- Practice · 5 marks
Customer segmentation and target segment
Short answer
Segment by demographic, geographic, psychographic and behavioural bases; start with a narrow, reachable, high-pain early-adopter group and expand later.
Explain the bases of customer segmentation. How does a startup choose its early-adopter segment?
Customer segmentation divides the market into groups of customers with similar needs or behaviour, so that the offer and message can be fitted to each group.
Bases of segmentation
| Basis | Examples |
|---|---|
| Demographic | Age, gender, income, occupation, family size |
| Geographic | City, region, urban/rural, climate |
| Psychographic | Lifestyle, values, personality |
| Behavioural | Usage rate, loyalty, benefits sought, occasion |
| Firm-based (B2B) | Industry, company size, purchase volume |
A good segment is measurable, reachable, large enough, distinct and actionable.
Choosing the early-adopter segment
- Pick a narrow group that feels the problem most strongly and is already trying to solve it.
- Check that they can be reached cheaply (one channel, one place).
- Check willingness and ability to pay.
- Prefer a group that talks to others (influencers), so word of mouth helps.
- Start with this beachhead segment, win it, and then expand to adjacent segments.
Example: a fitness-tracking device may start with urban office workers aged 25-40 with gym membership, before offering to the general public.
Answer: Segment by demographic, geographic, psychographic and behavioural bases; start with a narrow, reachable, high-pain early-adopter group and expand later.
✓ Answer checked by Claude Opus 5.5 (high effort)
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