Burning Ideas

One’s objective in this process is to define good market segments. Good markets are identifiable, accessible, and substantial. These criteria work well to discipline the tasks of gauging opportunities and directing marketing effort. Identifiable members of market segments can be enumerated and evaluated. Imagine a cardiologist who developed a healthy heart program for overworked and overweight executives. Is there a practical way to identify such individuals? The cardiologist might advertise her service and/or invite prospects to a power breakfast seminar or a free risk screening. Prospects might not be so willing to identify themselves, however, if the service were for coping with chemical addictions.

Accessibility means that members of a market can be reached or impacted by some directed marketing activity. American Express knew that to get companies to adopt its corporate card, an American Express sales rep had to get some time with the prospect firm’s chief financial officer. Years of advertising, direct mail, and attempted sales calls still left 400 attractive but inaccessible accounts.
The ability to approach or address known prospective customers is necessary but not sufficient to make an opportunity. That market must be substantial, promising sufficient business to justify the efforts to serve it. Customer lifetime value is a useful criterion in an assessment of a target market. Unfortunately, a firm’s history with its current customers may provide very little basis for estimating the LTV of customers from entirely new markets.