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How to Find the Right Customer Segment for Your Product

Updated: Jul 14

Finding the right customer segment or persona for your product is one of the most crucial and difficult tasks for any entrepreneur especially in the early stages of the organisation. It requires careful navigation through demographics and behaviours to pinpoint those most likely to use your offering. 

Usually the process starts by identifying all segments that exist in the market for that particular product. 

For e.g. if you are working on a protein shake product. Then your customer segments would be all those people who can potentially buy protein shake- fitness enthusiasts who go to gyms, pregnant women, busy professionals, teenagers who want to build their body etc

Now out of these potential segments, we can look at finalising or zeroing-in on one or few segments as the starting point. We can look at the following aspects to build further:

  1. Size of each of these segments?

  2. Rate at which each of the segments is growing YoY?

  3. Purchasing power of these segments

  4. Need and pain points of these segments and how well does your product solve these?

  5. Ability to reach/identify these users- helps you to think of customer acquisition cost. For e.g. some of these segments may be very difficult to identify or reach and hence would be very costly to acquire these customers and hence not a good business idea

Case Study: MagicRoll

One of our portfolio companies at Change Engine was building the product for automating the editing efforts of making a video Youtube or Instagram ready without having to spend multiple hours in it. 

There were multiple segments to look at:

  • Entertainment videos

  • News videos

  • DIY videos

  • Podcasts

Another way to look at the segments was 

  • Short videos- Reels, YT shorts, Tiktok videos

  • Long videos

Yet another was was to look at the personas of the creators:

  • Professional creators/influencers

  • Casual creators 

  • Brands creating videos for their product promotion

One more segment to look at was whether to focus on India or the US or any different geography. 

We looked at the different segments on the following criteria:

  • Size

  • Growth

  • Need of such a product

  • Paying capacity

Eventually we finalised to focus on the following as the first set of users:

“US content creators who are between 10k-50k subscribers and who generate short content and also focussed on podcast as a category”

This helped the team to focus on choosing the right kind of features and also in the market (GTM) by reaching these sets of users effectively.

Another case of a big brand: Tesla

One of the ways for brands and products is also to look at a specific customer segment to start off and then expand into others by using data and usage. 

Let’s look at Tesla, the trailblazer in electric vehicles. Tesla has exemplified effective customer segmentation through innovation and brand positioning:

Early Adopter Focus: Tesla initially targeted tech-savvy early adopters and environmentally-conscious consumers who valued sustainability and cutting-edge technology. By appealing to this niche segment, they created a loyal customer base and generated buzz around their revolutionary products.

Segmentation by Lifestyle: Tesla expanded its customer base by appealing to different lifestyle segments, including affluent urban dwellers, eco-conscious families, and tech enthusiasts. Each segment resonates with Tesla's brand values of innovation, performance, and sustainability, driving demand for their electric vehicles across diverse demographics.

Aspirational Branding: Tesla's aspirational branding and visionary leadership resonate with forward-thinking individuals who aspire to drive positive change and embrace the future of mobility. By positioning themselves as pioneers in the electric vehicle industry, Tesla attracts segments seeking innovation, status, and sustainability.

So, as entrepreneurs we need to study our customer segments closely, look at what pain points that have and how well we can solve their needs.We need to be very sharp about identifying these and then we can expand to other segments. Remember, understanding your audience is the key to unlocking their hearts and minds, and ultimately, driving sustainable growth and success for your product.


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