BMC104 - Customer Segment

Summary

In this video, the speaker discusses the first block of the Business Model Canvas: Customer Segments. He explains the importance of identifying the right customer segment by focusing on the decision-makers rather than the end-users. The video highlights five types of customer segments: Mass Market, Niche Market, Segmented Market, Diversified Market, and Multi-Sided Market. The speaker emphasizes the significance of defining customer segments before crafting value propositions or products, setting the stage for more detailed exploration in future sessions.

Takeaways

• 😀 The 'Customer Segments' block is the first and essential component of the Business Model Canvas (BMC).
• 😀 Customer segments refer to the group of people or organizations a business aims to serve, and it must be defined before determining the value proposition.
• 😀 A customer segment isn't always the buyer; it can be the person making the decision to purchase.
• 😀 Example: A father buys diapers for his baby, but the decision-maker is the mother who asked him to buy them.
• 😀 Understanding who your customers are and their needs is crucial for developing an effective business model.
• 😀 The BMC categorizes customer segments based on needs, not demographics or market size.
• 😀 Five key types of customer segments are: mass market, niche market, segmented market, diversified market, and multi-sided market.
• 😀 Mass market serves a broad audience with similar needs, such as essential goods like rice and sugar.
• 😀 Niche market targets a very specific group with specialized needs, such as companies needing particular machinery.
• 😀 Segmented market consists of subgroups within a broad category, such as different types of cars for various uses.
• 😀 Diversified markets serve two or more customer segments with distinct needs, like a travel agency catering to both travelers and cargo senders.

Q & A

What is the main focus of the video script?

The main focus of the video script is the 'Customer Segments' block in the Business Model Canvas (BMC), explaining how to identify the right customer segments for a business and why this step is crucial before determining the product or service.

What is the difference between the customer in a transaction and the actual 'customer' in the Business Model Canvas?

The customer in a transaction is the person who physically makes the purchase, but in the BMC, the 'customer' refers to the person who makes the decision to purchase or engage with the product or service, as illustrated by the example of the father buying diapers at the mother's request.

Why is it important to determine customer segments first in a Business Model Canvas?

It is important to determine customer segments first because it helps businesses understand who they are targeting, allowing them to tailor the product or service offerings to the specific needs and preferences of those customers, ensuring more effective marketing and service delivery.

What are the five categories of customer segments in the BMC?

The five categories of customer segments in the BMC are: 1) Mass Market, 2) Niche Market, 3) Segmented Market, 4) Diversified Market, and 5) Multi-sided Market.

What is a Mass Market in terms of customer segments?

A Mass Market refers to a customer segment with broad and similar needs, where businesses serve a wide range of customers without differentiating between specific needs, such as the market for basic goods like rice or sugar.

What defines a Niche Market in customer segmentation?

A Niche Market is a very specific customer segment with specialized needs, often found in industries with highly specialized products, like a company producing packaging machines for specific types of businesses.

How does a Segmented Market differ from the other customer segment categories?

A Segmented Market divides customers into smaller groups based on differing needs, such as in the example of the car market, where different groups need cars for business, family, or city commuting.

Can you explain what a Diversified Market is with an example?

A Diversified Market includes customers with very different needs. For example, a travel agency that caters to both individuals traveling for leisure and people shipping goods. The services offered to each segment will be very different.

What is a Multi-sided Market, and how does it work?

A Multi-sided Market involves two or more customer segments that are interdependent, such as a tabloid where the readers and advertisers both contribute to the business's success. The business relies on both groups for its operations to be successful.

How does understanding customer segments impact marketing strategies?

Understanding customer segments allows businesses to craft more targeted and effective marketing strategies, ensuring that the messaging, product offerings, and services are aligned with the specific needs of the customer segments, leading to better customer satisfaction and engagement.