation. Next: Analyze and segment your CRM data. Once you’ve identified your target segments and personas, you need to validate them against your actual customer data. This is where most companies struggle—their CRM is a mess. ❌ No data normalization ❌ Inconsistent industry tagging ❌ Missing roles, functions, firmographics At some point, you have two choices: 1️⃣ Clean up and enrich your CRM (tools like ZoomInfo and LI Sales Navigator can help) 2️⃣ Scrap it and rebuild from scratch If your data is somewhat usable, run segmentation analysis to uncover: Churn & lost opportunity reasons New and expansion revenue by segment Segments with the highest and lowest utilization ICP mistakes companies make (and how to fix them) ❌ Don't assume your current and future ICPs are the same. ✅ Build a moat—Your best customers today may not be your best customers tomorrow. ❌ Focus only on firmographics. ✅ Look at technographics—Are prospects using complementary tech? Should you block accounts where certain tech stacks lead to lost deals? ❌ They define personas based on assumptions. ✅ Validate with real customers. Listen for the exact language buyers use to describe pain points. 🔹 Pro tip: Use ChatGPT to create an interview guide, summarize call recordings, and extract insights to refine your ICP. How do you operationalize ICP? Knowing your ICP helps marketing with broad targeting. BDRs use it for qualification. But sellers need a subset—target accounts. 🔥 Jon Miller’s FIRE framework helps prioritize accounts based on: Fit (firmographics, technographics, industry, geo) Intent (buying signals) Relationships (leverage execs, board, investors for warm intros) Engagement (activity with your brand) Final Thought: Your ICP isn’t static—it should evolve with market shifts, competitor moves, new products, and GTM strategies. If you serve multiple industries or have a multi-product offering, you need multiple ICPs. If you’re not revisiting it, you’re flying blind. 📌 More on ICP process? Check out GTM Partners’ resource—link in comments. #ICP #B2BMarketing #AI #BoldGTM