How to identify and evaluate market segments

A ‘group’ or market segment might be defined because those involved have similar needs and service requirements. Market segments are fundamental to understanding who you serve and how. This guide helps you identify and assess your market segments.

All community service organisations have a least one primary market segment, and most have secondary and subgroups. As you define these at a broad level, you can move on to understand them at a subgroup level.

You will need to analyse your market segments on multiple levels to successful undertake marketing and communications. This will help to improve your brand awareness, relevance and reach.

Also refer to How to understand market scale.

Revisit your vision and mission

Revisit your vision and mission statements.

• Do they strongly align with the clients you are considering or servicing?
• Do your statements of vision, mission and purpose identify the types of client issues you are aiming to address?
• Do you need to consider modifying your vision and mission and purpose to reflect changes planned in targeting new and different issues and market segments?

If this review points to a significant drift away or conflict in purpose, this needs to be resolved before considering new market segments.

Refer to How to write vision and mission statements, and How to create a compelling Value Proposition.

Look for common themes

When identifying ‘market segments’ linked to your mission and purpose, aims, goals and objectives, look for themes common to particular groups.

• Primary market segments typically include the main client group of a service – e.g. all eligible people in your defined area that are approved for a certain funded service.
• Secondary market segments may also be relevant segments for your organisation, e.g. any person on limited income needing living support in your defined area.

Confirm that the segments you want to address are aligned with your goals and mission. This will assure stakeholders and funders and potential donors that your organisation is a ‘good fit’ in terms of their aims.

Assess each group – mapping subgroups

A market segment will have a range of dimensions and can typically be broken down into subgroups. Market segment subgroups enable you to assess more accurately:

• The potential numbers of clients in your defined area
• Any critical drivers of service delivery, such as the need for regular utility services or transformational change in services
• How to motivate potential funding partners to join with you to address a subgroup
• The likely increase of service demand over time and impact this will have on your organisation.

By mapping the subgroups within your primary segment, you can assess the impact they will have on:

• Resources
• People
• Process
• Finance.

Undertaking an assessment of your market segment groups and subgroups will give you a clearer picture of your service relevancy to your clients as well as any potential funding partner(s).

Assess your social return

Most community service organisations are concerned with financially sustaining their mission as well as demonstrating a social return.

Having a strong sense of the social benefit you provide to your primary segments, subgroups and stakeholders, can help you to align your financial health with achievable outcomes. If you are struggling with this knowledge gap, it might pay to do some market research – refer to How to conduct market research.

Also refer to How to develop market engagement strategies.

Resources

Australian Marketing Institute (AMI). The “marketing for good toolkit” for not-for-profit organisations has relevant sections from page 8.

Social Value UK – Social Return on Investment (SROI) Guide – This group provides extensive insights and guidance on this subject.