How can we spot and choose the right market segment for our new product

Segmentation is especially important when bringing new products to market. With proper segmentation, new products are presented to the right customers as soon as they hit the market. Use the following five steps to effectively segment the market fornew products. Define the market The first step in segmenting a market is to identify the market of interest. The various characteristics of the target market need to be clearly outlined. It is important that this market is not too large and that you are focused on a particular property. Create a market segment Once you have a well-defined market, you can start dividing it into different groups based on common characteristics. You need to take into account the four different types of segmentation i.e.behavioral, geographical, psychological, demographic. You can select the segmentation type according to the type of product you want to launch. Creating a segment profile Create a segment profilethat accurately describes the market segment. This profile includes a detailed description of geographic distribution, demographic distribution, psychographic description, segment size, segment growth rate, consumer needs, usage levels, and additional relevantconsumer behavioris needed. Evaluate Segments The fourth step involves evaluating segment profiles. You must evaluate the attractiveness of each market segment before you can select the one that is most appropriate for you to target. Different structural and financial factors will play a role in determining the attractiveness of a market segment. This includes profit margins, type of distribution channels, segment size and growth rate, and competitors. Select your Target Market(s) Once you`ve properly evaluated the different segments, you can select the segment that you want to target. This is the most important step in the entire process, as the selected segment informs you of allmarketing strategies andproduct positioning.