Segmentation
Dividing a market into groups with meaningfully different needs and buying behaviour.
Example
Splitting logistics firms by fleet size, because under 20 vehicles buy completely differently.
Important
Segments are only useful if they behave differently. Splitting by something that changes nothing about the sale is just tidier spreadsheets.
Related terms
- ICP (Ideal Customer Profile) — A precise description of the customer who gets the most value from your product and is easiest to reach, sell and keep.
- Persona — A short profile of a representative user — their role, goals, constraints and what they currently do instead.
- Market sizing — Estimating market size, ideally bottom-up from real units and prices rather than top-down from an industry report.
Lessons that explain it
- Reading the evidence honestly — Separating what people said from what it means, and noticing when you are hearing what you hoped for. (12 min)
- Defining your ICP — The customer who gets the most value and is easiest to reach. If your definition does not tell you where to find them tomorrow, it is not specific enough. (12 min)
- Positioning and messaging — Positioning is the place you occupy against the alternatives. Messaging is the words. Most startups get the second one wrong because they skipped the first. (12 min)
- Where startup ideas actually come from — Not from brainstorming. From personal pain, professional experience, and things that just changed. (10 min)
- Market size — TAM, SAM and SOM — How to size a market bottom-up so the number means something, instead of the '1% of a $50B market' slide everyone has seen. (12 min)
- Competition and defensibility — Everyone has competitors, including spreadsheets and doing nothing. What matters is why you win a specific segment, and what stops a copy. (12 min)
All 176 terms in the Founder glossary