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Why Market Segmentation for Growth-Stage Brands

While often used for bigger brands, market segmentation is a tremendously valuable, and often overlooked tool for growth-stage startups and other smaller companies to help refine brand strategy and accelerate the next stage of brand growth.

Interestingly, many growth-stage startups have a reasonable semblance of a brand positioning, brand essence and target audience given that they are typically not far removed from the idea that launched the business.  They haven’t had time to completely lose their way on these fronts as many bigger brands eventually do.  But these critical elements of the marketing strategy often get picked apart at the edges and threaten the brand’s focus.

It’s understandable how this happens.  Small growing brands typically aren’t doing a lot of marketing research so brand feedback comes in fragments from reviews, social media, even friends and family who use the brand.  They often have limited distribution so the profile of existing customers can be skewed by who uses a particular channel.  Channel partners – particularly big retailers – may ask for modifications of the product, packaging, messaging, pricing, etc. to better fit their customers.  Many smaller brands focus on performance marketing which is great for maximizing marketing ROI but can easily lead a brand astray from a positioning perspective or into very narrow, limiting target audiences.  And, typically, there needs to be some evolution from the initial kernel of an idea that launches a startup to the strategy that drives more significant growth.  You can see how it can all come a bit undone. And in the absence of a clear strategy, every idea for the brand can seem like a good (or at least plausible) one.

Market segmentation gives growing brands the chance to step back, reevaluate and then nail the strategy that will guide brand and marketing decisions in the future.  When done well, market segmentation provides:

  • A clear and complete definition of the marketing target – not just a profile of current customers, but a more representative profile of potential customers.
  • Understanding of the market opportunity – making sure that the target and brand are not so narrowly focused that growth potential is limited.
  • Clarity around the key brand benefits, target audience needs, the emotional connection and the competition – providing the necessary insight to solidify the brand positioning and essence and significantly focus the key messages for communications and packaging.
  • Insight on where to find target audiences – both in terms of communications and distribution.

And, for decisions where market segmentation doesn’t provide a direct answer, it still provides the grounding of a target and a brand essence to guide those decisions.

Lastly, in addition to providing the strategy that guides internal brand decision-making, it provides invaluable data and demonstrates a command of the business in sales presentations or when seeking additional investment.

Yes, market segmentation is often one of the more expensive marketing research investments, but when done well, the focus and clarity it provides quickly repays the cost, and more importantly helps prevent brands from becoming mired in indecision, or scattered which are real threats to a brand’s survival.

About Brookmark Research:
Brookmark is a data driven consultancy focused on developing powerful marketing strategies to fuel the growth of our clients’ businesses. We leverage primary marketing research, 1st party, 3rd party and proprietary data sources along with proprietary tools and strategy frameworks to develop, test and evaluate marketing driven strategies that deliver exponential ROI.  Whether you are an early-stage growth company or a Fortune 1000 company, we help successful companies accelerate, and stagnant companies invigorate growth.