Market Segmentation:
Know Your Customers

No one knows your business as well as you but there is a limit to what a management team can achieve on its own. Often, internal resource constraints mean opportunities are left on the table. Access to data sources, market intelligence and referencing, and third-party technical and commercial strategy support can complement existing teams to hone growth strategies towards the most value-add customer base.

What is a market segmentation exercise?

A market segmentation exercise seeks to help businesses understand new and underpenetrated markets by splitting prospective buyers into groups or segments, identifying the potential addressable market, market share and buying drivers within the segments.

The exercise aims to identify the specific needs and preferences of these customer groups and create tailored products and marketing strategies that can better meet each segment’s needs. A segmented market can help companies more effectively target clients, increasing sales and improve, as well as understanding their competition and identify market growth opportunities.

Market Segmentation Example Stages

Who should conduct market segmentation?

Everyone, all the time! But the ideal period in which a market segmentation adds the most value is when a business is putting together a midterm business plan and needs to understand the potential to increase its revenue and profitability through providing additional products or services, or by targeting new customers or end markets.

  • For small-to-medium-sized businesses, this may follow, or ahead of, an injection of new investment that comes with the need to prove out ambitious growth expectations. This may be initiated by the management team or at the best of the investors.
  • Larger companies find that market segmentation is particularly useful as external support to business development teams that need an outside-in view to identify untargeted white space and as third-party validation to strengthen decision-making on internal resource allocation.

When has Calash done this?

  • Multinational energy equipment and services business

One of the world’s largest oilfield service companies had resolved to seek diversification in line with energy transition themes and, as such, wanted to explore how its current equipment, services and people could be relevant to adjacent markets.

Calash worked with the client on several projects, exploring the potential growth opportunity across adjacent markets and technology verticals. These areas of focus included the mining sector, where there was cross-application of its equipment to this market, and other projects included a deep-dive into the hydrogen, chemicals, and flexible pipe markets, as well as a new region/jurisdiction assessment focused on Latin America.

We brought to bear primary data and market research, alongside market and customer referencing, to validate the addressable market in each focus area, providing our client with the information it needed to make strategic decisions on whether to proceed. Calash helped develop a fast-tracked approach to assessing new initiatives that was systemised and pulled together internal stakeholders, which resulted in improved internal decision-making and focus on short-term revenue-boosting growth markets.

  • Agritech and veterinary services

A world leader in artificial insemination (AI) and veterinary imaging was acquired by a midmarket private equity, which wanted to identify how to offer more to its existing clients and on which markets to focus. The niche technology and end markets of this segment required a focused approach to customer segmentation and growth opportunity identification, and the private equity sponsor hired Calash to conduct a market segmentation exercise and a route-to-market assessment targeted at the AI product line, with the exercise aimed at establishing segments of the market that it could target to drive continued growth, and assessment of the most effective means through which these markets can be accessed.

The exercise was carried out using a bespoke approach to data acquisition and usage, to properly size the target markets, paired with an extensive market referencing campaign that sought to validate the data and add qualitative observations and guidance. Calash successfully sized the addressable markets for its two main customer bases in the artificial insemination space. Our report identified potential new applications and customers that the company had yet to pursue.

  • Vessel inspection and maintenance

A midmarket private equity sponsor approached Calash to work with its portfolio company, which provided inspection, maintenance, and repair services to the offshore and marine markets. The management team believed it had a firm handle on the addressable market on the provision of its services from its existing facilities, but the investor was conscious of an upcoming exit window and wanted to prove the potential to grow the company’s customer base or boost value from the existing client base.

We were tasked with a market segmentation of the vessels that operate within the geographic reach of the company, which involved accessing marine data and vessel specification and validating our quantitative research with market referencing of the current potential customer pool.

The exercise revealed significant white space of vessel types used in the offshore energy industry that the company was not currently servicing, and the potential to upsell offshore inspection and certification services to existing clients.

What do you do next?

Reach out to one of the Calash team below, and we can arrange a confidential discussion on your business needs and where we can provide the most appropriate support. We always tailor our advice and consulting solutions to our clients and seek to integrate them into your existing business development resources at whatever level of depth is preferred. It may be that a more hands-off, market-referencing led exercise is what is needed, or perhaps a broader scope project that leaves no stone unturned.

It all starts with a conversation to understand your objectives.

Iain Gallow
John Corbett
Associate Director