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Ask HN: How do you do market segmentation of your product?

7 points by happyfeet ↗ HN
I am beginning to work on an online recurring payment solution. Though there are lots of established providers in the market, I think there is lot of scope to cater to niche segments that are still unaddressed. I do not want to build a solution only around startups / Web 2.0 companies (we will address it but that is not the only focus) and trying to identify features that would be required by lots of other services that have recurring fees structure.

I am looking for advice / learnings - how to use market segmentation data to derive specific features to build for those markets and tie that to revenue plan.

FYI, I am planning to bootstrap.

4 comments

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happyfeet
Found few interesting points as discussed in the following blog: http://vitalfindings.com/advanced-analytics/market-entry-str...

Which consumer segments are most price sensitive, and which are more likely to pay more for advanced features? Is improved technology enough to counter the advantages of having a dominant brand? How can I tie my consumer segmentation closer to actual feature preferences? Consumers say they're "very likely" to buy the product I want to develop. What does that really mean?

donofrip
I'm confused... you think there is a lot of scope to cater to niche segments, but then are wondering how to identify those segments?

If you have already identified the segments, then I would just talk to as many people in these segments as possible and ask them what they would like to see. I think that good customer/client dialog is invaluable.

Generally speaking, higher margin businesses are going to be less price sensitive.

There is a lot that comes with being a "dominant brand". In the electronics payments space, a trusted, tried and true product means a lot--moving money around is not the same as picking which site to use to post your blog. I would expect that there is a cost associated with a company moving from one provider to the other. Not only would your technology need to overcome the trust issue, but it would need to be able to validate the cost associated with switching.

Maybe if you spell out some of the segments you are considering, someone could provide more information about that particular segment.

happyfeet
Thanks for the thoughtful suggestion. I have identified few specific areas that can make use of our product, but as you mentioned engaging with them in a conversation may be the best way to find out.

I just read the article recommended by the other commenter (Joel's article on Segmentation) and it makes sense.

I think I should do the following to start with: talk to potential customers to find out what is critical; identify their price sensitivity; then group the features needed for various customer segments and identify price points.

I guess this will take several iterations to get a grasp, but I think I have a fair idea now as to where to start.