Find the right market segment for your innovation

You have launched your startup and developed an idea, a concept with high potential. Congratulations! However, your innovation can touch many markets and different applications at the same time. You have insomnia asking yourself, "what should I do? which market should I choose? and above all, should I choose only one to start with? ". The answer is yes.

The nerve of any startup is the speed of development. Your "time-to-market" must be short to make your project a success. This is why the first decision you must make is to determine which market segment to attack.

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I/ What is a market segment?

Let's start at the beginning. A segment is a part of your market. Logical, you might say. Segmentation, strictly speaking, consists of taking a population (the market) and cutting it up more and more finely using a series of criteria. There are 3 main categories of segmentation:

• Geography: which deals with a particular country or geographical area.
• Socio-demography: which reflects the objective characteristics of the population studied.
• The scope of application: which includes the sector of activity involved.

For a startup, which is often in its infancy and sometimes lacks experience, the most difficult thing is to conquer the first market segment and especially the right one. The others you will tackle later on will be much easier to approach.

II / What is a good market segment for your innovation?

Where there is a need

In a recent 1001startups article on " The 20 main causes of startup failure ", the first reason for startup failure is the lack of market need in 42% of the cases.
It is therefore important to identify the needs and select a mature market, ready to welcome you. Go where you are expected and find the segment where your offer will have a concrete and immediate application.

Be careful, the right segment is not the one on which you will have to evangelize the market, i.e. convince it that there is a need.
Imagine for example that you have developed a drug formula to slow down the development of autoimmune diseases. Now try to sell your solution to a person who has not yet tested positive. Even if they have risk factors for developing such a disease, as long as the first symptoms do not appear, your drug box will remain in the bottom of the drawers.

It is therefore important for any entrepreneur, regardless of the stage of maturation of his project, togo to the market where there is already a need and existing solutions and not to the market where the need has yet to mature.

How to select my first market? How do I study the market I found? How to validate my choice? We explain it all to you!

Think speed, not quantity

Unlike large corporations and other more mature structures, for a startup, the right market is the one where you will generate revenue quickly, not the one that will bring you the most money.
It is better to start with the market that generates revenue immediately and then think about other markets to pivot to.

III/ Why focus on a market segment?

Defining the segment your startup is targeting is a crucial step for your development. Focusing on a single segment will allow you to precisely define your product or service. You will then be able to find the directions to follow to eventually adapt your marketing mix or to develop new products better adapted to the target.

Adapting your product technically

Remember. At the root of every innovation project is a problem, a pain point that the innovator intends to solve.
By focusing on a particular segment, you have all the cards in your hands to better understand the needs of the consumer and thus orient the product according to the technical constraints specific to the target.

For example, one of our customers has developed an automated parking process using robotics to park cars in the parking lots of different public places.
This innovation process can be adapted to the parking lots of shopping malls, concert halls or airports...

However, each segment does not have the same technical constraints. If you focus on the airport segment, you must take into account the surface area of the parking lots, which is often limited, but above all the passenger flow, which is much greater or discontinuous, unlike the parking lots in shopping centers.
Once this segment is well established, you can then abandon the least suitable technical characteristics and develop those that provide a value proposition relevant to the problems of your market.

Know your ecosystem

By addressing a single segment of your market, you can more easily target companies that offer products or services comparable to yours. You may not be the only one offering a solution to a particular problem, and that's not a concern.
On the contrary, by positioning yourself in a particular field you can focus on what makes you unique to maintain a competitive advantage.
You will then be able to provide value, gain deep insights, and bring an exclusive solution to consumers. By keeping an eye on these few competitors, you will be able to take a relevant and reliable approach that will have a definite impact on your chosen industry.

Optimize your investments

For startups with limited resources, dividing the market into different market segments is crucial.
By choosing to launch in such and such a market, you will know how to consider your solution from a technical and economic point of view. You can then do everything possible to develop your innovation project on this market and ensure the sustainability of your company.
In any case, if you choose the segment where there is a need, there will be very little risk of failure for your innovation project. This way, you won't have to explore other markets and hope that the magic will happen: a real saving of time and money, so dear to startups.

In addition, by generating revenue immediately, you will have the resources to develop the segment that will be most profitable in the long run.
There are probably other markets that are much more promising, but you can take the time to think about them and find the right area of application when you have reached a certain stability. Be patient!

Simplify your speech

One segment means one idea. By focusing on one segment rather than several, you can build a simple, comprehensive but to-the-point brand image and narrative. It will be much easier for you to find arguments for your sales pitch and for building your brand story whether for products, services, B2B or B2C.

The same goes for your target, who will be directly impacted and concerned by your project. And since the trend is towards personalization, your message will be reinforced. You will make an impression and gain legitimacy with your future clients.

As you can see, as a startup, you have to concentrate your forces and choose your battleground: a company cannot meet all the needs of all customers in all markets. Segmentation is the judicious choice to concentrate your resources on a single part of the market, either to defend your position or to lead the offensive. But how to do this? Flavien Collard, project manager at UMI, shares his method with you.

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