Market segmentation

Also called Segmentation, Target market, Ideal customer profile, ICP

Dividing a market into groups that behave differently, so you can stop talking to all of them at once.

What it means

Segmentation splits a market by characteristics that predict buying behaviour — sector, size, location, need, or the problem being solved.

An ideal customer profile is the segment you have decided to serve best.

Why it matters

A small business cannot outspend a large one, so it has to out-focus it. A message aimed at one group beats a message aimed at everyone, on every measure, for a fraction of the budget.

It also improves delivery. Serving a narrow group repeatedly makes you genuinely better at it.

What it looks like in practice

Start with your own customer list. Look for the segment where you win most often, keep customers longest and make the best margin. That is usually your answer, and it is usually already visible in the data.

Segment on something that changes behaviour, not on something merely describable. "Companies with 10–50 staff" is only useful if they buy differently from companies with 100.

What to watch out for

Confusing a segment with a customer size. Two businesses of the same size in different sectors may have nothing else in common.

Chasing a large segment you cannot serve better than incumbents.

Where to get proper advice

Your existing sales data first. Trade bodies often publish sector data useful for sizing a segment once you have chosen it.