What are key factors to consider when assessing market segments?

When assessing market segments, one of the most critical factors is evaluating the segment size and structural attractiveness. Segment size refers to the number of potential customers in the segment, which can help determine the potential market share and profitability. If a segment is too small, it may not justify the investment required for marketing and servicing those customers.

Structural attractiveness involves analyzing competitive dynamics, such as the number of competitors, their strengths and weaknesses, market entry barriers, and overall growth potential. A highly attractive market segment is one that not only has a large size but also offers favorable conditions for entering and thriving in that market. Understanding these factors allows organizations to focus their resources on segments that present the best opportunities for growth and profitability.

Considering just the company structure and branding does not provide insights into market potential or consumer demographics, while looking only at production costs and logistical challenges misses the essential consumer-related characteristics that define a successful market segment. Similarly, marketing channels and promotional strategies stem from an understanding of market segments rather than being foundational factors in their assessment. By focusing on size and structural attractiveness, marketers can strategically align their efforts with the most promising market segments.