We talked last time about coalescing groups or segments of people based on needs or wants and those groupings are what we're going to call the segments of your market. What is a market segment? Well, for our purposes, we want to look at groups of individuals within the market that have an Udall want that you think you can deliver on. What can you classify them by? What can you measure them by? In terms of their demographic, there's psychographic, their behaviors and needs and as you begin to see groupings of these individuals that's what we would call a market segment. We'll look at demographics first, so demographics are probably what you're most familiar with from this lot, its the age, the gender, income, occupation, city or state that people live in. The things that you might have filled out before on various surveys where people are trying to learn about your demographic. For example, we might find that we have an app on our phone designed for moms to share photos of their babies with friends and family. Now if that's the app that you have in mind, if that's the problem you want to solve, then what we find is that you would categorize that as women of a certain range. Now a young women have children, middle age women have children, older women have children. What's the benefit of narrowing it down to a five or 10-year span? Well, the benefit of that is that you might not be able to afford to everyone and how and where you would spend your marketing dollar to get in front of someone in their '20s or their '30s or '40s is going to differ. We're not trying to necessarily ignore the other parts of the market, we're trying to figure out with a limited marketing budget and limited time to do marketing in the beginning, where are we going to get the most return on our investment? We'll pick a range for our purposes here let's assume we did our research and we've decided that 25-35 is where we want to focus. We want to focus too on children in the sense of one or more and we also want to quantify what we mean by babies are what we would mean by young. I don't like to see demographics defined as just adjectives. Your definition of young and my definition of young might differ, your definition of rich and my definition of rich might differ so try and quantify it. Women of a certain age bracket that have a certain number of children of a certain age for the child and this three would be an example of what we would mean by demographic. Furthermore, we can segment businesses similarly so you may have heard of a term called thermographic which is essentially demographics for a business. You might be developing a product and your intent is to sell that to a business, you're going to be a B to B company instead of a B to C or business to consumer company. That is entirely fine, it's encouraged and the principles of our course are going to apply the B to B as well. For the purposes of categorizing and segmenting businesses you're going to look for things such as company size, the location where they are, maybe the age of the company, maybe the budget of the company overall or the budget of the company spends on products and services like yours. Maybe they industry within which they operate. There are a variety of ways you can segment your businesses if you're trying to sell to business. There are also a variety of codes SIC codes NAICS codes that you can use as well. The second major category after demographic and thermographic is this area of psychographic. What we're looking at here are things like the attitudes, the opinions, the values, the interests of your target customers. Here let's break this idea down of this baby photo-sharing app for moms a little bit further. With the same app that we defined earlier and we talked about the demographics, there are also some psychographics that you could use to define your target market as well. It might be moms that enjoy using social media. They use Facebook and Instagram and TikTok whatever the new thing is as well. They enjoy sharing, they enjoy social media already for other things in their life and maybe they're already doing some of that as it's related to share in these baby photos. You also might find people that again, I'll already sharing those photos with friends and family, so you're trying to develop a product to help them do what they do better, recognizing that there might be some existing products they're already using and that is fine. If you sit around and wait until you have an idea and you're the first person in the world ever have that type of idea, you've probably never going to launch your product or never going to start a company because it's pretty rare, you're going to find something that's never been tried before in the history of human. Keep that in mind it's okay to evolve on some existing ideas that are already in the market. The third element I want to talk about is behavior, so this would be along the lines of whether or not someone takes a particular action and the frequency of that action. A mom that wants to their share pictures of the 3-year-old on an app with friends and family once a year, probably not going to be a good basis for your target market. We want somebody that does it weekly, semi-weekly, maybe daily, so you want to get a good sense when you're defining your target market, what is the frequency with which they experienced the problem that you're trying to solve. Lastly, I want to talk about needs-based segmentation. I'm going to break this down a little bit. When needs-based segmentation, you divide the market into customer segments that have distinct needs. Zoom, great example, many people have become a lot more familiar with this in 2020 than they had before. Zoom, different values, different needs serve pending who you are. Many of us might be using it to collaborate with our coworkers for employee collaboration, video conferencing with our coworkers. Alternatively, you might find that students are using Zoom as a lean way to learn, so it's a way that efficiently and effectively they can use the tools of Zoom to learn coursework, be it in kindergarten high school, college, or beyond. There is a third area with Zoom whereby it might just be entirely social. You're having a happy hour with your friends online, you're getting together as a broader extended family on some holiday. Same product. Product differs none. You don't go into Zoom today and select if you are using it for co-working, or for learning, or for socializing. That decision is instead based on how you use the product itself. With that being said, with need-based segmentation, there's a unified group of customers that have that need for video conferencing and a affordable, accessible, appropriately, high-quality way. Broadly, when you begin to segment your market, there's the opportunity to do it by demographic or firmographic. There's the opportunity to have I psychographic, there's the opportunity to do it behaviorally and there's the opportunity to do it through needs and you don't have to pick one. Ideally, you've given some consideration to all of these four opportunities to segment and you're able to cross them and segment your market perhaps through several of these lenses in parallel.
