5 Customer Segments Examples

Yesterday, I published an article on how to define your target market, and an entrepreneur sent me a question back asking “well, what if you have different types of target markets?  How do you explain this clearly to others, like your team?”.  Believe it or not, these are all questions entrepreneurs ask themselves.  After all, customers always will be the lifeline of your business.  Let’s pay attention to them.

So let’s relate this back to your own situation.  Have you ever filled out an angel investment group’s application and it asks for your customer segments? Or how do you explain your target market when you have more than one type of customer, without sounding dumb?  Maybe you need to speak MBA real quick.  If you have ever asked yourself these questions, I’m going to tell you what the heck customer segments are, and give you some examples in a way that won’t hurt your brain.

5 Customer Segments Examples

I’ll start by defining customer segments. Customer Segments are groups of people that your business will target. There’s different ways you can categorize them, and different types of customer segments you may choose for your startup or business:

Mass Market

This term applies to companies who don’t distinguish between customer needs. “We’re all created equal” might be their motto. Beware though! This can also say “we don’t care s*** about you”, which is what customers think when you don’t make them feel special.

Niche Market

A company targeting a niche market believes their customers have special needs, and they cater to that. “You’re special and we love you {and hate everyone else!}” is their motto.

Diversified Market

Diversified markets are pretty self explanatory: they’re diverse. They target two groups of customers with completely different needs. They’re out to prove “we don’t discriminate”. Or maybe someone there just had an idea and said “you know what…I already have this huge company, so I’m just going to use that brand to launch something completely irrelevant to what we already do”.  Good example: Amazon.com sells books, but they also offer cloud hosting for developers. Where did that come from….?  Who cares, because it worked.  Good for them.

Multi-Sided Market

Companies that have multi-sided markets often serve as the “middle man” for two different markets that have different needs. We’ll call these companies the “enablers” between the “alcohol and the alcoholic”. The enabler wouldn’t have a job if the alcoholic didn’t need the alcohol. A more realistic example would be a newspaper company. They need the news to produce the content, then they act as the “enabler” by relaying it back to the reader.

Segmented Market

Usually the most broadly used customer market segmentation, a company here would serve the same market, but segment based on SLIGHTLY different needs. For humor’s sake, let’s say Bob has two girlfriends. His girlfriends are very similar.  They both have similar likes, but have a different style.  He notes both Jane and Betty love shoes. Jane wears stilettos, but Betty wears flip flops.

I hope you enjoyed my real world approach to defining customer segments,  in a way that won’t hurt your brain.   Please feel free to leave comments if you enjoyed this approach, or it helps you relate common terminology in anyway.  It’s all part of my evil experiment :)

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