How to choose the right segment
When we talk about segmentation, most people imagine fixed categories that exist out there, waiting to be discovered. But the truth is different: segments are not given, they are constructed. They are groupings of people, companies, or organizations that share some characteristics. In every industry there are established segments, the ones everybody accepts as the standard way of dividing the market. Yet nothing prevents you from finding new criteria and creating a new segment of your own.
If you succeed in doing that, it is like striking gold. You become the first mover in a new space, you define its rules, and you enjoy an advantage that can last for years.
The classic segmentation criteria
Traditionally, segmentation is based on a set of criteria that structure markets into manageable groups:
- Products and services
- Demographics
- Geographics
- Channels
- Psychographics
These are the classic dimensions that guide most marketing strategies. They are useful, but they only scratch the surface. Segmentation can also be about identity struggles, aspirations, or inner tensions that define how people see themselves.
When I was at Nissan, working on the concept that became the Qashqai, we did exactly this. We noticed a group of young male parents who were happy in their new family role but felt that their sense of youth and adventure was being restrained. A regular family car didn’t excite them. We offered them the crossover: the comfort and safety of a family car, fused with the adventurous spirit of an off-road vehicle. We had not just segmented by age or income, but by inner tension. The result: the Qashqai dominated a new segment it created for more than a decade.
This illustrates a crucial point: segmentation is not only about describing groups of people, it is about understanding the conflicts and desires that drive them. When you do, you can create offers that resonate deeply with their identity.
Choosing well
But there is a warning. A segment must be worth playing in. Roger Martin reminds us that the first question of strategy is “where to play”. Choosing a segment is part of that choice. We must ensure that the segment is real, that it is large enough, and that our offer is both compelling and defensible.
Simon Sinek is a perfect example. When he entered the field of leadership theory, he was a latecomer. Established players dominated the space. His chances of success were slim. Then he reframed the segment: he spoke to leaders who believed values and humanistic approaches to business mattered. He gave them inspiring frameworks and delivered viral performances that turned him into the reference point for a new category of thought leaders. He didn’t just compete: he created and then owned a segment.
That is why we should take segmentation seriously. It is not a routine exercise, it is a fundamental choice. It forces us to ask ourselves questions that cut to the core of strategy:
- Am I serving the right segment?
- Is that segment big enough and profitable?
- Is my offer focused and relevant for that segment?
- Is there another way to frame needs in my market and create a new segment I could dominate?
- Above all: am I brave enough to serve one segment and not the whole market?
