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Day 57 in MIT Sloan Fellows Class 2023, New Enterprises 4, TAM & Persona

MIT MBA SFMBA entrepreneur

Market segments

People tend to put more weights on demographic because it is identifiable. 

However, psychographic is more important actually. Demographics are just correlating with psycographic.

 

The one of the most sophisticated organization to use user segmentation is political campaigners. They use demographic information very productively.

 

The other practices to think about market segmentation is automobiles. Once you think about automobile brand, the main customer segment is crystal clear. Sometimes it relates to persona level.

 

Terminologies

  • Watering holes: Where customers tend to gather?
  • Proxy products: What kind of products infer the customers are right segment to be targeted
  • Beach Head Market(BHM): The first market and expandable market you enter. It should not be too big. 
  • TAM(Total addressable market): If you get 100% market share in BHM, how much you can earn from this market?

Think about business scale

When you think about initial business scale, TAM and BHM are very powerful tool.

You need to think about demographic, psycographics of your target customers, and above all, clarify why they buy your product with data-driven and story-driven way.